Affordable childcare solutions
When our two youngest were in daycare, we paid more for childcare than we did for our mortgage. And while I’m morbidly curious, I wouldn’t dare to calculate the total amount we’ve spent so far on babysitters, preschools, and summer camps!
Three out of four Minnesota households with at least one kid under age 13 use some form of child care, according to a new Wilder Research study on child care in the state. Families spend an average of more than $7,100 per year on day care, eating up 12 percent of the family income. Other studies have shown that infant care in Minnesota is some of the priciest in the nation, and can cost as much as a new compact car.
Every family is different when it comes to which childcare arrangement works. But if the cost of homecare, a daycare center, or a nanny is insurmountable, here are a handful of more affordable solutions to explore.
1. Ask a family member. While this certainly doesn’t work for everyone, asking a grandparent to step in is a cost saver, even if you do pay Grandma or Grandpa a small wage or expenses such as gas. Two out of 10 families who use childcare in Minnesota rely exclusively on family or neighbors to watch their children while at work. But another common arrangement is to use Grandma for a couple of days and a childcare center for the rest.
2. Consider a childcare or babysitting co-op. If you are willing and able to take other children into your home for a day or so in exchange for care on other days, consider this solution.
3. Ask about a flexible work arrangement at work. It’s amazing the contortions that families endure so they can save money on childcare. What seems impossible for one family works well for another. You are in a job that could be done from home, in four 10-hour days, or at night. And if you run the numbers, you may find that in scaling back work, your finances and family benefit.
4. Research an au pair. This is an option we would have considered if we had a larger home. I’ve heard the horror stories of boy-crazy au pairs who crash cars, but I’ve also heard of wonderful experiences about new cultures and life-long relationships. Au pairs are typically far cheaper than a nanny and the weekly fee tends to be per family, not per child, making it an affordable option for larger families. Learn more about this option at iapa.org.
Finally, no matter what arrangement you choose, if you pay for childcare, you should look into the dependent care credit, which was extended by the tax bill. The credit offsets a percentage of your daycare costs. But if your employer offers a dependent care flexible spending account, which allows you to pay for up to $5,000 in child care expenses with dollars that aren’t taxed, that tends to be a better deal than the tax credit for all but the lowest of income earners. IRS.gov has more information.
Bottom line, childcare is expensive. But there is a silver lining: If you can manage to set aside even a portion of the money you once spent on day care for college costs, you’ll be well on your way to paying that pricey tuition.
Kara McGuire is a personal finance writer and a St. Paul mother
of three. Send comments, questions and story ideas to