The monthly fee at their day care center was $2,400 or $1,200 per child. Even with their pre-tax dollars, the cost of childcare every month took over one half of Kim’s paycheck. Tim half-heartedly joked that “paying for daycare is much worse than paying for college. At least we have a few years to save up for tuition.”
Last April, Tim lost his job and began to freelance. Luckily, he has some work from his old company. Together, Kim and Tim took a serious look at their monthly expenses. With Tim now working from home, the family decided that they had more flexibility so they could pull their kids from day care and save money on childcare.
They decided to hire an au pair and cut their childcare costs nearly in half. Between the agency fee and the monthly stipend, they are now spending about $1400 per month. Plus, they have a regular Saturday night babysitter.
According to “Breaking the Piggy Bank: Parents and the High Cost of Child Care” a report by the National Association of Child Care Resource and Referral Agencies, childcare fees comprise between 11.7% and 15.2% of median two parent family income. For single parents, childcare can take up between 35% and 6.9% of income.
Guess the state with the highest cost of infant care at a childcare center? Massachusetts, with an average cost of $13,480 or $1,123/month. In Arkansas, the cost is wildly cheaper, at $4,020 annually or $335 per month. The cost of a day care center varies tremendously based on geography.
Like childcare centers, the cost of hiring a nanny also varies. In the NYC metropolitan area, a full-time nanny can run between $750 - $1,000/week. Remember too, that hiring a nanny will most likely require post-tax dollars.
The only childcare that is cost-constant across the country is hiring an au pair because the fees are mandated by the State Department. The agency fee is around $7,300 and the weekly stipend to the au pair is $195.75/week - and both are eligible for the Child and Dependent Care Tax Credit.
Perhaps most shocking in the report was that – in most parts of the country - monthly childcare expenses for two children were equal to the cost of a family’s mortgage. In the Northeast and Midwest, childcare expenses are equal to mortgage expenses: an average of $1442 and $1067 (respectively) for childcare and $1430 and $1066 for the mortgage payment.
As the economic meltdown has affected the careers of parents, so too has it affected the choices they make on childcare. Scrimping on childcare may not always be the answer, but families should know that they do not always sacrifice the quality of the care when they decide on a less expensive childcare option.
Nancy Felix is the author of the book, Oh My, Au Pair! A Complete Guide to Hiring and Hosting an Au Pair. An expert host parent, she has had fourteen au pairs. Visit her website at www.nancyfelix.com for more information.
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