The cost of child care has become a bigger issue for American families in recent years, amid rising inflation and other economic challenges. Prices have risen, putting families in a crunch and making it hard to estimate what a typical budget should look like.
"When it comes to child care, there is no universal standard for what to spend because costs vary greatly depending on the market you are in and your family size," Jesse Mecham, founder of budgeting app YNAB, told Kiplinger.
Parents are having to use both their household income and savings to afford child care, according to Care.com’s 2024 Cost of Care Survey. Respondents are spending 24% of their household income on child care on average, the survey shows. Of the respondents, 60% are spending 20% or more of their income on childcare, while 84% are spending 10% or more. And while these numbers show a decline from 2022 levels, 35% are still having to dip into their savings in order to afford this necessary expense.
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To put this in perspective, child care is considered affordable if it costs households no more than 7% of their income, according to the Department of Health and Human Services.
Not only is child care expensive, it's also simply unavailable for a number of families. In September 2023, pandemic-era funding to child care facilities abruptly expired, and 70,000 child care providers were expected to be negatively impacted, according to The Century Foundation. This expiration of funding is referred to as the "child care cliff," and it has caused many parents to see longer daycare waitlists. In fact, Care.com found that more than half (54%) of respondents have experienced longer waitlists due to the child care cliff.
Back in 2022, finding child care was also a serious issue, with 43% of parents claiming it was much harder to find child care at that time than in previous years, as thousands of child care facilities shut down amid the pandemic.
This is all to say that if you're feeling like the price of child care has changed recently, you're not wrong — here's what it looks like now.
Average child care costs
From 2010 to 2020, largely due to the pandemic, child care costs increased 28%, according to USAFacts. And the average cost of child care in 2020 was over $10,000 annually, reports Child Care Aware of America. Furthermore, the following chart shows how child care expenses jumped from 2019 to 2023, according to Care.com's 2024 Cost of Care Survey.
| Header Cell - Column 0 | 2019 | 2021 | 2022 | 2023 |
|---|---|---|---|---|
| Nanny | $565 | $694 | $701 | $755 |
| Child Care Center | $215 | $226 | $268 | $293 |
| Family Care Center | $201 | $221 | $217 | $219 |
| After-School Sitter | $243 | $261 | $275 | $292 |
Child care also varies greatly from state to state. Care.com found that Massachusetts ranked as the most expensive place to hire a nanny, with the weekly rate costing $899. The most expensive place for infant daycare was D.C., costing $419 a week.
The Cost of Care Survey also found that 47% of respondent spent more than $1,500 per month on child care expenses in 2023, and 49% plan to spend the same in 2024. These high rates are causing parents to make significant changes to their daily lives, including working two jobs (28%), reducing hours at work (27%), moving closer to family (25%), going into debt (19%) and leaving the workforce altogether (17%).
How much you should spend on child care costs
As mentioned above, the Department of Health and Human Services states that child care is "affordable" when it is 7% or less of your income. However, because of high costs and low availability, this isn't always possible. Therefore, how much should be spent on child care is often a personal decision based on location, budget, desires and simply what's available.
"Child care is undeniably expensive but it is essential for the wellbeing of your little ones," Mecham said. "So, when it comes to budgeting for child care, treat it as an expected expense just as you would with a mortgage or a car payment, and build the rest of your budget around that cost."
However, for many, this means making sacrifices to other areas of their budget, like cutting back on vacations, dining out and extracurriculars.
How to save on child care costs
Here are a few ways that may help you ease the financial burden of paying for child care.
- Check to see if you qualify for any tax credits: Make sure you’re taking advantage of any tax credits or breaks you’re eligible for, such as the child tax credit, which can help you cover child care expenses.
- Check your FSA: If you have one, you could use the funds from your FSA to reimburse any daycare costs.
- Reach out to your employer: If you’re struggling to afford child care, reach out to your employer and check your company benefits package, as some include child care assistance for employees.
- Sibling discount: If you take more than one child to the same child care provider, you’ll often get a sibling discount, which is usually around 10% or 15%.
