10 Ways to Save Money on Childcare, According to Financial Experts

Ask any parent working to make ends meet: The cost of childcare has gotten out of hand. In fact, a recent survey conducted by Child Care Aware of America looked at spending in 11 states plus the District of Columbia and found that, on average, families with two children spend twice the cost of their rent on childcare. According to a second survey known as the Bright Horizons Modern Family Index, 46 percent of parents say that getting financial assistance for childcare costs would be the most helpful form of support they could receive.

"Childcare is the single largest line item on household budgets today for families with children under five," says Setu Shah, the founder and CEO of Financial Doula, a coaching and education platform dedicated to helping new parents financially prepare for parenthood. "In fact, 40 percent of these families are going into debt or dipping into their savings to afford childcare. It's truly a widespread challenge that requires change at the national level."

Shah says that given the tremendous cost of full-time childcare, it's important for all families to leverage whatever cost-effective solutions might be available to them, ideally without compromising on the quality of care. These are the top 10 ways to cut down on costs while ensuring that your little one is safe and supported throughout the workday.

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Since childcare facilities benefit from having cashflow up front, some may be willing to offer a discount if you make your payment in a lump sum months or even a full year in advance, says Chris Urban, CFP, RICP, founder of Discovery Wealth Planning.

"Anecdotally, I've heard and seen anywhere from a five to 10 percent discount given. Depending on the income and cash flow situation of your household, this may be an interesting opportunity to save a few dollars," he tells Best Life.

Paying for a full-time nanny can be costly, which is why the experts recommend considering a "nanny share" in which two or more families employ a nanny to care for their children.

"The families decide together the number of hours needed and the location of care," explains Shah. She says families can expect a potential cost savings of 30 to 50 percent compared to using a full-time nanny for their family only.

Cooperative daycares may also offer a more finance-friendly approach to childcare. Your child may benefit from "a combined parent-teacher setting where parents are more heavily involved in the early learning process," Shah notes.

"Parents are required to dedicate a certain number of hours to service and teaching at the childcare facility (examples include serving lunch, planning and leading an activity, reading books, cleaning up facilities, etc.). Usually, fees are lower due to the parent's participation in providing care," she says.

You can potentially save 20 to 40 percent compared to a standard, full-time daycare.

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In-home daycares also tend to be less expensive than those run in more formal facilities.ae0fcc31ae342fd3a1346ebb1f342fcb

"Care is provided for children from the comfort of the caregiver's home. Usually, there are one to two caregivers taking care of a smaller ratio of children, and often the caregiver could be a neighbor or friend who is also caring for their own children," says Shah.

However, she notes that depending on the size and location, savings may not be substantial. She estimates that your potential cost savings is between five and 25 percent compared to full-time daycare in a more formal facility.

Experts recommend looking into any employer-sponsored childcare options that might be available to you.

"Many employers offer full-time onsite childcare or provide subsidies to their employees for childcare. Working for a large employer that can afford this expense could save you thousands of dollars!" says Shah, noting that you might save 50 to 100 percent of the cost compared to an unsponsored, full-time daycare.

Doug Roller, founder at Crossroads Financial Group, says another way to save on childcare costs through your employer is to utilize your pre-tax dependent care benefits available within your flexible spending account (FSA).

"The money contributed to these accounts is not subject to federal income or employment taxes, which can lead to savings," he tells Best Life.

Shah notes that oftentimes, local churches or other religious centers will provide faith-based childcare at a comparatively lower fee—sometimes 10 to 25 percent less than hiring a full-time nanny.

"Typically, families must be members and/or contribute to the organization in other ways," the family finance expert explains. "Families that are not affiliated with the religious center can also often send their kids there as well; however, they must be open to a faith-based curriculum."

If you happen to have an extra room in your home, hiring an au pair can help you curb costs on childcare by 50 to 75 percent compared to hiring a full-time nanny living outside of your home.

"This is a live-in caregiver who is typically from another country and participated in the federally-approved au pair program," explains Shah. She adds that au pairs are typically allowed to stay up to two years in the U.S. through the program and are currently given a minimum weekly stipend of $195.75 per week, an amount established by the U.S. government through the au pair program.

"However, there are strict restrictions on the number of hours au pairs can work and what types of tasks they are able to take on (typically, they must be limited to childcare)," she says. "Also, there are some hidden costs: room and board, education stipends, meals, car and car insurance, and more."

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Depending on the state and your income level, your family may qualify for government-funded childcare programs that provide financial assistance for childcare expenses.

"The federal Child Care and Development Fund [CCDF] helps low-income families obtain childcare services so they can work or attend training or education programs. Additionally, some states offer free or reduced-cost preschool programs such as Head Start and state-funded pre-K initiatives," shares Roller.

Shah next recommends asking for help from a retired family member or friend who is willing to care for your child during working hours.

"This is a great option because your children could be in the hands of someone you truly trust. However, the family member or friend must be able to physically and mentally care for your child," not to mention willing to give the gift of their time.

While it may be difficult to find someone who can help out every workday of the week, shaving off even one or two days of full-cost childcare can quickly add up to major savings.

Job structure can also have a major impact on how much you pay for childcare costs. If the option is available for one or both parents to create a flexible, remote, or part-time schedule, this would allow children to stay at home, ultimately cutting childcare costs.

"This often comes with a sacrifice—either reduced income or reduced time that can be dedicated to making more money. This could be a great option, though, if the cost of childcare is more than your part-time income," Shah says.

Depending on the working partner's income, choosing to be a stay-at-home parent is also often financially sound.