Kids and Summertime Dreams
Four tips to reduce child care costs
With our recent unseasonably warm weather I have moved my “office” to the deck that overlooks my backyard. As I tipped my head back to soak up the sun, I relished visions of warm summer days lounging next to a pool with my foot dangling in the water. My heart filled with joy as I imagined the laughter and fun emanating from the hearts and souls of my children. Then it happened, reality splashes me in the face. Not with the warm embrace of the sun’s summer rays, but a cold rush of anxiety about child care and my kids. Although the idea of spending a carefree summer with my little people brings joy to my heart, it also can bring pain to my wallet.
HOW MUCH WILL SUMMERTIME CHILD CARE COST?
According to a recent study by the U.S. Department of Health and Human Services, families should consider allocating up to 10% of their household income for child care. ChildCare Aware found that in Washington, DC (which is home to the highest child care costs in the nation) it will cost over $22,000 for an infant in a day-care center. And if you look to invite a caregiver into your home, it will cost between $14,000 and $16,000 per year, depending on the age of your child or children. And when you consider that the median DC household income averages around $75,600 a year, many families could potentially pay more than 25% of their monthly income on child care expenses. The scope of these costs can present a significant dilemma for all parents. For many parents, particularly mothers, some chose not to work because their family financial math did not add up. In other words, many mothers do not work because the cost of child care easily outpaces their potential salaries. In fact, as I canvassed the other parents in my neighborhood who were also enjoying our pleasant February weather, I found that those that worked full-time outside of their homes budgeted as much money for child care as they did for their mortgage!
WHAT’S A PARENT TO DO?
Although there is no single solution that will render the reality of child care costs to an idyllic summer dream, there are a number of choices a family can make to address this challenge.
1) REDUCE HOURS OF CARE
One of the best ways to deal with the challenges of significant child care costs is to reduce the numbers of hours your family will need for child care. Working parents can stagger the hours that they work. More and more careers offer the flexibility to telecommute, another flexible solution to managing your family’s child care costs. There are even other creative solutions, to include taking “vacation” days at different times so that a parent is always home. Some families might even consider taking a leave of absence or working on a reduced schedule for a limited amount of time. Although many ways to reduce the number of hours might not be viable options for every family, taking the time to brainstorm different ways to reduce the hours of care a family needs still serves as a productive exercise to see what you could and would be willing to do.
2) REDUCE THE COST OF CARE
After considering the myriad options to reduce the amount of time you require child care, the next important step is to attempt to reduce costs. Could you ask a friend or a neighbor to watch your children for a period of time? Do opportunities exist to create a neighborhood kid-sitting co-op? Could a relative come and stay with you for the summer (living in DC does offer tourist-minded relatives with a win-win situation if they are willing to take your kids with them as they see the sights of our nation’s capital). Likewise, does your neighborhood offer opportunities to cut child care costs in two by developing a “nanny-share” program? Perhaps hiring a “Mommy-helper” in the guise of a “tween” aged young adult can keep your kids entertained as you telecommute. And for others, the traditional route of hiring an au pair or live-in nannies earning an average of $550 - $700 a week – could also present cost-saving options for your child care. For households earning less than $75,000 annually, check if you qualify for a subsidy with non-profits like Child Care Counts.
3) ASK FOR HELP – FROM YOUR EMPLOYER & YOUR GOVERNMENT
If you are searching for innovative solutions to fund your child care needs, you can expand your search beyond your neighborhood. For example, the IRS might be able to cover some of your costs. Although intricate and complicated, a combination of employer programs, tax brackets, and how much you pay for your child care determine whether you can save hundreds or even thousands of dollars on your taxes. First, inquire if your employer has a Dependent Care Flexible Spending Account (FSA). In this program, money from your paycheck is automatically deducted before taxes and deposited into a FSA for child care costs. Although the IRS limits contributions to no more than $5000 per year, it can offer savings. Second, the Child and Dependent Care Tax Credit (CDCTC) serves as another great option. The IRS allows an income tax credit of up to $3,000 for one dependent or up to $6,000 if you have two or more dependents.The amount of the credit is based on your adjusted gross income and applies only to your federal income taxes. The credit is a percentage of your allowable expenses, ranging from 20% to 35%, depending on your income.
4) BUDGET WHAT YOU NEED
No matter what option you choose, it is imperative to budget the funds that you will need for child care. If necessary, take a hard look and re-evaluate where your funds can shift to cover the costs of child care. And as you budget, do not forget that summer offers a multitude of free entertainment options that can create additional budgeting opportunities that can help all families align financial spending with their family’s values.
Reducing the high cost of child care will require organization, research, and discipline to take advantage of benefits available to you. But that extra work will pay off when your paycheck is not entirely consumed by childcare costs. And that summertime reality might be the best summertime dream around. Contact us at email@example.com and we’ll work with you to get your summertime reality to a summertime dream.