There are many financial realities that aren’t communicated to us until we experience them. It’s embarrassing to admit, but I personally didn’t know how mortgages worked until I was 26. But that’s another story for another time. Today I’d like to focus on another financial speed bump that no one tells you about growing up – child care.
Maybe it was a generational anomaly present in the curriculum when I was in high school, being taught by educators who more than likely grew up in a home where only one parent worked. That may have been the reality of their time, but the reality of my time is that most of us in the middle class find ourselves in situation where both parents need to work.
This post isn’t to evoke pity or bemoan the unfairness of it all or even to attack the lack of financial literacy present in our public education system. This post is to illustrate how our family managed to avoid thousands of dollars in childcare bills by simply thinking outside of the box.
Before we get into how we saved thousands let’s first tackle all of the different types of childcare out there.
Daycare / Preschool
The most commonly referred to is normal daytime child care. These are the kind folks that care for your children while you are at work. They make sure they are fed, changed / reminded to use the bathroom, rest if needed, participate in activities, and to varying degrees educate your children. I’m sure there’s a better, more complete definition out there, but at a basic level, these are the services most childcare centers perform.
I’ll step aside here to say that we absolutely love the childcare center that our children attend / have attended and felt that the extra attention and care that our children have received there has been a blessing and had a profoundly positive effect on their lives.
Prices for daytime childcare can range from $30 a day for a family child care to upwards of $1,500 a month for elite child care centers. In our ten years of needing daytime care for our kids, we have always fallen in the mid-to-low end of the that range – averaging around $800 per month for a child between 6 weeks and 5 years old. Obviously the prices are higher for infants and toddlers, but they have more or less averaged out to around $800 a month.
Well that’s… a lot. Per child that is more than a lot of folks rent or even mortgage payment. However, just as our bodies become acclimated to the weather as the seasons change, our budget got used to that cost as well. We set our eyes upon when the last child reached kindergarten age and prepared to say goodbye to that expense.
When we moved three years ago, our oldest son was well past kindergarten and his next oldest sibling was not yet there. So we didn’t realize that kindergarten was half day in our new school district until after we had moved. Our previous school district had full day kindergarten so this wasn’t an expense that we planned for.
Thankfully our school district had a child care center that they worked with. This organization had space in each of the schools, teachers and a great program (LEAP – Learning Extensions and Play) that kindergarteners could attend that ran alternate to whichever kindergarten session that a child had.
This was still another $500 that we had to pay for each month that school was in session.
Also referred to as before-school and after-school programs, these program provide care to your child before school and after school. Most of my peers’ work schedules rarely coincide with their children’s school schedules so families often have to drop their kids off at before-school care programs on their way to work and pick them up from after-school programs.
As was the case in our situation, school-age programs are often run by a third party like the YMCA at the school itself. The prices that we encountered with this type of care ran from $300 per month for after school care and anywhere from $100 to $200 for before school care.
Summer Care / Summer Camp
Unless you work in education, you likely don’t have the summers off. But guess what, your children do! So until your children reach an age where you trust them to be at home (hopefully doing something productive) by themselves for 8-10 hours out of the day, they have to go somewhere else between early June and late August.
We have always utilized YMCA summer day camps for this purpose. Most of the regional YMCAs around us have great programs and work-friendly hours. We generally try to take a family vacation once a summer for a week, so we normally need about 8-9 weeks of coverage per summer. At prices ranging from $150 – 180 per week, and including registration fees, this has run us between $1300 – 1600 per child.
What Our Costs Could Be
All of the prices that we have mentioned above are per child. So let’s run some numbers on a grand total, per child cost of child care for a couple where all of the parents work.
Assumption #1 Both parents have working hours of 8 AM – 5 PM, and require a 30 minute commute to get to work. That means parents are gone from 7:30 AM – 5:30 PM.
Assumption #2 A child can be trusted to be at home by themselves during the day over summer vacation at age 14. So at age 14, summer care is no longer needed.
Assumption #3 A child can be trusted to get themselves to the bus by age 14. Although at this point a child’s bus may come before the parents even leave for work. Again at age 14, before-school care is no longer needed.
Assumption #4 A child can be trusted to be at home by themselves for a few hours in the afternoon (between 3:30 PM and 5:30 PM) at age 11, thus after-school care is no longer needed.
Assumption #5 Daycare costs are $800 per month (only 10 months in the first year), LEAP / before-school / after-school costs run for 9 months are are $500 / $150 / $300 respectively and summer camp costs $1500 per year.
Wow. That’s almost $100,000 per kid! This isn’t factoring in a decision on private vs public schools or saving for your child to go to college. This doesn’t include any extracurricular activities, food, clothing or anything else. That’s just child care.
While we didn’t have the numbers laid out quite like this when we decided to make some changes, we knew that paying this much for childcare was going to severely limit our ability to save for our financial goals.
Flexible Schedules to the Rescue
Let me preface this by saying that I understand that this strategy simply won’t work for everyone. In families where parents work in industries or at companies with rigid scheduling, there is no leeway. However, I see far too many middle class families that simply chalk up all childcare costs as inevitable.
When we moved to our new school district we soon found out that K-3 students got on the bus closer to 9 AM than 8 AM. That, coupled with 30-40 minute commutes, should have forced our hand to need before-school care for our school-aged kiddos.
Luckily, my wife and I both work at companies where our daily schedule is somewhat flexible. We figured that we both didn’t need to be around in the mornings to get our boys up, ready for school and onto the bus.
I had been at my employer at the time for about eight years, so I used that as leverage to negotiate a later start time. I worked it so that I would stay home until our youngest school-aged child got on the bus, and then drive into work. Boom – no more before-school care!
My wife managed to switch to an earlier shift, getting our youngest kids (who weren’t yet in school) to daycare on her way into the office. When she left work, earlier in the day than her previous schedule allowed, she could then get home in time to be there when our school-age kids got off of the bus. Boom – no more after-school care!
Now in practice, sometimes this didn’t work out with traffic, weather and well… life. So we talked to our eldest, then 8 and taught him how to use the “house phone” (a $40 android phone that we added to our Ting wireless service for $6 per month), how to get into the house, safety precautions and expectations for when he was home by himself.
In terms of getting chores and homework done, this is still a work in progress. But we feel that on top of the financial benefit this has taught our boys about responsibility and doing the right thing, even when no one is looking.
The early morning routine is still day-to-day as well. Waking up at 6 AM, getting a 2 and 4 year old out of bed and ready to get into a car at 6:30 is nothing short of a circus every single day. Though it is easier than it used to be – trying to do all of the above with an infant, 2 and 5 year old and getting them all to fit in the backseat of a Nissan LEAF every morning was a real treat!
This is what our per child cost of childcare is now without before- or after-school care.
$64,400 is still a significant amount of money but we have reduced our total cost by $28,350! All thanks to some intentional decisions, processes and flexible work arrangements.
I will be the first to admit that this number could be a big fat $0. We could opt to have one of us stay home with the kids – thus eliminating the need for any child care costs. With what childcare currently costs us annually (around $20,000) and how dialed in we have our budget otherwise, we could certainly pay for all of our expenses and still a little left to put into savings with only one of us working.
While the idea of one of us being to stop working is very enticing, it would extend the amount of time it will take for us to reach financial independence as a couple. Relying on one income would add about 10 years onto our path to this goal.
Side note: While it wouldn’t be ideal, it is awesome to think that we could afford to lose one of our jobs and still be OK. I don’t know when we passed this milestone, but I am gonna celebrate it now!
As the timing works out, our youngest children are only going to be in full time daycare child care for about 3 more years. Once that happens, all of the money that we were spending towards child care will then be diverted towards savings – whether that be debt paydown, index fund investing or saving up for a downpayment for another rental property.
Also, once we reach financial independence – forecasting out about 7 more years at this point – I am confident that at least one of us will not be working full time, or at the very least won’t be working during the summers anymore. In fact, once we hit our goals, we will ideally be spending parts of our summers travelling, whether domestically or internationally, with our family. Boom – no more summer camp!
So there you have it, with a little thought and some flexibility we will have saved our family $113,000 over the course of 23 years.