Whether Paying for Child Care Makes Sense in 2024, According to Rachel Cruze

Rachel Cruze / Rachel Cruze

Child care is more expensive than ever, and you may find yourself balancing whether the salary you earn from your job is worth what you’re paying someone else to watch your kids while you work.

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In a recent video on her YouTube channel, financial expert, author and radio personality Rachel Cruze tackled this question. She explained why child care costs are so high and urged parents to consider whether paying for child care in 2024 makes sense.

Cruze emphasized that parents have to take control of their finances through a budget and getting intentional with their money when deciding whether to pay for child care.

Why Are Child Care Costs So High?

Almost half of U.S. households spent more than $18,000 a year on child care in 2023, with an average weekly daycare cost of $321, according to Care.com. Cruze pointed out that this means that one year of paying for child care could equal twice the cost of in-state college tuition.

Here are some common factors Cruze cites as causing the high price of child care:

• State labor laws

• Real estate costs and location of provider

• Licensing and insurance

• Employee salaries and training

• High demand

• Federal aid.

Child care waitlists are getting longer, causing higher fees, including non-refundable waitlist fees averaging about $75. If you live in a metropolitan area, your child could be on a waitlist for an extended period. Daycare center charges, government-provided funding and daycare staff salaries are beyond your control, Cruze noted, but parents can control their financial priorities when it comes to working and paying for child care services.

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How Much Is Paying for Child Care Worth to You?

Many parents wrestle with balancing child care costs for multiple children with their annual salary. Your take-home pay can be significantly reduced after taxes and other necessary deductions. Cruze suggested that parents evaluate the satisfaction their job brings them against their preference for staying at home.

If you don’t enjoy your job that much, it might not be worth spending a large chunk of your income on child care. Cruze advises you to think about your preferences, priorities, values and the associated costs.

What Percentage of Your Salary Would Make Paying for Child Care Worth It?

With the cost of child care services continuing to rise, working parents are looking for some financial relief. The U.S. Department of Health and Human Services suggests that families should be spending about 7% of their household income on child care. However, according to a Care.com survey, 2,000 parents forked out 24% of their household income to pay for child care in 2023.

If you have one child already in daycare and are considering having another baby, Cruze said, it might be financially prudent to wait until your first child is at least in kindergarten before incurring daycare expenses for two children at the same time. However, if keeping your family momentum going is important, then tightening your budget for a year or so might be worth it.

Ways You Can Offset the High Cost of Child Care

Figuring out how to pay for child care can be difficult. Here are some ways to ease that financial burden on your family’s budget.

1. Shop around: Use an online calculator to compare child care costs in your area. These search tools can help you find and compare different prices of child care across U.S. counties.

2. Adjust your budget: As a parent, you already make sacrifices for your children. Consider cutting costs in other areas of your budget and reallocating that money to pay for daycare. You could reduce spending on things like eating out, shopping or entertainment.

3. Work remotely: If your employer lets you work from home, even for a few days a week, take advantage of the benefit and save on child care costs during your remote working days.

4. Swap with a family member: If you have a two-parent household or have a friend or another family member who works an opposite schedule, you can reduce the number of days and hours you need to pay for outside child care. An added benefit is one parent caring for and nurturing your child at home. You may find that friends and relatives are willing to help.

Plan for Child Care in Advance

In addition to adjusting your work schedule and relying on family and friends to help out, you can use other ways recommended by financial advisors to save money on sending your children to daycare.

• Use company benefits: Many companies offer child care and dependent care Family Savings Accounts to their employees to pay for child care expenses. You can use up to $5,000 of pretax dollars per year from your salary to cover qualifying child care expenses.

• Eliminate your debt: Become debt free before you have a baby to reduce monthly expenses and free up money in your budget for future daycare costs.

• Save, save, save: Incorporate a child care savings fund into your budget before starting your family. These cash reserves will ensure that you have at least some money set aside to help manage the challenges of paying for future child care costs.

• Get the child care tax credit: The IRS Child Tax Credit helps qualifying families get a tax break on child care costs even if they don’t usually file an income tax return. Each qualifying child must have a valid Social Security number.

Seek Solutions and Relief From the Government

During this election year, with low supply and high demand for affordable child care, parents are demanding money-saving solutions from 2024 presidential candidates. Care.com revealed in its 2024 Cost of Care Report that 59% of respondents prioritize access to affordable child care in their voting decision, and 88% of respondents indicated that a candidate’s position on this issue will sway their vote one way or the other.

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This article originally appeared on GOBankingRates.com: Whether Paying for Child Care Makes Sense in 2024, According to Rachel Cruze