'I spend $5,000 a month on child care': American parents now spend over a quarter of their income on child minding — 5 ways to keep your kids in care without breaking the bank

America is contending with a ‘child care crisis’

U.S. families are now spending on average 27% of their household income on child care, according to a recent report from Care.com, an online venue that connects care-seekers with caregivers.

However, the Department of Health and Human Services considers child care affordable when it only takes up as much as 7% of one’s household income.

“America’s child care crisis is just that: a crisis for the entire country and it impacts us all, whether you have children or not,” said Tim Allen, CEO of Care.com, said in the press release.

“Child care is claiming a disproportionate amount of household incomes, and a decade of rising child care costs should be a wake-up call that the system as we know it completely fails the vast majority of families.”

Nearly 3-in-5 respondents in the survey also said they planned to spend more than $18,000 per child on child care this year.

Here’s the national average breakdown for the different types of services — and how much they’ve increased over the last 10 years:

• Weekly nanny cost: $736 (up 56% from $472 in 2013).
• Weekly daycare cost: $284 (up 53% from $186 in 2013).
• Weekly family care center cost: $229 (up 80% from $127 in 2013).
• Weekly babysitter cost: $179 (up 92% from $93 in 2013)

While there’s not much you can do about these rising prices, there are a few things you can do to offset them.

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1. Look into tax credits

When tax season comes around next year, make sure to apply for any credits or breaks you may qualify for.

For example, there’s a child and dependent care tax credit to help parents cover care for children under 13 while they work (or look for work). The amount of money you’re eligible for depends on how many dependents you have as well as your adjusted gross income. For the 2022 tax year, the maximum amount you could receive was $1,050 for one dependent or $2,100 for two or more dependents.

There’s also the child tax credit — which you can qualify for even if you haven’t paid for care services and your child is under 17 — assuming you fall under the specified income threshold.

2. Get help from family and friends

Consider asking your family or even friends and community members to help look after the kids while you’re working.

According to the Care.com report, 42% of respondents said they relied on relatives for either paid or unpaid support — while others got help from friends or neighbors. Some even moved closer to family last year to make things easier.

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3. Check your employee benefits

Not all employers will offer child care as part of their benefits package, but some offices include on-site daycare centers for a cheaper or discounted price, while a few companies may even offer subsidies for child care services.

You can also ask your HR manager about any other perks or reimbursements that could help you manage your child care costs. Even requesting flexible hours or a hybrid or remote work arrangement could make things a bit more manageable at home.

4. Use your dependent care FSA

Your employer may offer a flexible spending account (FSA) to help cover services like preschool, daycare and before or after school programs.

This is similar to a health savings account, except it allows you to contribute pre-tax money for child care costs specifically.

This will also reduce your taxable income, since the funds are taken out of your paycheck before your pay is taxed. For 2022, the contribution limit is $5,000 for single filers and couples filing jointly and $2,500 for married couples filing separately.

5. Apply for state financial aid

Your state may also provide certain vouchers or subsidies to help low-income families afford child care. Check the Childcare.gov site for resources and eligibility requirements where you live.