Economic Policy Institute reports that the average cost of providing center-based care for infant care in the U.S. is $1,230 per month. The annual cost in California is $1,412 a month—almost half the median income of a single parent. The federal definition of affordable childcare places costs at 7% or less of annual household income. The cost of center-based infant or toddler childcare does not meet this definition in any state, making childcare prohibitive for some.
Now, thanks to passage of the American Rescue Plan Act (ARP Act) of 2021, the childcare sector will receive more than $50 billion in direct relief funding. This bill, based on President Biden’s historical American Rescue Plan, set aside $39 billion in desperately needed childcare relief funding, including tax credits, tax breaks, and subsidies for families.
Of the $39 billion included in the ARP Act, nearly $15 billion will provide expanded child care assistance through the Child Care and Development Block Grant (CCDBG) for dependent care, including supporting the childcare needs of essential workers during the coronavirus pandemic. The remaining nearly $24 billion creates a stabilization fund for eligible childcare providers.
Even with this assistance, budgeting for full-time childcare will be challenging. To help, some employers such as Patagonia, Apple, and Google, are stepping up to offer onsite day-care centers for employees or to pay for daycare costs if an employee’s first childcare option falls through. New early childhood startups such as Vivvi offer employer-sponsored childcare. And Wonderschool, an Airbnb for daycare, helps neighborhoods launch childcare centers and home daycare. But if human resource services at your place of employment don't offer programs like these, here are three ideas for you to consider:
If you have family nearby, the easiest way to reduce childcare expenses is with full-time or part-time relative care. And although you should always offer to compensate them, the cost will likely be less than what you’d pay at a daycare center. Another perk? A family member might be able to adjust their schedule to your needs, while a contracted caregiver might charge additional fees.
Whether it’s with another family in the neighborhood or someone from your baby group, trading babysitting services is a cheap option that gives the other parent a break—for free. Here’s how it works: one of the other parents comes over to your house to watch your kids while you go out, and then you return the favor at another time. A nanny share and an au pair are also great options for working parents to save money.
A little more organized than trading one-for-one babysitting services, this option takes effort to get started and works better when more families are involved, but it's worthwhile once it is up and running. Families earn points for babysitting another family’s kids and in turn, they can spend those points on childcare services from the group. And while you can use the services at night, depending on your child's age, it’s fun for the kids to have playdates together which sometimes means less work for the parents.
The cost of childcare has the potential to absorb a large portion of a family’s personal finance, but with a little resourcefulness, you can save money. You’ve got this!