59% of Families Plan to Spend Over $18,000 on Child Care Costs in 2023

59% of Families Plan to Spend Over ,000 on Child Care Costs in 2023

Raising a child is expensive. Parents should consider how child care costs impact their wallets. As the cost of living rises, many adults must work full time. Unless they have family or friends who can help for free, these parents must budget for child care expenses or risk being unprepared for the cost.

These costs in the U.S. continue to rise, impacting the checking accounts of families with kids. If you have young ones, you may be in for a surprise. A recent study by Care.com found that families plan to spend more than $18,000 per child on child care expenses this year.

Families are spending 27% of their income on child care

Care.com, an online platform where people can hire housekeepers, pet caretakers, nannies, and more, publishes a yearly Cost of Care Report to help U.S. families prepare for the cost of child care. The 2023 report found that, on average, U.S. parents spend 27% of their household income on child care expenses. Here are some notable findings from this year’s study:

  • Half of parents are more concerned about the cost of child care than they were at this time last year.
  • One in five parents expect to break their child care budget by the end of the year.
  • More than one-third (42%) of parents surveyed lean on relatives for child care arrangements.

59% of parents plan to spend more than $18K per child

The study found that 59% of parents plan to spend more than $18,000 per child on child care expenses in 2023. Last year’s study found that 58% of parents expected to spend over $10,000 on child care in 2022. That’s a significant increase in expected expenses.

According to the U.S. Department of Health and Human Services, child care is considered affordable when it costs families no more than 7% of their household income. Unfortunately, many families plan to spend much more than that.

Two-thirds (67%) of parents surveyed spend 20% or more of their household income on child care, while 89% pay 10% or more of their income for this expense. Even if you spend time comparing prices in your area, finding affordable, quality care can be challenging.

Hopefully, more will be done at the state and federal level to help make this expense more affordable for parents so their children are well cared for while contributing to society and working to bring in income. But for now, most parents are left to figure it out on their own.

Four tips to afford rising child care costs

Here are a few ways you can cope with the expenses of child care.

1. Don’t wait to save

Saving up before you have children is not always possible, but doing so can be helpful. If you know you want to have kids and have the financial means to save now, stashing extra cash in a high-yield savings account can make paying for this expense in the future less stressful.

2. Research prices and get on enrollment waitlists early

Many parents are thinking ahead about child care. It can be beneficial to research prices and get on enrollment waitlists early. I’ve been seeing parents post in neighborhood groups in my area, and many recommend getting on enrollment waiting lists at least one year in advance. Don’t wait to plan, or you could pay more.

3. Contribute to a Dependent Care FSA

Check if your employer offers a Dependent Care FSA, a type of flexible spending account (FSA). By contributing pre-tax dollars to this type of account, you could save money. For 2023, families can contribute up to $5,000 annually, or $2,500 if married filing separately.

4. Consider alternative arrangements

If daycares and child care centers are too pricey or are booked up, consider alternative arrangements. See if other parents in your area offer small-group affordable care, or consider hiring a nanny to provide care in your home to keep costs more manageable.

Are you looking for additional financial tips? Check out our free personal finance resources.

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