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How to Afford Day Care

(Stretch Your Dollars)

Child care costs can be more than your rent or mortgage payment, which is a huge challenge for many families already on a tight budget. But there are ways to cut costs without lowering the quality of the care your child receives. Let’s look at some options for how to afford child care.


The Child Care and Development Fund (CCDF) provides money to states and U.S. territories to pay for or subsidize child care. Many states view this as a program that not only aids those on welfare, but also helps people avoid government assistance. Even if you think you make too much money, check your state’s plan — income eligibility levels may surprise you.

This money can be used to pay for care in a certified day care facility or in your own home. In-home child care providers also must be certified, unless they are a family member or meet other exceptions. So, yes, in some cases you can use this money to pay Grandma for watching your kid.


If you are a student and struggling to complete your studies because of child care costs, see if your school provides subsidized or low-cost care. Though not an exhaustive list of all programs, the Department of Education’s Child Care Access Means Parents in School Program provides funds annually to schools for low-income students with children.


If your employer offers a dependent care flexible spending account (FSA), these pretax accounts can be used to save and disburse money for child care. If you are married and file taxes jointly, or are a single parent, you can save up to $5,000 per year in this account. If you file taxes separately, you can save up to $2,500.

Because you are saving with pretax dollars, you ultimately get more money. For example, if you save $1,000 and are in the 15% tax bracket, you normally would see only $850 of that in your paycheck after taxes. But with pretax FSA contributions, you get the whole $1,000 to spend directly on child care.

Be careful not to save more than you need. In most cases, FSA funds not spent within the calendar year do not roll over and are lost permanently at the end of the year.

: Little boy in bow tie sticks out tongue as parents discuss how to pay for day care.


It will not compensate for your entire child care bill, but individuals without an FSA can claim the Child Care Tax Credit when filing taxes. This credit can mean up to a $1,000 deduction on your tax bill if both parents, or a single parent, paid for child care while working or looking for work. There is an exception for parents who are full-time students. The exact amount of the deduction will depend on your income and how much you paid for care.

This credit can be used in conjunction with an FSA only if child care costs exceeded $5,000 for the year.

Young father with child wondering how to pay for day care.


Look for child care facilities that are certified by the National Association for the Education of Young Children (NAEYC). Your state also will have its own certification program for facilities and in-home care providers. NAEYC-certified child care facilities and in-home care providers should be able to show you documentation of their state and federal clearances required to work with children.

As always, we’ve got your back. — The On Your Own Team End of article insignia

[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by On Your Own, the National Endowment for Financial Education or any of its affiliate programs.]