You Don't Need To Go Broke Paying For Child Care

October 11, 2017

By: Stacey Leasca


In 2016, more than 34 million families in the United States included children under the age of 18.

Among married-couple families with children, 96.8% had at least one employed parent and 61.1% had both parents employed, according to the Bureau of Labor Statistics.

As the percentage of dual income households continues to rise so will the need for great child care. But, as’s annual Cost of Care Survey shows, excellent care comes with a pretty hefty price tag.

According to the survey, which polled more than 1,000 parents nationwide, the average American family spends 20% or more of their income on child care. And while 72% of parents said they budgeted for child care, 30% aren't able to stay within their monthly budget, perhaps because the cost of child care has jumped almost twice as fast as any other goods and services since 2009.

“With heightened awareness of child care costs, parents are rightfully budgeting for baby more than ever before,” Robyn Wentzel-Freeman, a data analyst at, said in a statement. “However, even with this preparation, the 2017 Cost of Care Survey found that high child care costs still challenge families financially, emotionally, and in the workplace.”

And not being able to stay inside their allotted budgets has caused parents' stress to bleed outside of the home and into their careers as nearly two out of three respondents reported that child care costs influenced their career decisions. Of those, 33% changed jobs to afford child care costs, while 27% asked their employer for a more flexible work schedule and 23% downshifted to a part-time role or became a stay at home parent in order to save money.

“It’s clear from the 2017 Cost of Care Survey that working parents continue to struggle balancing care and work,” Ben Robinson, Global VP of Sales & Account Management for Care@Work, said in a statement. Robinson added that it’s important in today’s working world that companies address their workforce’s parental responsibilities and offer care benefits to retain their top talent.

And while being a working parent can be expensive, so too can making the decision to leave the workforce altogether.

Business Insider used the Center for American Progress' interactive child care costs calculator to estimate the true lifetime earning loss of leaving the workforce and found that when a woman leaves her job at the age of 26 (the average age for a woman’s first child) and stays home for five years to raise her child she will lose out on more than $635,000 in total lifetime income. For a man, that number jumps to $850,900.

The costs of child care can seem overwhelming, especially when you consider that nearly 1 in 3 parents responded saying they would put themselves in debt — or further in debt — to pay for child care, which is an increase from 25% in 2016.

However, as noted, there are ways for families to mitigate the high cost of child care, such as using the site’s interactive tools to look at local nanny rates and nanny tax calculators. Moreover, there are financial savings options offered by many employers including a Dependent Care Flexible Spending Account (FSA), which can be used to cover both before and after-school care.

“There are two key tax breaks that families can use to help mitigate the high costs of child care:  Dependent Care Accounts (also known as Flexible Savings Accounts) and the Child or Dependent Care Tax Credit,” Wentzel-Freeman told Forbes via email.

She explained that for eligible families, Dependent Care Accounts/FSAs can cover up to $5,000 of annual child care-related expenses using pre-tax dollars.

“Surprisingly, while our survey found that 67% of parents know about the benefits of these accounts, 44% don’t set aside money in an FSA program,” she added. “Families should definitely speak with their accountant or financial adviser to make sure they’re taking full advantage of the tax breaks that might be available to them.”

In addition to tax breaks, Wentzel-Freeman also suggested looking into nanny shares, which is when two or more families share a nanny’s services and his or her compensation.

“It really comes down to how the families and nanny design the work arrangement,” she said. “And there’s frequently upsides for the nanny too. Because the families are sharing the cost, she may make more money than were she working for a single family.”

Additionally, there are services available for families via the nonprofit Child Care Aware. With the site, families can learn how to build budgets or seek free care if necessary.

As the survey showed, only 1 in 3 parents were aware of the FSA savings options, while 59% admitted they don’t know how much they spend on their children each year. By understanding their options at work, potential new legislation that could help them save on care and how much they already spend on their kids, parents may be able to regain some of that lost cash and reinvest it in their family’s future.



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