Saving Money

The Ultimate Guide to Saving Money on Child Care

Written by Madison Mazer

As we begin to recover from COVID-19, quality and affordable child care is becoming harder to find. According to a survey, the cost of child care is the highest it’s ever been. Currently, Americans annually spend approximately $28,354 on in-home care, and $9,589 for in-center care, reports the index. This means families are using, on average, 10% or more of their household income on babysitting, nannies, after-school programs, and pre-school costs. 

To really put this price in perspective, in 2019, The Atlantic reported that the average American could buy a brand new Hyundai Elantra every year for what it costs to take care of their kids. 

While trying to keep up with these costs, many parents have been forced to reduce their work hours, change jobs, or even leave the workforce entirely. Although these options could get you some money back on child care, you shouldn’t have to quit your job just to save. 

Follow these seven useful tips for reducing daycare costs without impacting your work. 

1. Compare prices by using online babysitter rates or nanny tax calculators

To budget, and ensure you’ve found the most affordable option for your child care needs, you’ll need to do a little research and number-crunching.

Start with a base-price calculator to determine how much a caregiver like a nanny or a babysitter will cost. To gain a better understanding of your different child care options, you can gauge pay rates by the hour, week, month, or year. You can also factor in other key elements to see how they affect the price, such as how many children you have or how many years of experience your ideal caretaker should have.

For example, a babysitter just starting out may be an affordable option compared to a live-in nanny with many years of experience. Also, some caregivers may offer a discount for multiple children. 

2. See if your employer offers a Dependent Care Flexible Spending Account (DCFSA)

If you have a traditional job with benefits, there’s a good chance that your employer may offer a Dependent Care Flexible Spending Account (DCFSA).

A DCFSA allows you to put pre-tax money into a separate account specifically for child care expenses. The account can allocate thousands of dollars per year, depending on how much you put in and how many children you have. You can then deduct that amount from your taxable income and use it to pay for child care costs.

The money in the DCFSA can help you cover a range of child care costs. According to FSAFEDS, parents with a DCFSA save an average of 30% a year on child services. These permitted costs include summer day camp, before- and after-school care, babysitters, nannies, preschool, and nursery school. 

You can lose the money in the account if you don’t use it by the end of the year, so plan ahead to know how you will spend the money so you can maximize your savings.

3. Leverage tax breaks and credits

If you’re unable to contribute to a DCFSA, take advantage of tax credits that can provide welcome relief for the cost of most child care.

One option is the child and dependent care tax credit, which has been raised this year. The Child Tax Credit is now worth up to $3,600 per child under age 6 and $3,000 per child ages 6 to 17—approximately a $1000 increase from 2020. Another significant change is eligibility for credit. Previously families had to meet a level of income in order to receive funds, but now, even if you have $0 income, it’s possible to get the child tax credit. 

Eligible parents can also start receiving advances on July 15th, 2021, and this will continue till December. So while most tax credits don’t give you a savings benefit until April, you can start getting immediate cost savings with this one.

In addition to federal credits, don’t forget to research what your state may offer in terms of tax credits or breaks.

4. Explore child care subsidies and programs

Subsidized programs are a helpful option for low-income families. States receive funds from the federal government and with that money run free or low-cost child care assistance—aka subsidies. Support services also include Head Start and Early Head Start programs as well as state-funded pre-kindergarten. 

Another option is the Child Care and Development Block Grant. While the level of financial assistance varies by state, it does offer some cost relief for child care. 

Certain people can also get additional child care assistance. There are special support services for Native Americans, Alaska Native families, and Native Hawaiian families. There are also programs like Child Care Aware of America that helps military Service Members who need child care. And others specifically for high school students with children. 

To check your eligibility for these programs and learn more about subsidies and government financial assistance visit

5. Look into NGOs and religious institutions

Call or email houses of worship in your area to see if they have a daycare program, it could save you big-time. Many churches offer low-cost daycare as a part of their ministry and provide high-quality services that are usually significantly cheaper than private daycares. The best part, you usually don’t have to be a member of the organization—or even religious at all—to take advantage of these programs. 

If you are uncomfortable putting your kids in religion-based daycare, nonprofits like the YMCA and Boys & Girls Club are great affordable options.

6. Join a babysitting co-op

Enlisting the help of other parents can be an ideal way to lower child care costs for everyone. The concept of a cooperative (co-op) involves trading babysitting services, so if you have a flexible work schedule this might be ideal. You can work with other trustworthy parents in your local community and trade caring for each other’s children. Ask around in your neighborhood or friend circle to see if you know people who would want to participate, or use a website like and to track down other interested parents in your area.

Besides parent cooperatives, you might also consider employer-assisted cooperatives, which can be used for on-site child care or a facility close to your worksite. The center operates similarly to parent child care but involves financial and labor assistance from an employer. 

7. Host an au pair

If you need round-the-clock child care, the price can quickly skyrocket. However, you can lower those costs by considering the services of a live-in assistant through an au pair agency. 

An au pair is an international caregiver who wants to live abroad for a period of time. The arrangement typically involves some stipend payment as well as food and accommodations in exchange for full-time child care services. Typically an au pair will charge much less than a live-in nanny, so if you have some extra room at home it’s worth considering.

Many of the au pair agencies also offer discounts if you have multiple children or are in the military. Other au pair arrangements can be offset by employer assistance or the aforementioned tax credits. 

About the author

Madison Mazer