The True Costs of Having a Baby Part III: Childcare

July 18, 2012

By Preston Cochrane, President and CEO, AAA Fair Credit Foundation & Utah Saves

This article is part three of a five part series concerning the costs of having a baby.

The True Costs of Having a Baby - Part I: Knowing the Price

The True Costs of Having a Baby - Part II: To Work or Not to Work?

A caregiver is more than just a babysitter for your child. The caregiver will witness some of the earliest developments your child will make. For that reason, choosing childcare can be a difficult decision. Childcare can be one of the largest costs of raising a child. So the choice often comes to finding a balance between what's affordable and what's the optimal setting where your child will be five days a week.

Day Care Centers
Day care centers are a moderately priced option for childcare, but averaging between $400 to $1,000 a month, they are still expensive. You may be lucky enough to be employed by a company that offers day care as part of its benefits package or even onsite services. Churches, schools and community centers often provide lower-priced day care.

Day care centers are an attractive childcare option because they provide a stimulating environment for children and typically have several caregivers working at any given time. They also welcome unannounced visits, helping parents feel comfortable with what goes on while they aren't there.

But day care centers are usually closed on holidays and if your child is sick, they won't be allowed in day care so you'll have to take the day off, too. They also have stiff monetary penalties for early drop-off or late pick-up so if something unexpected happens, you'll pay for it.

Family Day Care
Family day care differs from traditional day care in that the caregiver provides care inside their home. Since they are run from a residence, they are often located more conveniently than other centers and can be much less expensive, around $300-$400 a month. You should still insist on licensed caregivers. Family day care is often less structured so you'll want to make sure the caregiver's ideas on playtime, feeding, napping and other issues as well as their value system are a good fit with your own ideas and values. You'll also want to inquire about and possibly run a criminal background check on the other people that live in the home, even if they are not caregivers. It’s also a good idea to check your state’s child sex offender registry to see if anyone listed lives close by.

Nannies and Au Pairs
While usually the most expensive option, costing $1500 a month and up, both live-in and daytime nanny and au pair childcare have definite advantages: One-on-one attention, the familiarity and convenience of your own home, and a consistent companion for your child. You also don't have to worry about getting your child ready and out to day care before you leave for work. If you pay enough, light housekeeping may be included. Keep in mind that you will be an employer, so legally you are required to withhold money for taxes and pay Social Security, unemployment insurance and any other costs according to your specific state and local laws. Nannies and au pairs get sick occasionally, so you will either have to have a backup plan, find a substitute on short notice, or stay home.

For more resources on debt and saving, check out these other resources:

Recovering from Overwhelming Debt

Paying Down Debt

5 Signs You Are In Financial Trouble

Dig Yourself Out of Debt Action Plan

New Theme: Paying Off High-Cost Debt

Get out of Debt

Take the Pledge

I pledge to save money, reduce debt, and build wealth over time. I will encourage my family and friends to do the same

Take the America Saves Pledge

Tip of the Day

  • Written by Administrator2 | January 12, 2014

    Keep track of your spending. At least once a month, use credit card, checking, and other records to review what you've purchased. Then, ask yourself if it makes sense to reallocate some of this spending to an emergency savings account. http://ow.ly/sj972

Saver Stories View all »

Starting and Continuing a Personal Finance Journey

Written by Sara Cooper | December 23, 2013

When Kiara Hardin, now a junior at Western Illinois University, became an intern with the Chicago Summer Business Institute during her sophomore year of high school, she began her personal finance journey. The program required participants to open a savings account.

Read more...

Saving Early: Key to Successful Future

Written by Katie Bryan | October 28, 2013

For Johnnie Lovett, a Young Illinois Saver, saving has been a habit since he was a teenager. “As a teenager, I was responsible for buying certain things with my allowance,”

Read more...

The Gift of Homeownership

Written by Tammy G. Bruzon | August 5, 2015

Quaneka Willis, a single mother of three children, was receiving rental assistance through the Housing Authority of the City of Milwaukee when she decided to take control of her finances. So, in September of 2013 she attended the Make Your Money Talk program and pledged as a Wisconsin Saver. In less than 12 months, she had maximized her savings and was beginning the process of purchasing her first home.

Read more...

Receive Updates

Sign up for Texts

Written by Tammy G. Bruzon | July 15, 2014

Sign Up

Sign up for Emails

Written by Super User | September 16, 2013

Get Emails

Take the Pledge

Written by Super User | September 16, 2013

Start Saving