As parents and professionals, we strive to have the best of both worlds. We want our children to receive the best care while we earn a living. However, as the cost of living rises, the balance between our worlds becomes unsteady.

According to the Center for American Progress, the annual cost for an infant in a childcare center is higher than a year’s tuition at the average four-year public college in most states.

In fact, I speak from personal experience. In 2009, my youngest daughter’s pre-school in the Washington, D.C. metropolitan area cost $13,200. In 2014, my eldest daughter’s college tuition at University of Maryland College Park was $11,400.

While this may seem a cause for concern, there are ways to save money and regain balance:

  • Dependent Care Flexible Spending Account - Most companies offer a benefit called a Dependent Care FSA, which allows an employee to use pre-tax dollars from his or her paycheck to pay for expenses related to care for a child, disabled spouse, elderly parent, or other dependent in order to work or attend school. The minimum and maximum amounts that you can contribute to the Dependent Care FSA are determined by your employer. The maximum allowed by the IRS is $5,000 a year for individuals or married couples filing jointly, or $2,500 for a married person filing separately. The amount that you contribute to a dependent care FSA will be included in box 10 of your W-2.  Keep in mind that married couples have a combined $5,000 limit, even if each spouse has access to a separate FSA through his or her employer.
  • Tax deductions - According to the Internal Revenue Service, if you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. The alternative to using a Dependent Care FSA is to use a dependent care tax credit when you file your federal income taxes. The preferred method will depend on your income, number of eligible dependents, and other factors.  The Dependent Care FSA usually provides the greater tax advantage for most families, especially as their household income increases. It’s important to consult a tax advisor to help determine which method is suitable for your situation.

According to the Center for American Progress, families spend 7.8 percent of their monthly income on child care. Weekly childcare is well over $100 a week and depending on the center and services, it may be double the amount.

There are other methods of childcare that you should consider:

  • Babysitter/Nanny - Who doesn't remember making some extra cash as a teen by watching the neighborhood kids? Times have changed and babysitters are no longer making $2 per hour. According to Payscale, babysitters now make between $10 and $15 per hour. This rate may seem steep, but consider enlisting a relative to watch the kids for a few hours to offset some of the cost. If the kids are in school, you may only need a babysitter to send the kids off to school and watch them for a few hours after school.

    According to, some families opt to share a nanny. When my older two children were in pre-school, I knew of a family who shared a nanny on alternate days. The parents in each family worked from home one day per week. It took coordination and cooperation, but they made it work. The nanny was able to secure full-time hours and the families had the opportunity to share costs. explains the typical nanny share arrangement where two or more families employ one nanny, sharing the cost of her salary and benefits. Some parents work together to come up with a schedule that is tailored to their work schedules. Since both families are contributing to the nanny's pay, the nanny is usually able to earn more. It is a win-win for the parents and the nanny. 

  • Au Pair - An Au Pair is a caregiver who provides a unique cultural experience and has a live-in option. The U.S. Dept. of State regulates all Au Pair agencies. The typical wage can be as low as $7, although higher in affluent areas.

To ensure compliance with IRS guidelines and avoid any misunderstanding, it’s important to disclose whether the compensation is gross or net and what deductions, if applicable, will occur. If you do offer compensation net of Federal and/or state taxes, clearly communicate whether you are paying U.S. Social Security/Medicare taxes only for the employee.  Other considerations may include health insurance and auto insurance depending on your situation.

Hardworking parents shouldn't have to stress over how to pay for childcare. Allowing time for careful research and input from other parents will help moms and dads find quality care for their children.