What is the average cost of daycare?

In recent years, one of the hardest parts of becoming a parent is financial. The cost of child care, one report says, is one of the biggest items on a family’s monthly budget. With the national average cost of $9,900 annually, the expense of child care comes in higher than the average costs associated with housing, food, and transportation. According to a report by the Child Care Aware, the average cost of child care is more than that of a four-year public tuition in all states.

That means if you’re in a household of two working parents, it’s important to understand your affordable child care options and other ways to keep costs low.

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Understanding Local Differences in Daycare Affordability

Each state differs in the cost of child care as costs depend on provider type such as in-home/family child care or center as well as age range (infant, toddler). Affordability is often looked at the cost against the family income of that local area (the price of care as a percentage of income). For instance, as reported by Child Care Aware the typical cost for infant family child care in the District of Columbia exceeds that in Nebraska ($18,425 compared to $10,660). However, when these costs are evaluated relative to the median income of married couples with children, Nebraska emerges as the less affordable option. This disparity arises from the higher median income present in the District of Columbia compared to Nebraska.

Finding Affordable Daycare in High-Cost Living Areas

Ways to make daycare more affordable

There are a few options to help make daycare more affordable. We explore a variety of options from tax credits, to employer solutions to evaluating in-home care options.

1. Government assistance
2. Tax credits and deductions
3. Employer benefits
4. Local resources and community-based programs
5. Homeschooling and in-home daycare options

Government Backed Daycare Options

To help parents out, some government agencies have taken steps to address the high price of child care. You can find benefits from both Federal and State levels. Each state, for example, receives federal funds to help subsidize child care and other forms of financial assistance for low-income families. You should also take the time to look into whether you and your child meet the requirements for Head Start and Early Head Start, a program launched in 1965 by the United States Department of Health and Human Services that provides early childhood education and parent services. Also, more and more states are acknowledging the importance of early childhood education and offering free public kindergarten and pre-kindergarten, so you should research whether that is something your state offers.

There are options for military members and the Department of Defense. To learn more about subsidies and offers available under military family assistance, see the fee assistance details on Child Care Aware.

Utilize Tax Credits that Offset Daycare Costs

One thing to keep in mind when planning for your child care arrangements is that, while expensive, there are tax benefits associated with going this route. The Child & Dependent Care Credit is meant to help reduce the cost of child care for many families with working parents or those caring for a relative who can’t care for themself. Before counting on this money, though, it’s important that you understand what types of care qualifies, how the credit is calculated, and that it will require you to pay for child care upfront.

Utilize Employer Benefits for Daycare Cost Reduction

Some employers offer benefits for daycare cost reduction. Ask your employer if they offer assistance. There are a multiple ways that employers can provide assistance:

• Offer partnerships with local providers at a discounted rate
• Provide child care finding services
• Partner with programs to offer back-up care
• Offer workplace flexibility whether it be flexible work schedules for you or work from home options
• Flexible spending accounts where you can set aside a pre-tax dollar amount for eligible childcare expenses

Tap into Local Resources for more Affordable Daycare Solutions

You may be able to do part-time daycare within a in-home or center, and use community-based programs to fill in the rest of your schedule. Often community centers, non-profits and the like offer affordable daycare services for part-time care. This does require more scheduling and coordination, but it can provide some financial relief. Consider connecting with other parents in your community or at these centers as a way to learn more, share in drop-off and pick-up times and coordinate care can help you find a solution as well.

Beyond facilities that may offer more affordable solutions, some local organizations and non-profits offer grants and scholarships to families based on need. Reach out to your local Child Care Resource & Referral Agency (CCR&R) for information.

Explore Homeschooling and In-Home Childcare for Affordable Care

One option to consider in your attempts to keep your costs and anxiety low is to go with a child care option that is based at your own home (homeschooling). With this option, you can become your child’s caretaker, a move that will amount to a flexible and fulfilling career, or become a director of a homeschool and hire someone else to do the teaching in your home. To many, this became an appealing option during the pandemic, and there are a number of resources to help you get started with a business plan. You may end up learning that you like the control and freedom of this new endeavor. You are your child’s parent, after all, and you know that your home is a safe place, so why not take matters into your own hand? At first, this might seem like a big undertaking, but there are a number of ways to keep costs down by going this route.

Another great option is in-home childcare which is care provided at the provider’s home. In-home child care can be more affordable than larger centers as they are run out of a home and have more flexibility in pricing. They also offer very similar experiences, curriculum and developmental opportunities for your child. Your child can benefit from smaller class sizes, more individualized learning possibilities and a tight bond with other children in care.

Lastly, if you have more than one child in care, some places offer discounts for siblings. Make sure to ask providers about reduced rates throughout your search.

Find the Most Affordable Daycare Options in Your Area