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Child Care

Child Care Financial Considerations

Kathryn Patricelli, MA

Factors in the Childcare Decision

3D figure shaking piggy bankAs parents think about their motivations for providing care to their child, they must consider many factors. These include financial considerations, career issues, emotional considerations for both the parents and the child, and the development and socialization of the child. For example, the type of developmental and social opportunities that parents desire for their child must be considered. Some parents want their child to be part of a larger group and gain experiences from interacting with other children. Others desire a smaller setting where their child will receive more one-on-one attention and skill building. Parents must also consider what they desire for themselves. Some parents desire to continue their careers while others feel that the ability to be a full-time or part-time caregiver for their child must take priority over their career during their child’s early years. There is no one solution that fits all situations. Instead, each family must find a caregiving solution that fits their unique needs, desires and resources. The many variables that affect the childcare decision are described in some detail in the following discussion.

Financial Considerations

If the family chooses to use some form of day care, they will most likely be required to make a weekly payment to the provider. Rates vary depending on a number of factors, including the area of the country, whether the setting is metropolitan or rural, the type of care chosen, and the number of care hours needed.

Some families choose to use nannies or au pairs for child care duties, locating suitable persons for such positions through agencys, or in some parts of the country, by hiring an undocumented worker. Other families choose to have a friend, relative, or neighbor provide care. Rates in these types of settings will vary not only depending on the area of the country, but also on the individual agreement made with the caregiver in terms of salary, benefits, or housing. There is more flexibility in agreeing on a rate in such informal settings, but generally a live-in nanny will earn an average of $550-700 per week. In addition, benefits can include paid health insurance, use of a family car, two weeks paid vacation per year, and all major holidays off and paid. A live-in nanny will also receive room and board.

Rates for family care providers in the United States vary depending on the area of the country. However, the typical rates for one child is typically in the range of $25-60 per day. However, in some parts of the country, this figure can be much higher. The total cost is also affected by the number of hours for which care is needed and the number of children that the parents are placing in the care situation.

The average annual cost of full-time infant care also varies greatly by location.  For example, data from Child Care Aware shows that Massachussets is one of the highest at $16,430, New York is $14,939, and Minnesota is $13,876, whereas Mississippi is $4863, Alabama is $5467 and Louisiana is $5574.  In the middle are Maine at $9360, Nevada at $9608 and Wisconsin at $9939. 

Data from the Canadian Centre for Policy Alternatives shows that Toronto comes in the highest at $20112, Vancouver is $14580, Calgary is $12,600, and then on the lower end, Edmonton is $10,800, and Winnipeg is $7812.

The cost of childcare is often one of the biggest variables in the decision regarding childcare. Families desiring childcare must first decide if they can afford it. Those parents who do not have a great deal of disposable income must balance the value of the income they produce against the cost of purchasing care. Care costs can be expensive. As some consider the costs involved, they look at whether that payment makes sense or whether one parent will end up working simply to pay the childcare bill. Particularly when a family has to provide care for multiple children, it can easily be the case that the costs for professional care actually exceed parental income. When this is the case, families often consider whether it is feasible and desirable for one parent to stop working and remain at home with the children. While this option eliminates the childcare payment, it also reduces the income available to the family to pay bills and support the child. Ultimately, however childcare is arranged for, the cost of that childcare, measured either in terms of the cost of paying for professional care or in lost income, must balance out in the family budget or financial trouble will result.

Families come up with a variety of ways of making childcare feasible (whether they pay for that childcare in cash, or in lost income). For example, parents who forgo income to stay home and take on a caregiving role are sometimes able to find work-from-home opportunities that allow them to contribute to the family income. Sometimes it is possible for one parent to arrange with his/her present employer to telecommute (work from home) for part or all of his/her hours. Alternatively, the parent may accept employment working from home for a different company or in a different career area. The Internet has opened up a variety of possibilities for work-at-home opportunities that the enterprising parent can consider. Finding appropriate arrangements and positions can be challenging, but they can be worth considering when making the childcare decision.

If the family income decreases as a result of the need for childcare, the family can choose to create a new budget and reduce spending in order to meet the loss of income. This reduced spending can occur in a variety of ways. Some families will determine that the price they are currently paying for housing is no longer affordable and will choose to move to a different area or seek a smaller house/apartment in their current location. Families also reduce spending by not eating meals out, packing lunches to take to work, disconnecting cable television or Internet services, canceling news and magazine subscriptions, not buying new clothing or household items regularly, and reducing monies allocated towards entertainment needs, including not going out to movies or renting DVDs/videos and not purchasing electronic items.

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