With many parents living in households where both spouses work away from home, childcare has become an integral part of many budgets. While no one wants to leave their children in the care of the absolutely lowest-paid provider, many people are looking for ways to save money on childcare costs. Here are a few hacks to consider when looking for ways to save money on childcare.
Use Dependent Care FSA
One of the best childcare hacks is a Flexible Dependent Care Spending Account (FSA). A dependent FSA is similar to a health savings account. Both are accounts that are typically offered as employee benefits. A resident FSA allows you to withdraw money from any paycheck without paying tax on it.
You can then use this money to pay for childcare all year round. Various types of childcare can be paid for with DCFSA funds. Therefore, find out about the rules and regulations of your account. If you pay for your childcare costs with pre-tax money, you save 20-30% or more compared to paying with post-tax money.
Another thing to keep in mind about a dependent FSA is that many accounts "use or lose" each year. So you should be conservative about how much money you put into the account and make sure that you use all of your balance each calendar year.
Work from home or adjust your schedule
Another possible hack for childcare is how flexible you can be with your schedule. Of course, this depends on your specific employer and your professional situation, but if you are flexible in terms of time, you can save on childcare. This is especially true if your spouse or partner also has a flexible schedule.
It is unlikely that you can adjust your schedule so that you can both work full-time at home and take care of children full-time, especially if your children are younger. Of course, this means that both your work and personal life will suffer. However, you may be able to arrange things so that you can compromise with your spouse to reduce the number of days / hours you need childcare.
One idea might be to balance days you work from home with those in the office. Or, if you are flexible with your working hours, you can work early in the morning with your spouse, who will take care of childcare in the morning to compensate for later in the day. Experiment with different options to see if any of these options work well for your family. Even one day a week when you can save on childcare, you save 20%.
Consider a nanny share
If you're more interested in working with a nanny but feel like it's too expensive, a nanny stake could be a great option for your family. Sharing a nanny with neighbors or friends can be a great way to take advantage of a nanny, including a more flexible schedule and more one-on-one care for your child, while reducing costs.
Looking for family and friends
Another option is to look for family and friends who may be able to help. If grandparents live in the area, they can be an option, either as full-time caregivers or as part of your overall childcare strategy. Here, too, it can be helpful to be a little flexible. Another option that you should consider could be a swap deal with another family where you swap childcare for another service.
Is it worth?
Finally, take a look at yours budget and see if moving to a household with an income is even feasible for your particular situation. Of course, in many situations this won't be the case, but there are hidden costs of living on a dual income that you may not be thinking about. If you find yourself in a household situation in which one partner earns significantly more than the other, it can make sense to leave the second partner at home.
Of course, having a partner at home will save you almost all of your childcare costs, but having someone home all day can also drastically reduce your food budget. Having someone at home means you can probably shop more carefully and eat out less.
Taxes are another huge expense that you can reduce by cutting down on an income. With a second income, you not only pay tax on your income, but by increasing the total household income, you are likely to be raised to a higher tax bracket overall. It may not be possible, but if there is interest in having a spouse stay home, do the numbers and see if it makes sense for you.
The bottom line
For families, childcare is one of the largest expenditures in your household budget. But if you're flexible and think outside the box, you can save yourself some of those costs. If your employer offers this, consider a flexible dependent care expense account to use pre-tax dollars to pay off some of your childcare expenses. And if you have a job where you sometimes work from home, see if you can schedule your schedule to cut childcare costs.
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Dan Miller (74 posts)
Dan Miller is a freelance writer and founder of PointsWithACrew.com, a website that helps families travel for free / cheap. His home base is in Cincinnati, but he tries to travel the world as much as possible with his wife and 6 children.