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Working families with young children face a lot of expenses, from diapers and entertainment to food and clothing. Childcare cost is one of the largest expenses a working parent faces. Depending on the location and how many children need to be included in early care, childcare expenses can easily outweigh the cost of a mortgage each month. 

How To Save on Childcare

  • Compare Childcare Centers
  • Request a Discount for Multiple Children
  • Look for Assistance Programs
  • Join a Childcare Cooperative
  • Ask for Family Help
  • Ask Your Employer About Remote or Hybrid Options
  • Make Sure You’re Not Missing Employee Benefits
  • Consider a Dependent Care Flexible Spending Account
  • Get the Tax Credits You Deserve

Some research has shown that the amount parents pay for childcare centers to care for children while they work can equate to more than a mortgage or even the cost of college tuition. Paying for quality child care can easily cut into the amount a working parent is able to put toward other bills or budget for retirement.

Therefore, parents should make it a point to find affordable childcare and learn how to reduce the cost of childcare each week or month to make their household income and budget stretch further.

9 Ways to Reduce the Cost of Childcare

Childcare Costs

Just like finding ways to save on utility bills can help you budget for each month and keep more of your money for spending or saving, so can learning how to spend less money on childcare. In fact, child care is among the top expenses working parents face, so finding affordable child care options is a must.

Consider the following ways to reduce the cost of childcare as you look for the best daycare options that align with your household income.

1. Compare Childcare Centers

Not all childcare centers charge the same tuition or include the same cost-saving benefits as others. It’s important to find child care providers that fit your financial needs, just as you would when you search for a home or shop for a new vehicle.

Start by calling each daycare center within a reasonable distance from your work and home. Ask about the base tuition cost plus any additional costs you may need to consider. For example, some child care providers include meals and diapers in their tuition rates, while others might ask parents to provide these, tacking on extra costs to consider.

🧸 Compare various childcare centers to find the best balance of quality and affordability for your family’s needs.

Also, think about alternatives to traditional daycare centers. For example, some people provide in-home childcare that may be more affordable than childcare at a center. Many YMCA locations also offer highly affordable childcare for working parents, although their hours may be more limited than traditional childcare options.

Even finding an option that charges $1 less per hour than another can lead to significant savings each year. Think about it: If you work full-time, that’s $40 in savings each week or $2,080 each year.

If you have friends or family using a specific childcare provider, ask them if they’re comfortable sharing what they pay for tuition to help you start your preliminary research.

2. Request a Discount for Multiple Children

If you have multiple children participating in childcare each day, your costs could rise exponentially, potentially creating an expense you can’t afford. Still, many parents don’t have the option of staying home instead of working to care for their children.

This is when multi-children discounts can help. Fortunately, many childcare centers offer discounts for families with multiple children, usually through a reduced hourly or weekly rate per child. For example, if one child costs $200 per week, a day care center might charge $350 per week for two children or $500 for three children, saving parents $50-$100 weekly.

Childcare centers may not advertise these discounts, but you should feel comfortable asking about their availability when visiting or calling a center. Some centers have special programs for low-income families to reduce child care prices for multiple children.

3. Look for Assistance Programs

Every state offers some type of child care assistance, whether it’s through a child care subsidy program or free preschool programs. Although the details of these programs vary, they usually are designed for low-income families seeking childcare while a parent or parents attend work or school.

Subsidized child care is one type of program to check for in your state. These programs provide reduced rates to families based on their income. Families with very low income can sometimes qualify for free childcare along with SNAP benefits.

🔍 Explore state assistance programs to significantly reduce your overall childcare costs.

Early Start and Head Start programs may also help families needing daycare for younger children. These free programs provide developmental support for children through age 5, and they typically provide care for children during the day, similar to school hours.

To find child care assistance programs in your area, visit the Child Care Aware website or contact your local job and family services department to see what’s available and find out if you qualify. Local childcare centers may also have information about relevant programs that could help you.

4. Join a Childcare Cooperative

A childcare cooperative is an affordable alternative to traditional daycare in which parents of several children take turns caring for one another’s children as a group. For example, say a co-op has 10 children. Anna typically works weekends but has Wednesday to Friday off each week. Anna might care for the children in the co-op on those days, while other parents in the co-op volunteer to rotate their time on weekends and the rest of the week.

Some co-ops work a bit differently in that the parents will pool together their resources to pay for a designated caregiver for their children. Others hire a teacher if the children in the co-op are homeschooled. The best thing about childcare cooperatives is that they’re unique to the parents and children using them, so you can always tailor yours to fit the group’s childcare needs.

5. Ask for Family Help

Do you have a family member who can help care for your children while you work or go to school? If so, it might be a more affordable option than daycare. Some family members, like a grandparent or sibling, might even volunteer to watch your child for free, while others likely won’t charge as much as a local daycare.

👵 Seek childcare assistance from family members to save costs and strengthen family bonds.

Even if your family member can only watch your child for a couple of days per week, or even a few hours, that time equals money you’ll save paying a daycare bill instead.

6. Ask Your Employer About Remote or Hybrid Options

If you use childcare providers solely for the times you’re working, then you may be able to reduce the cost of childcare by working remotely. Of course, this may not be possible with all types of jobs. But if your job doesn’t require you to come to the office each day, consider asking your employer if remote or hybrid work is available.

Your employer may let you work remotely most or all of the time. If not, request one or two days a week of remote work, allowing you to save on daycare costs during those days. Some employers may offer a trial period to ensure that you can balance work and personal time.

7. Make Sure You’re Not Missing Employee Benefits

You may be sitting on employee benefits that could help with childcare, and you aren’t even aware of them. It sometimes happens if you weren’t explained what your full benefits package contained clearly when you started working there, or your policies are confusing. You also might have recently qualified for certain benefits if you’ve met the company’s waiting period and didn’t realize it.

💡 Review your employee benefits to ensure you’re not missing out on any childcare-related perks.

Some employers offer benefits like discounted childcare for local daycare centers or even an in-house daycare for employees to use while they work. You might also qualify for flexible work scheduling, like working remotely one or two days per week, to reduce what you pay in childcare costs.

If you’re unsure what your benefits are or what you might qualify for, request a meeting with your human resources department or your manager if your company doesn’t have an HR department.

8. Consider a Dependent Care Flexible Spending Account

A Dependent Care Flexible Spending Account (DCFSA) lets you save pre-tax income to help you pay for child care. In other words, you can reduce your taxable income for the year by the amount you contribute to your flexible spending account, allowing you to pay less in income taxes.

Married filing separately tax filers can contribute up to $2,500 per year, while married filing jointly, single, and head of household tax filers can contribute up to $5,000 annually. Your contributions come directly from your paychecks, so your employer needs to set up the DCFSA for you.

You can use the money you save for qualifying dependent care expenses, like paying the daycare bill for a young child or older child under age 13. However, you need to ensure you use everything you’ve saved by the end of the plan year, or you’ll lose your savings.

9. Get the Tax Credit You Deserve

When it’s time to file taxes in April, don’t forget to check if you qualify for the Child and Dependent Care Credit. Along with other tax benefits for homeowners, this tax credit reduces the amount you owe for taxes by giving you credit for some of the money you’ve paid in dependent care expenses for the year.

📝 Claim the Child and Dependent Care Credit when filing taxes to potentially receive significant savings.

You can claim up to 35% of your qualifying expenses for using child care for children under 13 while you work or search for work. Your rate depends on your income for the year. The IRS caps qualifying expenses at $3,000 for one dependent or $6,000 for two or more dependents.

If you qualify for a $1,500 credit, you could owe $1,500 less in taxes or even get a refund of $1,500 for using this credit.

Reducing Child Care Expenses Is Important for Parents’ Overall Financial Health

Childcare is a major expense for many working parents, making it necessary to reduce the cost of childcare for better financial health. Using the tips above should help. Be sure to check with your local federal agencies, like your Department of Human Services, to see if any assistance is available as you navigate your childcare costs.

It’s also important to consider your personal finances as a whole. Daycare is a necessity for many parents, so it’s not a cost you can wipe from your monthly expenses. However, learning how to make a budget and cut unnecessary costs can help you improve your overall financial health and make your daycare costs easier to manage. Consider investment strategies like opening a high-yield savings account to help you build wealth on the money you save. Putting your money to work will provide extra cash for daycare or other expenses.