Financial Planning for Childcare Expenses: Budgeting Tips for Parents

childcare expenses
Photo by Kelli McClintock on Unsplash

There is no doubt that childcare in the United States is expensive for a child at any age, but even more so for infants.

According to the Economic Policy Institute (EPI), parents in Illinois need to plan to pay approximately $13,802 for just one year of infant care. For many, that is a substantial additional expense on top of everything a child needs.

Planning for childcare expenses and adjusting the budget are two ways to prepare as much as possible. Let’s discuss some options that may be of help.

Start Planning as Early as Possible

It is essential to start planning as early as possible if you will put your child in childcare at some point, even if it is not when they are newborns.

This allows you to develop an adequate plan that works for your budget. Whether you start the planning process before they are born or after, the sooner you start, the better.

Adjust Your Current Expenses

Cutting back on your current expenses could play a big part in establishing a workable budget for childcare. For example, see if you can negotiate a lower interest rate on your credit cards.

You can also cut back on other items, like streaming services, gym memberships, and any other expenses you pay that are not entirely necessary.

Please list all the expenses you currently pay, whether you make the payments manually or they come out automatically from your bank account and start making cutbacks.

Research Daycare Costs Where You Will Be Living

Knowing how much you will have to pay for childcare is essential, but make sure you are getting estimates for the right place.

If you plan on staying in your current location, get an estimate for the state and city you are in. However, if you are considering moving to a different location in another city or another state, get an estimate for that area.

Find Daycares With Flexible Options

Finding a daycare with flexible options, like part-time or drop-in availability, can be a huge benefit for parents who do not have traditional schedules, like first responders.

It is also a good option for those who work remotely and need a completely quiet, distraction-free space to have an essential meeting on certain days. Depending on the pricing, it could be much more budget-friendly than paying by the week or month.

Determine if Remote or Hybrid Work is an Option

If it interests you, find out if your job offers the option of working remotely or doing a hybrid schedule.

It could be an incredibly beneficial option if no daycares near you offer flexible childcare options or if you prefer to have your child home and save some money in the process.

Ask at Work About Childcare Options or Assistance

Many employers, even small businesses, now offer childcare options or assistance to their employees. It can range from vouchers to use toward childcare to offering on-site daycare.

Having a conversation about the available options will also be an opportunity to learn more about taking time off from work after the baby is born. Ask your employer once you tell them about the baby so you can apply the information to your early financial planning.

Ask For a Raise and/or Extra Hours

Both parents should consider negotiating for a raise at work, especially if it has been a while since one or both of you got one. If a raise is not an option right now, hourly workers may want to consider asking about picking up extra hours until the baby is born (and possibly after).

Even a slight increase in income could help with expenses, and it is even better if both can negotiate the raise and/or extra hours.

Calculate Net Income(s)

Calculating the monthly take-home pay from both parents can be an excellent step for determining what you can afford to pay for childcare.

Include funds from primary jobs, part-time jobs, side hustles, and anything else that brings money in every month. Do the calculations after speaking to your employer about a raise and childcare options, so you use updated numbers.

Consider At-Home Childcare

If you have loved ones you can turn to for help with childcare, consider asking them if they would be willing to do it for pay, which would likely be more affordable than daycare.

Even one or more days a week could be a huge help. The option would also be an excellent way for the child to bond with one of your favorite people.

Think About Changing Jobs

For some, changing a job could seem dramatic, but it is an option, especially if they offer perks that your current employer cannot or will not offer. For example, if you can get a remote job that offers a significant bump in pay or a new job near your home provides on-site daycare, the prospect may be worth examining.

As easy as it can be to start panicking over the cost of childcare, the best thing you can do is work on creating a plan. Doing so can help you figure out future steps that can work out better than you could have imagined.

Above all, do not be afraid to ask questions and ask for help. It can make a significant difference for all involved when we are all willing to offer assistance and guidance if and when we’re able.

Sandra Chiu works as Director at LadyBug & Friends Daycare and Preschool.

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