Starting a Family

Afford Childcare with These Financial Strategies

When you find the right caretaker for your infant or toddler, it makes you feel good about the choices you’re making for your family. Yet, whether you rely on center-based care or in-home care, the choice is likely to take a big bite out of your household budget.

Care for babies and toddlers is expensive because the youngest children require the most hands-on care. The average cost of center-based daycare for infants in 2011 ranged from about $4,500 per year in Mississippi to nearly $15,000 per year in Massachusetts, according to a study released last year by Child Care Aware® of America. For a four-year-old, full-time care in a center ranged from $3,900 to $11,700 a year.

The study found that the cost of center-based infant care exceeds the cost of college in 36 states.

The good news is that parents have a variety of options and price points when it comes to childcare. Here are a few of the best options that you can choose from:

Child-care homes

For infants and toddlers, early childhood development experts, including the National Institute of Child Health and Human Development, recommend care in small groups where there is a low adult-to-child ratio. These often include in-home care and home daycares. In these settings, children often receive lots of individual attention and can build a relationship with the caregiver. According to Child Care Aware, the cost of care in a family child-care home for an infant ranges from about $4,500 to $10,400 a year.

Au pairs

An au pair is someone from a different country who comes to live with you and shares responsibilities for childcare for an average of $350 a week, according to Au Pair Care. An au pair is not the least expensive option, but he or she provides the benefits of live-in care, as well as bringing another culture and potentially a second language to your child.


For 30 percent of mothers who work and have children under the age of five, grandparents are the primary providers of childcare. If your parents or in-laws live nearby, this may be an option for you. Disney-owned BabyZone—which includes articles from pediatricians and childhood development professionals, as well as reader-written blogs—recommends talking openly with your parents about all aspects of the arrangement, including payment, upfront.

Financial assistance

Here are some ways you may be able to offset some of your childcare costs:

  • Tax credits: Parents can benefit from federal and state tax programs including the Earned Income Tax Credit, the Child Tax Credit, the Child and Dependent Care Tax Credit, and Dependent Care Assistance Programs. To learn more, view Child Care Aware’s brochure here.  
  • Dependent care flexible spending account (FSA): An FSA through your employer allows you to pay for childcare expenses using pre-tax dollars, thereby reducing your tax liability.
  • Employer childcare: Some employers, including Meridian Health, Google and Publix Super Markets, offer in-house childcare facilities for employees' children.
  • Work schedules: When this option exists, some families can avoid childcare costs altogether: One parent works days, the other nights or weekends, so someone is always around to watch the children.

When it comes to childcare, cost is a secondary consideration after the safety and well-being of your child. But when your childcare decision takes your finances into account, it can decrease money-related stress and help you feel confident about your financial path.

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.