Save on child care expenses and bills.

To put the high costs that parents face raising kids into perspective, consider this. According to a report by the National Association of Child Care Resource and Referral Agencies, the average monthly cost of child care spent on an infant is greater than the average amount of money that families spent on food each month last year. In fact, full-time child care for an infant can cost as much as $14,000 a year, stated the study. When you also factor in the 50-plus packs of diapers, the toys and stroller (not to mention paying for the college fund), you may find that you need to fire the baby sitter or get a second job to help afford it all and pay for all these bills.

But parents should not despair. There are several ways to save on child care expenses and related bills that do not involve bringing your one-year-old to that weekly sales meeting at work.

Take advantage of tax credits to help save on child care expenses
The federal government can offer cash-strapped parents some help. The Child and Dependent Care Credit will allow working parents the ability to claim up to $3,000 for one child and up to $6,000 for two or more children on their income federal government tax returns. Some states may also offer deduction to low income, working parents.

This can help offset any money that household paid for child care. You do need to keep in mind that the maximum tax credit to which you may be entitled will be lowered if you use your employer’s flexible spending account. (More on this in the next section.)

Open a Dependent-Care Flexible-Spending Account
These accounts are offered by over 90% of employers, according to Hewitt Associates. These accounts function like medical FSAs. They allow employees to set aside pretax dollars, up to a maximum of $5,000, to help pay for their child care expenses and other costs associated with caring for loved ones.

Eligible child care expenses and bills that can be paid include baby sitters, day-care centers, and even day camps. To qualify for this assistance with day care expenses, your spouse must be working, looking for work or be a full-time student.





You also do need to remember that the same child care expenses can’t be used for both the tax credit and the FSA. As an example, if a taxpayer had $8,000 in qualifying costs for one child, $5,000 of those bills could be covered by the FSA and the remaining $3,000 could qualify for the full child and dependent care credit, which is also dependent on your income. If a taxpayer had only $5,000 in total bills for one child, those total child care costs could be covered entirely by the FSA and no expenses would qualify for the tax credit.

States child care assistance programs
Many states offer aid and grants to help with paying child care. The details will vary by state, and some government programs will offer a voucher as a form of payment.

They may have discounted, or even free, child care programs for working poor families. While this financial aid is primarily for lower income families or those in job training, or those who may be facing a temporary hardship, the help is definitely out there and should always be considered. More on state assistance programs.

Seek Employer Discounts to Help With Paying Child Care Bills
Some large companies will negotiate substantial discounts with local child and day care centers. Find out if your employer offers any discounts, and if they don’t offer this, you should request they look into it as others will benefit from the help as well. Most human resources departments are very happy to follow up on something like this as it is no cost to them, and it helps improve employee retention.

Adjust your work schedule
You can ask your employer for flex time. Employees that do have the potential for working more flexible schedules, even if it only on a short-term basis, can help divide care by working shifts. For example, one parent can work in the evenings, while the other parent stays home with the child during the day. It is great for the child as it is more time at home with your kids, and it is also less money spent on all these different costs ranging from baby sitters, child care expenses and bills.

Share child care obligations and the costs involved in this
One increasingly popular way to save on child care costs is to share the costs of a baby sitter or Nanny with another family. For the savvy, frugal parent, “share care,” as it is now sometimes being called, is an excellent option to save on these day care expenses.





Here's an example of how this program works. A family that is maybe struggling to pay a nanny $600 a week on child care bills joins with another family that has a child around the same age. The provider will watch both children during the day, and this arrangement will help them share the costs of paying the nanny or baby sitter.

Using that example, now each family will only need to pay $350 a week or so for the nanny's bills, thereby giving the care giver a bump in compensation (she now earns $700 a week) and it will also significantly lower the families total child care costs. Both the nanny benefits from a higher income, and the families benefit from lower expenses outlays as well.

However, finding a sitter or nanny who meets both families’ needs may take time. You can start your child care search by contacting local parenting groups or by visiting your local child-care sites or day care providers. You will now often find entire sections devoted to sharing.

Reduce Your Baby Sitter's Pay
This is one of the unfortunate fall outs of the weakening economy, but it can always be an option of last resort. Some cash-strapped
parents are being forced to give their nanny or baby sitter a pay cut. A study by SitterCity showed that 36% of sitters surveyed reported getting paid less than they were a year ago. This is a sticky situation for parents as while they don't not want to offend or upset the person who is caring for their precious child, they also need to avoid having to take out a second mortgage to pay for child care expenses.




If you do decide to adjust a baby sitters compensation, this may be one way how to communicate this news  to them.

  • Do not do it over e-mail or the phone. Talking about lowering hourly rates paid should be an in-person conversation.
  • Be honest and forthcoming. Explain the situation in detail. While it might be painful, the more open you are, and the more information you give for the reasons behind the move, the better it will be received by the sitter or nanny.
  • Consider a barter arrangement to help with child care expenses. For example, to compensate for lost wages, offer your nanny or sitter something that might be valuable to them, such as letting them drive your car on the weekends, borrowing electronics, or using your Wi-Fi.


By Jon McNamara

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