The ‘why’ of high childcare costs; they’re so high it’s hard to believe anyone can afford it
The average cost of daycare in the U.S. is $9,589 per year. To put this into perspective, the average cost of in-state college tuition is $9,410. In many states, families spend more on daycare than they spend on rent.
Families struggling to stomach these costs may have more options than they think. Here are 3 common ways families are saving on child care costs:
Dependent Care Flexible Spending Accounts (FSAs)
These accounts let you take money out of each paycheck (pre-tax!) to put toward child care costs. FSAs can save families as much as $5,000 per year, although only 55 percent of families contribute to one.
Be careful not to save more than you need; FSA funds not spent within the year often do not roll over.
Tax Breaks That Save Thousands
Your daycare costs could be tax deductible! Families often miss out on Child and Dependent Care Tax Credits.
These credits can save up to $600 for families with one child and $1,200 for families with two or more children. Child Care Aware of America has a map that shows all the child care resources available in each state.
Create A Budget To Find Areas You Can Save
Calculate all of your expenses and test a final budget a couple times to see what amount your family has to work with. Look for simple ways to save, like cutting back on eating out and canceling unused subscriptions.
Since childcare takes up such a high percentage of budgets, some families decide to stay home full-time or work only part-time.
Remember that you won’t be paying for daycare forever. The amount of money that you’re currently spending on childcare will decrease as your children get older. Once your kids are in school, you may be able to eliminate it from your budget altogether.