There’s no doubt about it: daycare is expensive. Whether you’re using it part-time or full-time, daycare is often one of the largest items in a family’s budget. However, the cost of child care varies based on the type of care provided. You may be asking yourself: what are the cheap and affordable daycare options?
While no daycare is exactly cheap, there are affordable daycare options. One important point to remember is that there are no hard and fast rules when it comes to daycare affordability. The most expensive child care in one part of the US might be less expensive than the cheapest care in another part. This is key to remember: the cost of child care varies quite a bit by the region you live in and the cost of living in that region.
This article reviews the affordability of daycare options. We start with the most affordable and move down to the least. The recommendations we provide here are what is generally true when it comes to daycare affordability, not what is always true. However, these general rules tend to hold true no matter where you live.
Most affordable: Family, friend, and neighbor care
The cheapest daycare option is to have a family member, friend, or neighbor care for your children. Why is this the most affordable daycare option? There are two major reasons.
One, care you get from a family, friend, or neighbor does not need to be licensed child care. This is different from several other types of child care like family daycare and center-based daycare which are required by most states to be licensed. While licensing is a great way to ensure quality, it also increases the cost of care as programs invest to meet those quality standards. On the flip side, a family, friend, or neighbor caregiver does not have those requirements but may not also have the expertise that a licensed program has. This means that a family, friend, or neighbor may be cheaper but not necessarily better.
Two, is that you can usually use family, friend, and neighbor care only when you need it. What this means is that you’re not paying for any ‘extra’ daycare that you don’t need. For example, some daycare centers only offer full-time care. This means that parents must pay the full-time cost to use the center, even if they only need care for 30 hours per week.
Somewhat affordable: Home-based child care
The second most affordable daycare option is usually a family (sometimes called home-based) daycare. Family daycares are run out of a caregiver’s own home. Frequently the caregiver, or homeowner, is the only person providing care in a home-based program.
This is one of the major reasons that family daycares are more affordable than other types of child care. A family daycare program does not need to pay rent for a separate facility in the way a daycare center would. This is money-saving for the home-based daycare provider since they can use their home for dual purposes.
Another reason that family daycare is often a more affordable option is because of limited staffing. Very often, family daycares only have only staff person: the main caregiver or teacher who runs the daycare. This means that there are no other staff salaries or benefits that are going into the cost of care. The downside of this is that you are at the whims of the caregiver’s schedule. If they take time off you may need to arrange for and pay for backup care.
Somewhat affordable: Part-time preschool
Preschool can be an affordable option for families looking for care for children from ages three to five. Preschool is different from other types of daycare in that it is usually part-time. The part-time nature of preschool is a big part of what allows it to be affordable for families. However, while the overall cost of preschool may be lower the per hour cost may be higher. But preschool remains a great option for families who do not need full-time care and who have preschool-age kids.
Many preschool programs only operate two to three days a week. Occasionally, they will run five days a week but rarely for the full day. As mentioned earlier, part-time preschool means that parents are only paying for the care they need. A drawback of preschool is that the limited scheduling means you may end up paying for backup care. Additionally, many preschool programs follow the school year and do not offer programming in the summer. If your family needs summer care a preschool may not be a good option for you.
Many families find that preschool is good as an accompaniment to another type of child care like having a nanny. Combining preschool with a nanny is a great way to provide young children with one-on-one attention and structured time with a teacher and peers. Combining preschool with a nanny also is a good approach for families with a large age spread among their kids. The nanny can have some focused time with the babies and toddlers in the family while the preschooler enjoys some time with his peers.
Somewhat affordable: Nanny share
A less frequently used but still somewhat affordable daycare option is the nanny share. Nanny shares are when two or more families pay for one family who cares for multiple children in the families’ homes.
A nanny share can be an affordable option because the high cost of having a nanny is split between multiple families which can bring down the cost substantially.
Keep in mind that, as with nannies, you’ll need to pay employment taxes on your nanny share. Typically with a nanny share, one family assumes the role of the employer so that they can handle the nanny’s pay and taxes. This can be a headache when dealing with multiple families. However, many families still find that a nanny share is a great way to get the benefits of a nanny without the very high costs.
More expensive: Center-based child care
A more expensive and less affordable daycare option is center-based care. Daycare centers can be single programs or part of a chain, like KinderCare. Daycare centers are located in a commercial building and are run as a business. As such, they typically are large child care programs that serve children from babies up through preschool. Most center-based daycares have multiple classrooms for each age group.
One reason that daycare centers are more expensive is their ongoing expenses, like staff pay and benefits, and building rent. These established costs make it difficult for daycare centers to cut costs too much. Staff salaries in particular are closely tied to work experience so higher salaries often translate into better care and teaching. That means that while you will often pay more for center-based child care you’re also more likely to have a seasoned teacher for your child. To sum up: you get what you pay for!
Similarly, daycare centers often strive to reach a high level of quality in the care they provide. This quality is great for kids and means they are well-cared for in a rich learning environment. Of course, that comes at a cost and most families find they need to balance quality care with affordability. Many families want center-based child care for their kids but find that the cost is simply too prohibitive. One way that families tackle this problem is by sending their kids to a family daycare when they are younger and child care costs more. Then when their kids become preschool-age (3 to 5 years old) they switch to a center that is more affordable for older kids.
Most expensive: Nanny
The most expensive and least affordable daycare option is usually a nanny. Nannies can be a fantastic option for families. They come to your home and provide one-on-one care for your kids. You have full discretion over who you hire so you have the chance to find someone who is a great fit for your kids.
All of the benefits of a nanny come at a cost. You as the nanny’s employer need to pay 100% of her salary and benefits. Additionally, hiring a nanny means you’re now an employer and need to pay nanny taxes. These costs can quickly become prohibitive. If you are considering hiring a nanny, you’ll want to sit down and calculate all of the costs. You don’t want to find yourself in a situation where you hire a nanny you love only to find out you can’t afford her.
If you afford her, however, a nanny is often a fantastic option for families seeking to maximize flexibility, hands-on care, and learning.