How to afford the cost of child care: 4 strategies that can help now

According to a recent report from KPMG, child care costs have risen at nearly double the pace of inflation from 1991 to 2024. Faced with these unprecedented costs, families are stretching their income—even dipping into their savings—to make it work.

If you're struggling to figure out how to afford child care or aren't sure where to start, here's an overview of average costs and strategies to fit child care into your overall financial plan.

The average family spends nearly 25% of their household income on child care, according to Care.com's 2024 Cost of Care Report. Most parents pay between $1,500 and $3,000 per month for help watching their children. And those costs can vary greatly based on your child's age, the type of care you want and where you live.

Here's a look at the average national costs of care for one child:

• An occasional babysitter for a child of any age averages $192 per week (about $832 per month).
• An all-day daycare center for a toddler averages $293 per week (about $1,269 per month).
• A full-time nanny for an infant averages $766 per week (about $3,319 per month).

These staggering costs mean many families are sacrificing other financial goals for quality care. The Care.com report notes that 35% of parents are tapping into savings to pay for child care—and 68% of them said it could deplete their savings in about six months.

You can tackle the affordability of child care expenses in several ways. With the average costs in mind, start by looking at your budget and your options so that you know what numbers you're working with. Then, explore the ways you may be able to cut the costs with financial assistance or being creative with your situation:

A budget is essential when figuring out how to afford child care because it shows how the cost of care can fit with your other expenses. By taking your monthly income and subtracting your other essential living expenses, you'll realize how much you can spend on care without dipping into savings. If you don't have much money to devote to child care, all is not lost. Your budget can reveal where you may be able to cut back on spending or show exactly how much you need to cover the gap by increasing your income or finding different care options.

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Child care can take many forms, and each can vary in cost, level of care and other factors. Understand the types of child care programs and other options to help you decide what's best for you and your family's finances.

• Stay-at-home parenting. Not every household can afford to have someone be a full- or part-time caregiver, but if you're interested in the possibility, you should run the numbers. Especially if having a parent at home is important to you, determine what the finances of it would look like.
  
• Family care. You may have family members who are willing and able to care for your child for less than the cost of a nanny, day care or babysitter. Have the conversations—even if your family can't help you out full-time, you may be able to balance occasional family care with other options.
  
• Babysitter. Babysitters can be hired on short notice, giving you more flexibility. They typically don't handle as many responsibilities as nannies, but you usually can find a qualified person who meets your needs.
  
• Day care center. Day care centers are licensed and employ professional child care providers. Many parents appreciate the state mandates for cleanliness, curriculum and safety. But they also can be costly.
  
• In-home day care. Child care in a home or a home-like setting typically has fewer caregivers and fewer children. This can mean they're less expensive because they have lower overhead costs than maintaining a facility. However, bear in mind that in-home care in your state may have different licensing requirements and regulatory standards than day care centers.
  
• Nanny. Nannies can take on a broad set of responsibilities, including setting a curriculum, keeping the child engaged, providing meals and doing light errands and housework. However, individual care may cost more than group care depending on the nanny's rates and hours.

While exploring your options, also think about combining them. You may discover it works for your budget to do day care some days of the week and then have a part-time babysitter on other days. Another factor to consider is whether you could share a babysitter or nanny with another family and split costs.

You may be eligible for child care assistance and tax breaks. Here are some common programs families use to reduce or offset child care expenses. But be sure to check if your local government and area organizations offer financial help:

ChildCare.gov, a service run by the federal government, exists to help you find options for child care and get a list of financial resources for child care specific to your state. After you select your state, click "Financial Assistance for Families" to get links to state agencies and organizations that offer child care financial assistance as well as cash, food and health insurance aid.

The CCDF is operated by the federal government and provides subsidies, grants and vouchers to families with low incomes. Parents and primary caregivers for children under age 14 (or under age 19 if they're unable to care for themselves) may be eligible. You'll have to provide proof of low income. You can check your eligibility online or by finding a local CCDF administrator in your state or territory.

Head Start is a federal preschool program offered at child care centers or in family-based settings for qualified families with newborns to children up to age 5. It's free for eligible families, including those with low incomes or those receiving Temporary Assistance for Needy Families, Supplemental Security Income or Supplemental Nutrition Assistance. You can contact your local Head Start program to find out more about the requirements.

Some day care centers directly offer subsidies, discounts or other financial assistance for families who meet certain qualifications. They may fund and operate their own programs, or they may partner with local, state or national organizations to help eligible families. Check with your child care facility to find out what options are available.

If you're a member of the military or work for the Department of Defense, you may be able to get child care fee assistance through Child Care Aware of America.

You may qualify for the child and dependent care tax credit if you paid for certain child care expenses for a child younger than 13 while you worked. Up to $3,000 can be claimed for one dependent or $6,000 for two or more dependents, lowering your tax burden and saving you money.

Working parents and caregivers with low to moderate incomes also may be able to get a significantly larger earned income tax credit with a qualifying dependent. The credit is equal to a portion of your earnings and is larger if you have more children. The qualifying income range as of 2023 is $46,560–$63,398, and you could receive up to $3,995 for one child or $7,430 for three or more children.

When you're juggling work and child care, your employer may have ways to help you out. Explore these options to save where you can:

• Onsite care or discounted partnerships. Large employers are increasingly offering child care services during the work day as part of their benefits package. Some employers have arrangements with specific child care providers to offer lower rates for their employees.
• Dependent care flexible spending accounts. Check with your HR administrator to find out if they offer a dependent care FSA. It allows you to save pre-tax money from your paycheck and then use it tax-free to pay for certain child care costs. Expenses allowed by the IRS may include day care, babysitting, afterschool programs, nannies, summer day camp and more.
• Ask about adjusting your work hours. Your employer may be willing to flex your workday start and end times, compress your schedule to fewer days per week, allow a work-from-home or hybrid schedule or let you shift to part-time for a while. You won't know until you ask, and you may come up with a satisfying way to maintain some income while cutting down on child care costs.

There's no denying that the high cost of child care can weigh heavily on family finances—creating a pinch during this particular time in your life with young children at home. A Thrivent financial advisor can help you create a plan, including a realistic budget and overarching strategy, so you can confidently navigate the financial realities of raising children without derailing your financial future.