When you’re expecting a baby, there are a lot of expenses that seem to come out of nowhere. It can be tough to estimate how much money is enough. One such expense is childcare. If both parents work out of the home, infant childcare costs may seem like a necessary evil, but they can be unpredictable.
According to a 2022 CNBC report, childcare averages $10,000 per year in the U.S. Depending on the childcare provider, the age of your child, the hours you need, and any dietary or health restrictions your baby may have, the costs could go from bad to worse.
To start a sinking fund, you’ll need to create an accurate budget for infant care. Here’s where to begin:
Know the Cost of Childcare in Your City
If you don’t have anyone in your inner circle willing to watch the baby for free, childcare costs can feel like a trap. Many parents feel like they’re just working to earn enough to pay for daycare while they work. So, it’s important not to base your budget on national averages or even state estimates. You should ask a number of care providers in your town and neighborhood for their current rate sheet. These prices usually are broken down by age, needs, and hours of care.
You’ll want to budget for the highest of the rates on offer, not because you’ll go with the costliest option but because usually infant care is the most expensive type of daycare around. The rates can go up dramatically based on availability (infants need more supervision) and location.
Saving for that higher rate will make sure you’re prepared for any early dropoff or late pickup fees that you might incur throughout the year, and any developmental needs that may come up. Hopefully, you’ll have leftover cash at the end, but–if not–at least you won’t come out of pocket for major surprises.
Ask for Help
Now that you have the highest possible price in mind, it’s in your best interest to do everything you can to get financial aid, vouchers, or assistance to undercut that number.
Check with your state to learn about low-cost or free childcare options. State-funded programs and assistance programs from the military can bring those costs way down for people who are eligible.
Also, check if you can sign up for a dependent care flexible savings account, which is a pre-tax benefit account that helps offset the cost of daycare, babysitting, camps, and more. There are a number of programs available, so check out FSAFeds, PayFlex and HealthEquity to learn more about the savings each has to offer.
Don’t Forget the Babysitter
Many parents only think about childcare during the time that they’re in the office, but forget about the nights and weekends when they want to go out or sleep in. If you don’t have a helpful teen or neighborhood babysitter, you may want to consider online sites like care.com.
While fees vary widely, parents should plan for at least $15/ hour, which may or may not cover meals and transportation. Even for the homebodies, late nights at work and date nights can easily eat up 10 hours per month. Set aside enough for around 10 hours per month, and roll over the funds if they’re not completely depleted each month. This will allow new parents to go out for increasingly longer periods of time as their baby grows up.