Personal Finance

Affordable Child Care Hacks

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With many parents living in households where both spouses work outside the home, child care has become a significant portion of many budgets. While nobody wants to leave their children in the care of the absolute lowest paying provider, many people are looking for ways to save money on child care expenses. Here are a few hacks to consider if you’re looking for ways to save money on childcare.

Use Dependent Care FSA

One of the best child care hacks is a dependent care flexible spending account (FSA). A dependent care FSA is similar to a Health Savings Account. Both are accounts that are typically offered as employee benefits. A Dependent Care FSA allows you to take out money from each paycheck and not have to pay taxes on it.

You can then use that money to pay for child care throughout the year. A wide variety of different types of childcare are eligible to be paid for with DCFSA funds, so make sure to check the rules and regulations of your account. By paying for your childcare costs with pre-tax dollars, you’re getting a savings of 20-30% or more as compared to paying with after-tax money. 

One other thing that you’ll want to be aware of with a Dependent Care FSA is that many accounts are “use it or lose it” each year. So you’ll want to be conservative with how much money that you put into the account, and make sure that you use all of your funds each calendar year.

Work From Home Or Adjust Your Schedule

Another possible child care hack involves how flexible you can make your schedule. Of course this will depend on your specific employer and job situation, but if you have flexibility with your schedule, it’s possible that you can arrange things to save on childcare. This is especially true if your spouse or partner also has a flexible schedule.

It’s unlikely that you’ll be able to adjust your schedule so that you can both work full-time at home and take care of children full-time, especially if your children are younger. Clearly, that will mean that both your work and home life are likely to suffer. But you may be able to arrange things so that you can trade off with your spouse to reduce the amount of days / hours that you need childcare. 

One idea might be to trade off days where you are working from home vs. being in the office. Or, if you have flexibility with your workable hours, you might work early in the morning with your spouse doing child care in the mornings to trade off later in the day. Experiment with different options to see if any of these options work well for your family. Even one day a week where you can save on childcare represents a 20% savings. 

Consider a Nanny Share

If you’re more interested in working with a nanny but feel like it’s too expensive a nanny share could be a great option for your family. Sharing a nanny with neighbors or friends can be a good way to take advantage of the benefits of having a nanny including a more flexible schedule and more one-on-one attention for your child while also cutting cost.

Look For Family And Friends

Another option is to look for family and friends that might be able to help out. If grandparents live in the area, they could be an option, either as full-time caregivers or as part of your overall childcare strategy. Again, this is something where being able to be a little flexible can help out. Another option to look into might be doing a bartering arrangement with another family where you exchange childcare for another service.

Is It Worth It?

Finally, take a look at your budget and see if going to a one-income household is at all feasible for your unique situation. Of course, in many situations it will not be, but there are hidden expenses to the two-income life that you might not be thinking about. If you are in a household situation where one partner makes significantly more than the other, it may make sense to have the second partner stay at home.

Of course, you’ll almost completely eliminate your childcare expenses if one partner stays at home, but with someone at home full-time, you may also drastically reduce your food budget. Having someone at home likely means that you’ll be able to shop more carefully and eat out less. 

Taxes are another big expense that you can reduce by dropping to one income. With a second income, not only are you paying taxes on your income, but by raising the total household income, you’re likely being bumped up to a higher tax bracket overall. It may not be possible, but if there is interest in having one spouse stay at home, run the numbers and see if it makes sense for you.

The Bottom Line

For families, childcare is one of the largest expenses of your household budget. But if you’re flexible and think outside of the box a bit, you can save some of those costs. If your employer offers it, look at a Dependent Care Flexible Spending Account to pay some of your child care expenses with pre-tax dollars. And if you have a job where you work from home sometimes, see if you can arrange your schedule to help cut down on childcare costs.

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