Bring Clarity to Your Finances™

Clarity Financial Planning Services is an advocate for your financial future who takes a holistic approach to your needs and goals.

Financial Planning for Families: Childcare Costs, Part 1

Three years ago, Personal Capital asked an important question in The Rising Cost of Childcare: Can You Afford to Work?” that while at one time staying at home with children was a luxury for some parents, it is now becoming a necessity for others. Childcare costs so much that some people really cannot afford to work and these costs have only risen since the piece was written. Without relatives or friends to provide free or seriously discounted childcare, some parents cannot maintain jobs.

Whether people plan a pregnancy or not, once it is confirmed, it can be easy to concentrate on the immediate costs like a crib and diapers. And while there are some families that are reserving daycare spots even before there is a baby, Personal Capital observes that a lot of “new parents are shocked to find they are working for pennies after paying for childcare.” Certainly, families above the federal poverty line find that daycare costs are a burden, but Personal Capital reports that “daycare is unaffordable” for families living at the poverty level.

If you can do some financial planning before having a child or before you need to make a quick decision about placing your child in day care, you may avoid some stress.

Some people do not have the temperament to stay home with a young child so you must consider that. However, you can work with a Fee-Only financial planner to actually crunch the numbers to see what makes sense for you financially. While you may look at daycare costs and income, a Fee-Only financial planner can help you examine the larger picture, including how federal and state taxes, transportation, and other expenses that you need to think about before you decide on daycare. And keep in mind, daycare does not have to be full-time.

Next week we’ll look at some options that parents can consider when making this decision.