My family is going through something right now that I’m going to affectionately call the Daycare Gauntlet. Maybe you’re familiar with this time in life? It’s temporary, thank goodness, but we have two young kids, they’re both in daycare, and you know what? Daycare isn’t cheap.
Technically, my son goes to a daycare and my daughter goes to a preschool, but for this discussion, they’re effectively the same thing. We’re fortunate that my children attend, I believe the cheapest daycare in town (though with a fantastic reputation).
It’s still incredibly expensive.
One kid costs $150 per week, the other costs $220 per week. That’s $370 each and every week for child care. That’s $19,240 per year. Let’s call it $20,000 per year, because that’s close enough.
If I had my way, I could do a lot with $20,000.
I was listening to a well known financial radio show a year or so ago and someone called in asking how to handle the high cost of daycare. They were in a similar situation, paying roughly $25,000 per year. The host made some dismissive comment about what is this person paying for? College for their toddler? It made me mad. Clearly this radio personality had not actually paid for child care in a very long time.
There’s no escaping the fact that childcare, daycare, preschool, it’s expensive. I don’t want to spend this whole post complaining about it, because it’s just the way things are. Those educators deserve to get paid a living wage, and I’m happy to help.
If you’re in this situation with me, know that I see you. It won’t last forever, and you can get through it. The question is how?
For some families, the answer is that one partner will leave the workforce and stay home. If this is what makes sense to you, then of course you should do it. We decided against this for a couple reasons.
- The Daycare Gauntlet does not last forever. Eventually your children will go to school, and that shouldn’t cost nearly as much as daycare, particularly if you’re using public schools. It’s not free, of course, especially if you need after school or before school care, but it should cost significantly less than full day coverage. If you take five years off from a career to watch your kids until they go to school, you might find it challenging to re-enter the workforce at the same level you left. The ripple effects from that might last the rest of your career.
- Interaction with other kids during the daycare years is crucial to their development. I’ve seen this first hand with my own kids. My daughter had a classmate at daycare when she was an infant. His parents chose to take him out of daycare to stay with a relative during the day, and now, three years later, he’s back in preschool. The difference in growth between my daughter and her classmate is noticeable, and I think it’s because she’s stayed in daycare the entire time.
If you’re not going to stay home, what else can you do? Well, if your employer offers a daycare FSA program, absolutely take advantage of it to the fullest. A daycare FSA allows you to pay for childcare with pre-tax dollars. This can save you thousands of dollars per year.
How it works is pretty simple. This is my situation:
- Every paycheck, my employer deposits pre-tax dollars into an FSA account.
- We pay for daycare out of pocket.
- We submit receipts from daycare to the FSA administrator, who reimburses us from our FSA account, effectively paying for daycare with pre-tax dollars.
Just Get Through
The last thing I can think of right now is not something I’m excited to say. It feels a bit like giving up, but there’s just no way around the cost of daycare. It’s expensive, and there’s only so much money in the budget. You may need to cut spending elsewhere temporarily to pay for daycare.
It’s also not forever. My wife and I tell each other this all the time. This isn’t forever. The kids will be in school, that daycare money will be freed up and can be allocated somewhere else in a few years. We just need to get through it.
These years are hard. There’s no denying it, but do whatever you can to get through them. They won’t last forever. Good luck.