The Cost of Daycare: What Do You Spend?
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A couple of months ago on Corporette, we discussed how much you should spend on housing costs, and today we’re going to talk about something that often looms just as large in the minds of working moms: the cost of daycare. Lately, the news seems to be full of articles about the cost of daycare (e.g., “U.S. Parents Are Sweating And Hustling To Pay For Child Care,” NPR), so we thought this would be a great time for a discussion. How much are you spending on daycare? Is the cost of daycare more than you expected?
We’ve talked a lot about childcare over the years, including the general pros and cons of different childcare arrangements, backup childcare strategies and how to find childcare for a sick kid. We’ve talked about nannies (the logistics of a nanny share, how detailed to be for a nanny job listing), shared tips on how to manage au pairs, and daycares (including general daycare tips for working moms, daycare waiting lists, whether a great daycare is near home or near work, safety policies at daycare). We’ve even talked about how to level up your childcare when money is no object, working moms’ tips on using grandparents for childcare, and the pros and cons of granny as nanny.
How Much You Should be Budgeting for Daycare Costs
For a quick review, the recent Corporette post covered the 50/20/30 rule for budgeting, which recommends that you spend no more than 50% of your take-home pay on fixed costs, use at least 20% for saving money and reaching your financial goals, and spend no more than 30% of flexible costs. How does the cost of daycare fit into the ratio? In the comments on the post, several readers shared their childcare numbers, and their responses ranged from 10% of their take-home pay to 30% (for a child with special needs). The average childcare spending among readers who shared information was about 18%.
The Real Cost of Daycare
The Care.com Cost of Care survey found some striking statistics:
- “54% of families said they spend more than 10% of their household income on child care — and 1 in 5 said they spend a quarter of their income or more.”
- “21% of respondents say they’ve waited to have children specifically because of child care costs. This statistic increases to 26% for millennial parents.”
- “More parents (74%) are budgeting for child care costs — 92% of them even started budgeting while they were pregnant!”
Signing up for a dependent care flexible spending account through your employer can help a bit. Here’s the simplified version: Each year, a household can contribute up to ,000 to a dependent care FSA for daycare, after-school programs, and summer day camps (not sleep-away camps) in order to pay with pre-tax dollars. You need to submit claim forms to be reimbursed for all of the funds by the end of the plan year or you lose anything left in the account.
What is the cost of daycare for your family, either as a dollar amount or percentage of gross or take-home pay? Do you have a dependent care FSA? How much was cost a factor in your choice of childcare: nanny, au pair, home-based daycare, daycare facility, family members, etc.? How has it affected your job or career decisions?
Further Reading:
- 5 Steps to Create a Child Care Budget [Care.com]
- Choosing Child Care: What New Parents Should Know [NerdWallet]
- Daycare Costs — 9 Ways to Save Money on Childcare Services [Money Crashers]
- The Ins and Outs of the Child and Dependent Care Tax Credit [Turbotax/Intuit]
- Filing Tax Form 2441: Child and Dependent Care Expenses [Turbotax/Intuit]
In Idaho I pay $400/month for daycare
I live and work in central MO. I pay $500 a month in childcare costs for my daughter.
1.5 hours north of Seattle, we pay about 12% of our gross pay in childcare for three kids age 4 and under in full time care. This amounts to about 20% of our take-home pay.
I will have baby #4 in April, so my MIL is moving to our town to live in our rental house and care for our kids in our home. I will pay her $1000 a month on top of covering her housing costs. This will keep us at about the same monthly cost despite adding another child. I am so hopeful that it will work out.
Anchorage, AK. We pay around $1,200/mo for 2 kids in a full-time military daycare. The center has a sliding scale for cost, but we pay the highest rate given our incomes. Center is open M-F 6-5:30 and provides all meals and formula. By comparison, our mortgage is around $1,600. We’ll be looking at charter schools or public schools when the time comes, and I may reduce my hours to be home in the afternoon. I can work from home, but am uncertain how much I’d actually get done with the kids there.
I did look into in-town daycares, but they cost a lot more and had less convenient hours. My husband works on base and can easily do drop off and pick up when he’s not traveling. When he’s gone (like now), I suffer a bit handling all transportation alone, plus work and house care. I do not have any family near by to help.
St. Louis–$840 a month for a 3-year-old. When she was an infant, it was $1,160 a month; when she was a toddler, it was a little less than $1,000. Our mortgage is just over $1,000 so as you can see, daycare has cost us both more than our mortgage and almost as much now. The upside is that the daycare/preschool is amazing. Still, hoping to get her into a free public school pre-K next year. We’ll still, of course, have to pay for after school care/summer camp, but that will be peanuts compared to what we pay now.
Chicago – $1500/month for a 2 year in the city. Was $2000 until he was two. We have #2 coming in March so starting in May we are looking at about $3500 month (10% second child discount plus increased tuition since #1 was an infant = wash) for two.
We live in Western Wisconsin but basically a suburb of MPLS/St. Paul. H and I both commute to the Twin Cities for work. We pay about $2,800/month for an infant and 4-year-old in a full-time center, part-time church preschool for the 4-year old 2 mornings a week, and before/after school care for our kindergartener. It was about 20% of our take home pay last year before a recent career change. This doesn’t include add-ons like soccer at daycare or school release/snow days for our kindergartener, or summer camps for her. It seems like our school district has early release or late start at least twice a month and a random day off a month, and those days are about $45 each at the school age care program.
We’re paying full-time daycare plus the part-time private preschool for our just-turned-4 year old because our district is one of less than 10 in our state without a 4k program. The only way to get a shot at one of the coveted all-day pre-k programs at our NAYCE-accredited church preschool is to be a “currently enrolled family” to get a one-hour jump on enrollment. So, we’re paying extra this year and running around like crazy just to give her an advantage by being in the part-time program this year. I can’t wait for the Black Friday-style enrollment day, which is of course held in the dead of winter. I’ve heard I have to get there by 5am just to have a chance. The things we do for our kids…
I am in a LCOL city in the Southeast. We pay $950 per month for one infant. The prices decrease, but not by much, as a child’s age increases.
I am terrified of the costs of summer camps, etc. when our little one starts school.
We have done every childcare arrangement out there (day care, in home care, nanny and au pair). Our current set-up is an au pair plus preschool. The out-of-pocket for the au pair is about 1600 per month, but that does not include the increase in car insurance, gas, extra cell phone, food, etc. Preschool is 415 per month for three mornings per week. Before our au pair, we had a full-time nanny and paid about 3000 per month for her, which included the fees paid to the agency to take care of taxes, taxes and the overtime for hours in excess of 40. We are in New England.
I have an 18 month old in a corporate daycare 3 days a week (MIL watches him the other 2 days). $1424 a month, meals and snacks included. In a few months I’ll also have an infant in a similar center down the road, about $1800 month. So around $3200/month for two kids, Boston suburbs so definitely HCOL area. Our daycare costs will be about 35% of my husband and my take home pay, which is frightening to type out, but we’ve somehow managed to fit it into our budget. We’re really happy with the care and education our son is getting, so it’s worth it to us.
In 2017 we’ll pay about $4500/month for 3 kids (middle one is moving out of the 3:1 classes and tuition gets significantly cheaper. Yay!). Maryland side of close-in DC suburbs in a nonprofit center, hours are 7-6, food is included, cost reflects a sibling discount. count me among those parents in the first statistic; we spend almost 20% of our salaries (not including bonuses) on childcare.
I wouldn’t say it’s substantially impacted our career decisions, since we’re fortunate to have well-paying jobs with good work-life balance (I did cut back to part time temporarily after baby #2, but am now full time again in a more flexible office). Cost isn’t the biggest issue for us in choosing our childcare, either. I’m sure we could have a nanny or host a share for less, but we really love our center and think the social environment there is good for our older kids. Also, as I’ve mentioned here before, we did not have a good experience with our nanny a couple years back. Childcare cost definitely does influence the size of our family, though. Not the sole determining factor, but probably the tipping point in favor of stopping at 3.
It’s a depressingly large chunk of money, and the dependent care FSA doesn’t make much of a dent.
In Chicago – pay about $3000/month total for 2 toddlers in a technically home-based daycare, but run more like a little center or school and we LOVE it! It’s twice what we pay for our (admittedly very reasonable) mortgage. It’s about 25% of our take home pay, but almost exactly equal to what my husband’s take home pay is.
In Toronto (Officially in the city but a former suburb) currently paying a nanny $15/hour. However, we will soon be switching to a daycare. Not-for-profit daycares are not uncommon to find. Ours is a co-operative and will be about $1200/month. They only start taking kids at 18 months. Hours are 7-6, food is provided. We are very fortunate for the option. Toronto is otherwise a very HCOL city- average price for a detached home is now over $1 million.
We pay $1950 a month in a midsized New England city for one kid in infant/toddler care. That’s more than our mortgage and 17% of our gross income. That is significantly more expensive than if we were willing to drive kid to the suburbs (there, it’s probably around $1200 a month.) But we work downtown and there are few in-town options.
Minneapolis here — we pay around $3200 for a pre-schooler and a 15-month old. Full-time M-F. Includes all lunches, and some “add-ons” for the older one (soccer, field trips, etc.)