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November 02, 2011


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I have 2 kids, I'm divorced, and I work full time. I'm surprised that you are surprised by this! Child care is extremely expensive even if you use the cheapest option--like taking your kids to daycare someone runs out of their home.

I have twins. When they were infants (daycare is costlier for infants because of regulations about how many workers are needed per child) I paid $400 PER WEEK ($1600/month) for two babies 8hrs/day of the cheapest option--an in-home daycare at someone's house. The professionally-run daycare center would have charged twice as much ($3100/month). My mortgage is $800/month so yes I was paying much more for daycare than for my mortgage!

It's also "standard" in my area anyway for daycare (in-home or daycare center) to charge you the same price even for their "vacation" days when the kids aren't at the daycare, including at 1-2 weeks/year when the daycare workers all go on vacation. You have to pay this or they'll give your spot to another child--and that's another thing, the aren't enough daycare openings for all the people who need them, and waiting lists are really really long.

Daycare gets slightly cheaper as kids get older, because the daycare doesn't have to maintain such a high worker/child ratio. Still it is costly particularly if you want your kids to be in a stimulating environment where they do crafts, play outdoors, do educational/preschool activities, instead of a place where they just plop them in front of the TV all day. If you need daycare before & after school for older children, most daycare centers still charge very high prices because they still have to hire the workers and pay them for the whole day, even if your kid is gone at school for 5 hrs/day. And of course you have to pay a higher price for daycare in the summer when the kids aren't in school--this is back up to around $400/week for a good summer daycare program where the kids are taken on fun outings to swimming pools, parks museums, etc a couple times each week.

I paid $16-20,000 per year for full time daycare for 2 children, at in home daycares, a daycare center when they were preschoolers, and finally I hired a nanny to come to my house when my kids were school age until the kids were 11 years old. When they were that old, I felt comfortable leaving them at home for a couple hours after school by themselves. I paid the nanny $10/hr for actual hours worked and the cost was about the same as any daycare center option that I could find.

I used a dependent care FSA administered through work to pay $10,000/year of the daycare costs with pre-tax dollars. However, $10,000/year is the annual max you could put the FSA and it's very inconvenient because it takes about 8 weeks to get reimbursed from your FSA. So you have to be able to afford having $2000-3000/month taken out of your paychecks to fund your FSA, and then you have to be able to pay another $2000-3000/month to the daycare from your remaining income and you have to be OK with waiting a couple months to get that money back--for example, for my daycare costs it would mean that $4000-6000 of my take home pay per year would be "up in the air" and unavailable for the entire year. I could do this because of my high income & savings and so I got the tax savings of the FSA, but I know other mothers/families who could not use the daycare FSA because they just didn't have the cash flow or savings to afford giving up immediate access to that much of their paychecks.

That said, daycare costs do not go on forever--even in my case where I work full time, only 11 years. Yes it's a chunk of money--probably cost me at least $180,000 total for the 2 kids. On the other hand, I made $150,000/year during that time and I will (hopefully!) make at least that until I choose to retire, I have good health insurance through my work, I will be able to help my kids with all or most of their college costs, I have retirement savings, and I am vested in a great defined pension plan---all of which I would NOT have if I had stayed home to "save" daycare costs. If I had quit working when I had my kids, I would have been financially desperate when my ex-husband left me, and I would have been excluded from the high-pay/benefits career track in my field.

I believe people should look long-term, not short term, when planning their finances. Just thinking about the current cost of daycare when you're planning your life/finances is not appropriate--you have to also consider the lost income and lost income/benefits of the person "staying home to save daycare costs" throughout the rest of their career.

We had child care cost while the kids were little and while my wife worked half time in school teaching. She kept her senoirity, her pension and her tenure. Although it was quite difficult financially she is better off keeping her foot in the door and keeping all her skill current.

Yes it was difficult for 7 years but some people can do it. All depends on the profession.

We are about to put two kids into daycare and the cost will be more than our monthly housing cost and at the high end of what CNN mentioned. We are at an expensive center but childcare is the most important line item in our budget so we make it work for a place we really like.

There are not a lot of home based options in our area but I know that is one way people really save. We are able to save some on our cost by using a FSA, so $5000 year is covered by that. Unfortunately, with two kids, that doesn't even cover 3 months.

My husband and I make similar incomes so there is no easy answer of having one of us stay at home. In addition, we both really like our jobs. The best we can do is account for it in our budget- so this is a huge consideration as we hunt for a new house.

On more thing. We live in an area where childcare costs are very high and our local paper recently had an article on au pairs. Many families are starting to use them, especially if you need childcare for multiple kids. It requires you to have someone living with you which is a huge consideration. However, once we have a house it is something we may consider as it is considerably cheaper than our childcare costs. I believe the article listed a price of between $17,000 and $19,000 a year so this is probably only a 'cheaper' option for people in bigger cities with multiple children.

I spend $26,000 a year for a toddler and an infant. Costs are high in northern Virginia.

Also in Northern VA and up until this year (oldest started going to Kindergarten at public school) we were paying $31k/yr for 2 kids in daycare, far exceeding our mortgage (on a nice house no less).

Your article is redundant. Yes, child care costs are very high. But considering how low child care workers are paid, the costs are a bargain. If you didn't put your kids in child care you would not be able to continue your career. Whatever you pay for child care is a bargain when you consider that you're giving your most precious possession(s) over to someone else for extended periods of time.

Rural South Dakota. The last year I had 2 kids in daycare full time - 3 years ago - I paid $5,000 for 9 months of care. (In-home daycare that closes during the summer months.) My summer care was a teenager @ $4/hr and myself working odd hours to accommodate (self employed.)
It IS expensive - yet a hard thing to complain about. These people are, afterall, ensuring the safety of our own flesh and blood...

Childcare is a temporary expense. The lost wages and benefits (opportunity cost) of a spouse staying home don't always make it the right long-term choice, financially. Especially in a market where taking a few years off from working is a real detriment to getting back into the labor market.

Not to mention, many people simply don't find fulfillment in full-time childcare and home making.

We pay almost $14,000 a year for our toddler, and that excludes 8 weeks during the summer when we keep her home. This is at the cheapest center we could find. Massachusetts, however, does have the highest day care costs in the country (by far unfortunately). You can go a little cheaper by doing home-based child care, but we couldn't find one we liked that was cheaper than the center.

My wife continues to work because we can't afford to live off my salary alone. Plus, she's a teacher and it's better for her to work, keep climbing the pay ladder, and putting into her pension.

We have a 9mo, I started a new job that is only 20 hours a week (and a great one that is very flexible if I need to bring her with me!!) so that I could spend more time with her. We pay about $25-$40 a day for part-time daycare (we have had to switch because of a move and then our daughter having separation anxiety price has varied). That is a steal! I heard anywhere from $30/day to $125/day.

I would stay at home but we need my income to pay for my student loans. Once the smaller one is paid off, we can look at me staying home.

"We have never had child care costs since my wife has stayed home since we've had kids. Looks like it saved us a bundle."

No, you didn't save a bundle, because you lost her income. Unless one partner is completely unqualified for any but the most lowest-paid work, it will cost you money to have one partner at home. However, there are other "fringe benefits" - a clean house, home-cooked meals, raising kids how you want, and a happy partner (if that was a desire for them). Also, it can be a status symbol to have a wife at home. But to say that it is a cost saving measure is incorrect.

Potential child care expenses have long been a major consideration in my husband and I's decision making process around whether or not to have kids. We're just now coming around to the idea, but it still feels like we're about to do something that - strictly speaking - is incredibly irresponsible from a financial point of view. Yeah yeah yeah, it's worth it, kids pay dividends in other ways, blah blah blah. But still. KIDS ARE EXPENSIVE and people need to come to grips with that before having them.

That said, I just can't wrap my mind around the argument that it makes MORE sense (financially) for one parent to stay home with the children rather than working and paying for childcare. Unless you are an EXTREMELY low-earner with multiple children, you will almost ALWAYS come out ahead by earning an income and earmarking a portion of it for childcare, and I mean that in both the short and long term.

The most expensive child care situation cited above costs $23,500 per year for 3 children. SURELY your wife could have been earning more than that all these years - probably significantly so. Sure there are "costs" associated with working, but for the most part, those same costs are associated with living. Clothes? Gotta wear those every day regardless of whether you stay home with your children or not. I work in a professional environment but in no way, shape or form do I feel like I have to purchase "special" clothes for my job that I wouldn't otherwise wear, as I'm quite adept at repurposing items in such a way that they're professional in the work place and more casual outside of it. Gas? Yup, gotta drive to and from work every day. But you know what most stay at home parents spend half their day doing? Driving their kids around from one place to the next, be it classes, play dates, excursions, the grocery store,'s not like being a stay at home parent is a get out of gas free card. I'd be willing to bet that the average annual gasoline expenditure for families with children are consistent across the board, regardless of whether one or both parents work.

I understand that some people simply WANT to stay home with their children, and that's 100% A-OK. I'll never begrudge them that decision. I just wish they'd quit couching it as some kind of money saver, because like I said, unless you're a very, very low wage earner with multiple children and no prospects for increasing your wages over time, you will pretty much always come out ahead by earning an income and spending a portion of it on childcare.

Des --

You're making a lot of assumptions about what my wife would have earned and what other costs we saved by her not working.

Besides, we did save child care costs, like I stated -- even if we gave up something else (like an income) at the same time.

Life was very different when we bought our new home for $27K in a subdivision in California in 1963. We took out a 4.25% conventional 25 yr. loan with 25% down. I was a 28 year old engineer making $11,700/yr. We had a 5 year old, a 3 year old and a baby. Not one of the mothers in our neighborhood worked. The kindergarten+ age kids would meet up and walk the short distance together to school and mothers would meet in each other's homes for coffee and chatting while supervising their younger children at play.

The reason mothers with small children didn't work was that they didn't need to because the husband's pay was enough to pay the household expenses, lead a nice life and still save for retirement. Our street was made up of quite a few engineers, an attorney, a doctor, a school principal, a professor, city government employees and a few business owners.

It was the kind of happy neighborhood where we all knew each other and every July 4th. we would get permission to close off the street and hold a big party. When my wife and I became citizens they held a party for us and presented us with a nice USA flag.

Life changes but in some ways not always for the better.

Old Limey - $11.7K in 1963 would be $82.4K today. Seems fairly reasonable comparison actually. So why don't more moms stay at home? Because folks would rather try to double that $80K to $160K, and drive a BMW, instead of have a modest home.

That's why my wife stays home to take care of the kids.

Heh, all of our friends that put their kids in daycare are usually sick. They wonder how we do it. The parents don't even know what's going on with their kids at daycare. One didn't even know that their 2 year old knew some of their colors. "Oh, I didn't know that little Timmy knew his colors." ????? Um yeah, who potty trained your kid? The daycare. Not you. Who reads to your kids? No one, unless you can find 30 minutes in the evening. I'm telling you, daycare kids are behind the curve in so many ways that an extra income is not worth it.

My husband and I always planned to have one of us stay home when kids came along, and luck would have it that I recently started to work from home. Now, when we are blessed with children, I can cut back on my contracted hours and be a work-at-home mom. I'm very happy about how it all turned out, even if I sacrificed a little on my salary.

I find this topic interesting as I'm expecting our first and my husband and I are talking about our options. Plus, some people can be very opinionated and one-sided about the issue.

Example, I find it hard to believe that daycare kids are "behind the curve" like ranch111 says just because the friends he knows don't have a clue about what's going on in their kids' lives.

We are also considering paying a family member to watch our soon-to-be-born baby but we haven't made any final decisions yet.

We pay $60/week for 2 days. My husband works part time from home, and watches our son the other days. Basically we strive to break-even on his business because it keeps him working but if we could find a full-time job for him we'd take it in a heart beat. But the graphic design field has pretty much died. we count the home office as a deduction on household expenses, and do pre-tax dollars for the day care through our FSA. But starting next year when our son is 3 we will want to do preschool, which is a lot more expensive than home based daycare.

@STL Attorney - given the median household income in this country, i doubt that both parents are working so they can double their income from 80k to 160k. its more like doubling their income from 30k to 60k...

If people are making decent money, it may seem like an odd choice when you see that someone's net income after child care is $2-$3/hour, but for many people they actually need that extra $4000, and they have already budgeted out the extras...

yikes, we're considering a montessori that's going to cost $3300 per month for two kids. That's almost $40,000 a year.

@KH, I'm really happy to see your comment - especially the notion that people should look at the long term in considering whether a spouse should stay at home to save money. Unfortunately, bad things happen; I don't think it's necessarily a good idea to make financial plans based on the assumption that your life partner will always be around or able to earn income. The recommendation to stay at home to save money is also at odds with FMF's mantra, your career is your most important asset!

I enjoy reading FMF and have learned a lot about personal finance from this blog, but it'd be great to have more coverage on how to manage two incomes and two careers.

@STL Attorney
My wife went back to work when she figured that she could handle a part time job when the youngest reached 16. She ended up having a satisfying 16 year career in education that provided her with a nice retirement pension. Maybe it was the way I raised in the UK, but when my wife started working I told her that the money she earned was hers to do whatever she liked with and I never asked for 1 cent towards the expenses that I had been paying for many years. She saved a large percentage of her earnings but paid for all of her own personal expenses, hair, makeup, clothes, manicures, presents etc. and saved the rest in separate accounts. We didn't combine her savings with mine until much later in life when we put 99.3% of our assets into a Living Trust. Now that we are in retirement we still keep separate joint checking and savings accounts of small to moderate size at our Credit Union and it has worked out very well for us. By the way, she drives a Mercedes C230 and I drive a Mercedes 560SEL but since mine is a gas guzzler I use her car when she doesn't need it.

Everything worked out very well indeed for us in the end, we have travelled everywhere in the world that interested us, money isn't an issue and the only time we talk seriously about it is with regard to making changes in our will and living trust documents.

Bottom line - the only childcare expenses I can remember paying was for neighborhood teenage babysitters that charged 50c/hour when we had a date night.

We have a 9 month old and a 3 year old. Daycare costs run about $32,000/year. Tough pill to swallow, but we're both PhD chemists and taking a few years off to stay home with the kids is essentially a career-ender.

My wife stayed home with our 3 boys till they were old enough for elementary school. Sure we didn't drive new cars, eat out much or have a big house... but I wouldn't have changed it for the world. If you can swing it I recomend one parent stay home. You can buy all your luxuries for later in life.

My coworker here in Kansas has a soon-to-be laid-off wife and two kids. He looked into daycare with a local church to see if it was feasible for his wife to go back to school. They told him it would be $3,000 a month...which was more than he makes per year.

We paid my sister-in-law to watch our two kids since she was staying home with her 2 of similar ages. This eased the transition out of the workforce for her (about $13K a year for 4 days a week). During this time my wife and I alternated working from home a day a week to watch the kids and give the sis-in-law time with her family.

This went on until my oldest was 3. Then, SIL (sis-in-law) had her 3rd child and decided she wanted to focus on her family. We hired a college student ($11/hr) to watch our kids for that summer and then was able to find an in-home daycare in our neighborhood.

The kids love it, my son is 4 and daughter is 2.5. They know all the kids in the neighborhood and seem so much more well-adjusted. Plus, I like it because it runs about $800-1,000 depending on the month.

You have to do what is right for your family. My wife would not be happy without a career. I like the idea of staying home, but not necessarily with the kids all day :) I'm being honest.

The net result is we feel lucky for our situation and we've both remained high earners along with several promotions during this 4 year period. We are willing to make sacrifices for our kids, such as with my SIL caring for them. We paid her full going rate to not take advantage of her, and we drove 15 miles in the opposite direction of our work places every day. It made the commute a little tiresome, but it was the best choice for the kids at the time.

We're on track to retire if we want to when the kids are in Jr. High. This includes fully funded college savings. It may not be for everyone, but it is how it worked out for us. Also, with both the wife and I having somewhat flexible work schedules, we feel we've had a pretty good balance. If your job allows it, I highly recommend exploring working from home occasionally.

We pay our nanny $450 per week to watch our 3 month-old son from 8-6 Monday through Friday (she's a single mom and brings her 2 year old with her to our house, hence the slightly lower salary). She also does house cleaning, some cooking, and baby's laundry so that when we're not working, we're spending quality time with our baby. I wouldn't do it any other way (ie, day care).

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