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If you have two children — an infant and a 4-year-old — in child care, chances are it’s costing you more than your rent, says a report from Child Care Aware of America. Child care is actually more expensive than college on average in about two-thirds of the U.S. The report says:
In 2012, the average annual cost of full-time care for an infant in center-based care ranged from $4,863 in Mississippi to $16,430 in Massachusetts. For an infant in a family child care home, the average cost ranged from $3,930 in Mississippi to $11,046 in New York.
For a 4-year-old, the average annual cost of care in a child care center ranged from $4,312 in Mississippi to $12,355 in New York.
That’s awful, right? How can parents save for college while they’re also paying college-sized bills for preschoolers and after-school care?
Here are 10 ways to shrink your child care bills:
1. Find the right employer
Some employers will help with your costs. When you’re job hunting or switching, include child care benefits in your decision. Some companies negotiate a discount with child care providers; others help pay your costs. A number of employers have on-site child care programs that let you stay in close touch with your children while you work. On-site care saves money and time spent driving to and from outside child care.
Some employers help establish child care cooperatives. The website of nonprofit Parent Cooperative Preschools International says:
By establishing on-site facilities as cooperatives, businesses may provide space, initial financing and assistance to child care programs, but are able to leave operation and ownership to the employees who use the center. The U.S. Senate and the World Bank are among numerous organizations which have established child care cooperatives owned and operated by their employees.
2. Start your own co-op
Reduce child care costs to zero by joining or starting a cooperative of parents who baby-sit for each other. San Diego Family Magazine explains:
Organized baby-sitting co-ops usually consist of a group of moms who use a system of hours, points, tokens or tickets that are redeemable for baby-sitting services. The members of each co-op decide which medium of exchange works best for them; usually no cash is involved.
The magazine has tips for finding a co-op and for starting one yourself.
Parent Cooperative Preschools International offers a state-by-state directory to help parents find local co-ops.
3. Consider staying home
Another online tool called “Stay at home or return to work?” leads parents through a thorough assessment of pros and cons, financial and otherwise, of keeping one parent at home with the children.
U.S. News & World Report also offers “7 Financial Steps to Become a Stay-at-Home Parent” to help you make the decision and figure out a budget.
4. Look at nonprofits
Nonprofit organizations can offer less expensive services because they don’t have to turn a profit. “Your local YMCA, JCC, or church may offer child care services that cost far less than you’d pay at a private business,” says Forbes.
Child Care Aware helps parents find free or reduced-cost care. Put your ZIP code into the child care finder on the right of this page to find a nearby agency for local referrals for quality care. Also, use the state-by-state map to learn about state regulations, inspections, criminal background checks, licensing and other related information.
5. Telecommute, even a little
If your company allows telecommuting, use the option to shave a day or two off your child care bill. If not, see what you can negotiate with your employer. Start with MarketWatch’s 10 tips for having that conversation.
When you’re job-switching, look for employers that allow telecommuting or negotiate it as part of the hiring deal.
6. Share a nanny
A nanny sounds pretty high-end, but it may work for you if you share the cost with another family. Legal publisher Nolo lays out the issues to consider, legal and nonlegal.
7. Take it off your taxes
- Flexible spending accounts. You can pay for child care with pretax savings if your employer offers a flexible savings account. You can contribute up to $2,500 a year ($5,000 for a couple) to the account to spend on eligible expenses, child care among them. Says U.S. News & World Report, “Essentially, an FSA reduces your taxable income by the amount you put into the account and then use for qualified dependent care expenses.”
- The Child and Dependent Care Tax Credit. If the cost of caring for dependents, including children, adds up to more than $5,000 a year, you’re eligible for this tax credit. A tax credit lets you subtract the amount of the credit from the taxes you owe. The IRS provides details, including this:
This credit can be worth up to 35 percent of your qualifying costs for care, depending upon your income. When figuring the amount of your credit, you can claim up to $3,000 of your total costs if you have one qualifying individual. If you have two or more qualifying individuals you can claim up to $6,000 of your costs.
- Use a state tax credit. NerdWallet says that in 24 states you can claim additional dependent care credits on state income taxes. Find what’s available in your state with an online search for “dependent care tax credit” and the state’s name.
8. Use the Family and Medical Leave Act
The Family and Medical Leave Act lets you use 12 weeks of unpaid leave, with your job protected, in any 12-month period. Covered reasons include a child’s birth or adoption or the care of a child with a serious illness.
Unfortunately, not all workers are eligible. Your employer must have at least 50 employees and meet other standards. The Department of Labor tells who is eligible here and, on a separate page, explains how to keep records and claim expenses under the act.
9. Get help for military families
Military families may be able to get help paying child care fees. Child Care Aware points you to what’s available for members of each branch of the military.
10. Turn to your family
Family is the time-honored child care system. If you are lucky enough to have parents or other relatives nearby whom you trust, by all means do what you can to enlist their help.
Share your experiences with us. Have you tried sharing a nanny or joining a co-op, for instance? Let us know in the comments below or on our Facebook page.