On average, parents pay between $9,000 and $9,600 per year on childcare, according to Fortune. In order to be affordable, child care shouldn’t cost more than 7% of a family’s total income, states the Department of Health and Human Services. However, with the Census reporting that the median household income is currently $61,372, it’s clear that families are spending significantly more than 7% on quality care for their child. But, is there a way to cut back on these costs?
Check your FSA & tax credit eligibility
A Dependent Care Flexible Spending Arrangement (DCFSA) provides eligible families the opportunity to save as much as $5,000 on their childcare costs, providing the child is under 13 years of age. An alternative option is the Child and Dependent Care Tax Credit which is granted to eligible working families. If your application is successful, you can claim $1,050 for one child’s care or $2,100 for the childcare of two or more children, so long as they’re under 13. You can only claim one of these childcare benefits, though, so make sure you review which is best for your family before signing up to one of them.
Be smart with borrowed funds
In some states, childcare is extortionately higher than in others. Washington, D.C. takes top space at $22,631 and Massachusetts comes in second at $17,062. In comparison, families in Mississippi pay just $4,822 for their childcare. As a result, some families are choosing to borrow funds to cover their costs. If this sounds like you, then the good news is that there are ways to save cash on your personal loan. Be sure to review your interest rate regularly and switch to a lower fixed one where possible. Additionally, take steps to pay back what you owe quicker, such as rounding your automatic debits up to $150 per month rather than $135.
Flexible working hours are becoming more prevalent in American businesses. In the space of a year, Flex Jobs noted a 17% increase in the number of employers posting vacancies which offered flexible hours. Thus, proving that employers are willing to work to the needs of parents like you. It’s therefore advisable to speak to your employer about the possibility of changing your hours. By starting work later and dropping a couple of hours of daycare per day, you’ll save a significant amount over the course of a month, as long as your partner can pick up your child from daycare at the normal time.
Childcare is a mounting cost for American families. Thankfully, it is possible to cut back on this expense by checking which benefits you’re eligible for, being wise with any loans you use, and by changing the hours you work.