Childcare or Credit Repair: Where is Your Money Going?

Supporting your family is more than putting food on the table. For working parents, the cost of childcare can be a devastating expense in an otherwise frugal budget. According to, the average household spends between 7.3 and 16.0% of their income on daycare costs depending on location. A family living in Chicago is likely to pay upwards of $18,000 per year for one child. That’s $90,000 invested before Junior enrolls in kindergarten.

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Everyone wants the best for their children, but paying top dollar for daycare may not be it. If credit repair is a long-term goal, chances are you’d rather be spending that hard-earned cash elsewhere. Credit is strengthened by paying down debt, diversifying your credit report, and adding to your savings account. The financial security afforded by a money-conscious budget is arguably just as important as a well-qualified nanny. Why not strive to attain both? Review the tips below to reduce your childcare costs and focus on credit repair. Money saved could mean a better future for your kids.

• Flex spending

Many employers offer flex spending accounts to help their workforce meet the demands of mandatory expenses. Pay for daycare tax-free by taking advantage of this option. Ask your company to withdraw a portion of your income for this purpose. Saving on taxes will add up quickly, allowing you to invest that money in credit repair.

• Working from home

The trend of telecommuting is taking over corporate America thanks to rising costs and increased family need. If your boss is open to the idea, talk about setting up a virtual office. The flexibility of working from home allows you to take care of your own children while managing outside responsibilities. Suggest a trial period to illustrate your work-from-home abilities. While the kids may need to play in a separate room, juggling work and family is much easier with fewer expenses. Cross “daycare” off your budget and set your sights on a better option.

• Pre-K

Thinking about preschool? Why not secure a positive environment at no cost? Many public schools offer part-time preschool for children ages 3-5. This option allows your children to work on their developmental skills while cutting your daycare costs in half. Give your kids a head-start while giving your bank account a boost. Look for educational options in your community.

• Cost sharing

Some parents prefer undivided attention for their little one. That said, hiring a dedicated nanny could cost even more than the average daycare center. If you are looking for added attention without the added dough, consider cost-sharing with another family. Talk to friends with kids and choose a professional together. Negotiate a fair price with the nanny that includes care for multiple children and then split the cost down the middle. This strategy allows your child to receive the best care, interaction with other children, and a discounted rate for you. Use the money you save to pay off credit card debt or apply it to Junior’s college fund. The sooner you cut back, the easier life will be.

• Family help

They say it takes a village to raise a child, a sentiment many parents live by. Your extended family is a unique and perhaps superior option in the realm of childcare. After all, they understand your financial situation and love your child as their own. If you are fortunate to have relatives close by, ask if babysitting is an option. Grandma is certainly less likely to charge $18,000 a year to spend time with her grandson, allowing you to reap the savings and provide your son with a safe environment. Credit-friendly options are sometimes the best available—get creative and find a solution that preserves your credit score.