Skip to main content

Paying for Childcare

Paying for Childcare Blog image
Free Tools For Understanding Finances Affinity FCU Blog
By: Grant Gallagher
AVP Financial Wellbeing & Brand Communications

January 9, 2024

As a parent of toddler twins, with both of them in daycare, I’m all too familiar with the overwhelming cost, and the stress parents face who are trying to find a childcare solution that fits their budget. The good news is that daycare is not a forever cost, your kids do grow up, and once you can enroll in public school you will get a nice bump to your budget.

When people hear that I have twins in daycare they joke that it's like a second mortgage, and I wish that were the case, because my mortgage is actually less than my monthly daycare payment, and that's with a sibling discount. For families that cannot afford the high cost of daycare there are some options that can be considered.

Government & Private Programs

Many states offer childcare financial assistance, Head Start and Early Head Start, or state-funded pre-K. These programs are all managed differently from state to state, some contracted out and some managed by the state themselves through a Children and Family Services or human services division. A good place to start if you don't know what your state has to offer is start with or your state’s family and human services webpage. Many of these programs have income thresholds, but they can vary by location.

Other options include looking to see if there are any local nonprofits that offer grants or scholarships for pre-K. In New Jersey we have a nonprofit called Preschool Advantage, which funds preschool tuition for 3- and 4-year-old children whose families find it challenging to cover the high cost of preschool. These programs typically also have income thresholds, but can be more flexible than government programs. For example, Preschool Advantage recognizes that New Jersey has a higher cost of living, so their income thresholds take that into account.

Be Shameless and Seek Help Where Available

Look for and ask about any and all discounts possible. Often there are discounts for siblings, first responders, educators, military, and government employees. Even some employers offer discounts to partnering daycares as a benefit.

They say it takes a village to raise kids, well this applies just as much today as it ever did. If you have local family that are home makers or retired, they might be willing to watch the kids one or more days a week, which could save you hundreds of dollars – if not more - a month.

If you have a dual income household truly do the math on what it would cost for one parent to stay home. Don't forget to factor in things like the cost of commuting to the office or what is spent on things like meals or snacks while on the job. Even though my wife is a tenured teacher, when we sat down and ran the numbers it was surprising how close the cost of daycare actually was to her post tax earnings. The reality is if you are living in high tax areas and you need childcare for two kids, if one of you earns $50,000 or less, you are likely pretty close to breaking even from childcare costs. Don't forget to factor in any benefits being received though, as something like healthcare coverage or retirement plan matching can be a significant portion of compensation you're not considering.

If the math comes out close, also consider the benefits to your wellbeing you may be able to take advantage of by staying home and being a full-time parent: no more commute, more time with your kids, and more control over your day and lifestyle. Even if the financial benefit isn't close, some find that cutting back on their budget to be a full-time parent is worth it for the change of pace and stress alone.

This information is for informational purposes only, is intended to provide general guidance, and does not constitute legal, tax, or financial advice. Each person's circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition.