Trim Childcare Costs

As any parent can attest, childcare accounts for a gigantic chunk of a family’s budget. While it’s not exactly something you can simply cut, there are some things you can do to ease the financial burden. • Family Members: Extended family nearby who are retired and willing to help, even if it’s only a day or two each week, can help you save money on daycare. • Securing Daycare Early: When there are multiple daycare options in your area, do your research well in advance and reserve a spot ASAP. If you wait too long, the best (and, often, most affordable) ones will be full. • Alternating Work Schedules: If either you or your partner has a flexible work schedule, it could be relatively easy to take turns looking after the kids. • Nanny-Sharing: Hiring a nanny can be expensive, but if you share the cost with another family (or two) it could be a cost-effective solution. • Dependent Care Accounts: Look into your insurance options at work. If you have a dependent care flexible spending account, you can normally contribute up to $5,000 annually (married couples/single/ head of household; pre-tax) for childcare costs. For 2021 only, the limit was raised to $10,500 with the American Rescue Plan. • Child and Dependent Care Tax Credit: If you don’t have a dependent care account, you can normally claim up to $6,000 per year ($3,000 per dependent) with the child and dependent care tax credit. For 2021, families can claim a max of $16,000. Visit https://www.irs.gov (search ‘child and dependent care tax credit’) for all the details on what expenses qualify. • Investigate Subsidies: In some cases, childcare subsidies may be available to you through work, school, or military service. This map can direct you to what’s available in your state: https://www.childcareaware.org/resources/map/