6 Ways to Save on Child Care Costs


As a working mom, few things frustrate me more than feeling like every cent I earn goes straight toward paying someone else to raise my child.

And I’m not alone: A new study shows that even in this weak economy, child care costs are rising through the roof. According to Child Care Aware of America, in 36 states the average annual cost of having a kid in daycare now exceeds in-state college tuition.

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In all 50 states, having two kids in daycare exceeds rent. The worst offenders? New York, where parents cough up $14,009 per year for an infant (it’s also where I live, so I feel this pinch personally), followed by Minnesota, Oregon, Colorado, Hawaii, Kansas, California, Illinois, Massachusetts, Indiana and Wisconsin.

Aside from moving to Europe (where governments actually pay parents to have kids), I figured there wasn’t much I could do to lower my child care costs. But after doing a little research I was pleasantly surprised to find out I’m wrong. Here are a few tips on trimming this expense, many of which I’ve cashed in on myself.

1. Take a Tax Break

The IRS offers tax breaks to working parents in the form of a Child and Dependent Care Credit, which reduces your taxable income. Anywhere from 20-35% of your child care costs may qualify, with a cap of $3,000 per child and $6,000 for more than one child. Find out exactly how it works here in our Knowledge Center, and be sure to ask your accountant if you qualify.

RELATED: 11 Kid-Centric Tax Breaks Every Parent Should Know About

2. Open a Flexible-Spending Account

According to a study by Hewitt Associates, 96% of employers offer a Dependent-Care Flexible-Spending Account. They work just like health FSAs—only instead of setting aside pretax dollars to pay for medical expenses, you set aside pretax dollars to pay for daycare, babysitters, and day camps. A maximum of $5,000 can be allocated for this purpose per year. Just keep in mind that this may impact the tax breaks you’d get with the Child and Dependent Care Credit (above). Your best bet is to plan your strategy with your accountant.

3. Get a Company Discount

Some larger corporations have negotiated discounts with nearby child care centers. Ask if your company has such an arrangement, or if they don’t, ask human resources to explore this possibility. Since it doesn’t cost them anything, they may be willing to look into it.

4. Explore Shared Child Care

Depending on your situation, a nanny share—in which two families pay in toward the cost of one nanny may be a good way to defray your costs, and the low caretaker-to-child ratio may lead to advantages for your child in the long run. When your kids get a little older, you could also look into a preschool co-op that you form with other parents, like this mom did.

5. Search for Nonprofits That Care for Kids

Your local YMCA, JCC, or church may offer child care services that cost far less than you’d pay at a private business. The reason for this is nonprofits don’t need to rake in cash or answer to shareholders.

6. Bargain

On Sittercity.com, you can name your price for a sitter, so don’t be afraid to lowball—you’d be surprised who may bite if it’s convenient and works with their schedule. In fact, we spoke to the founder (and mom of twins!) here to find out more about how the site works.


  • Regina Pitts

    there is “no” real way to save on childcare… especially if you are a single parent working a full-time job with no help from anybody. Paying for childcare sucks, but you need it. Moving to Europe doesn’t look so bad after all.

  • ANanny

    Folks posting jobs on sittercity should keep in mind that they can certainly “lowball” if they like, but that a professional nanny costs a decent amount more than that. This is because a nanny provides much more personalized, individual care, comes to you (no packing up the kids and driving them too and needing to pick up at an often early time!), and will work with your parenting style and child’s needs much more than a daycare worker is able to do. Also, minimum wage still applies, and taxes are not something you should be trying to avoid.

  • Robert

    I do not have any kids at 25 because I understand how expensive it is. My generation thinks its “the thing” to have kids at earlier ages as it was for past generation. Maybe its time for adults to understand that men and women need to work multiple years before thinking about a child. A married couple does not have to have a child right away after getting married (and not its not always about what “they” want). As sad as this sounds but waiting several years, maybe even into one’s 30s, before having a child would help save up financially. That is a big reason why I do not have kids at my age.

  • guest

    as a mother of the 70′s I insisted when pregnant I would stay home with child until he entered 1st grade. money was tight but we ,managed bought a starter home when child was a year old most of the parents were same at home and we all loved the idea. We did not squander money lived within our means Salaries were small but survival was easy. today/s couples are competitive need to outdo also tell us they are better parents I think most prefer a job rather than a stay at home mom they miss all the wonders of a baby as it grows, Over do with toys etc and try to fill need on weekends . Tp all single moms if you decided to be a mother with out a husband you asked for the problem .

    • Sharissa

      “Tp all single mom if you decided to be a mother without a husband you asked for the problem”

      All I can say to that is wow. You are disillusioned if you truly think that all single mothers choose to be so. Way to be understanding of another person’s situation! Try having a little empathy.. it’ll make you a better person.

      And how wonderful for you that you both wanted to and were able to stay home until your child entered 1st grade. Many mother’s don’t have this option today. The idea of buying a “starter home” and living on one salary is a pipe dream in more ways than one for most of today’s parents. You might try not to look down your nose at those who aren’t able to do what you did while also belittling those parents who are trying to “out-do” you.

      Who’s trying to out-do who? Who’s trying to say what a better parent they are? Sounds to me like you are..