What child care can I afford?

Find child care that works for your baby and your bank account.


If the time has come to choose a child care provider for your little one, it’s bound to be a big emotional—and financial—decision. In fact, 54% of families said they spend more than 10% of their household income on child care, while 1 in 5 spend a quarter of their income or more.1

It’s normal to experience a mix of feelings during this time: sadness at the thought of spending so much time away from your infant, excitement about leaving the house or resuming your career and worry about whether or not you’ll be able to afford it.

Understanding child care prices and the different options can help you make a decision that suits your needs, your baby’s needs and your family’s budget.

Consider child care costs

There are 2 main types of child care: a nanny or daycare. Like with many parenting decisions, there’s not a “right” or “wrong” answer. Your family’s unique situation will determine which one works for you. Either option can provide your baby with loving, attentive care. Here’s what you can expect from both options in terms of price tag and experience.

Select a super nanny

Understanding how nannies are paid and the different services they provide can help you choose the most affordable child care option for your family.

Hire a nanny: A nanny cares for your baby at your home, saving you the added trip of dropping off your baby (and assorted gear) at a daycare before work. A nanny can give your baby lots of one-on-one time and help him or her stick to a routine. Many are even open to light cleaning and cooking, as long you nail down those responsibilities up front.

When it comes to cost, the average monthly salary for a nanny is around $2,228 or $14 per hour.1 Nannies determine their own hourly rates and salary, so the cost varies. You may want to do some research and talk to friends who have used a nanny in the past to fully understand considerations and costs. As your nanny’s full-time employer, you may want to provide paid vacation, as well as a few sick days, a yearly bonus and overtime when you need extra coverage.

Split the cost with another family: Some families decide to team up and share a nanny. Your child may get the best of both worlds—lots of personal attention plus interaction with other kids—while you get care at a more affordable price. Most of the time, the nanny watches all of the children in one family’s home, but the families can decide together what setup works best for them.

Welcome an au pair into your home: An au pair is a live-in nanny from another country. A government-regulated cultural exchange program will match an au pair with your family. You’ll pay an agency a fee (usually around $7,795) to help you find an au pair. You’ll also pay the au pair a stipend of about $783 per month and provide 2 weeks paid vacation.

Although you may feel nervous about inviting another adult to live in your home, many families develop warm, lifelong relationships with their au pairs. Your child will bond with someone from another country and may even learn the au pair’s native language.

Decide on daycare

Daycare often costs less than hiring a full-time nanny, but the price of individual daycares varies. There are 2 different types of daycares—a daycare facility and a home daycare. You and your family can decide which type fits your needs.

Choose a daycare facility: At a daycare center, children are in a classroom-like environment.2 The state regulates daycare centers to ensure they meet certain safety and care standards.3 Daycare.com has a breakdown of licensing requirements you can use to understand the regulations in your area. Your child can make new friends and try new activities. A common worry for new parents is that their child will be exposed to many different germs. Don’t worry, though: Studies suggest that these early illnesses strengthen children’s immune systems, meaning they may get sick less when they’re older.4 The national average daycare cost is $784 per month.1

Select a home daycare: Home daycare providers usually watch other children in addition to their own kids, in their own residence. According to Child Care Aware, a child care advocacy group, you can usually expect to pay less than you would for a traditional daycare center, but rates vary. BabyCenter reports that the national average monthly rate for an in-home daycare is $646 per month.5 While some home daycare providers are state-licensed, many may not be. Your local Child Care Resource & Referral agency can assist in any research you may want to do.

Two ways to help pay for child care

At this point, you may be wondering how you can afford child care, in addition to all of your other expenses. You may be worried that your finances will be stretched, but there are ways you can lessen the blow to your paycheck that you may not have considered before:

  • Take advantage of a tax credit: Pay your child care providers on the books so you can benefit from any associated tax breaks.6 The Child and Dependent Care Credit allows you to claim up to $3,000 per child (under 12 years of age). The credit, which varies depending on your income, can cut the amount of federal taxes you owe the government. This may free up more money that you can save for other child-related expenses.

  • Use a child care flexible spending account (FSA)6: Your company may offer this type of FSA. It allows you to put aside up to $5,000 before taxes to pay for child care expenses. After setting it up, a certain amount of money will be automatically deducted from your paycheck pre-tax. After you submit receipts from your child’s nanny or daycare, the funds will be reimbursed to you. Keep in mind that any money in the account that isn’t used by the end of the year will be forfeited, so try to anticipate the child care costs as best you can.

It’s true that you may need to make some changes to your current spending habits to accommodate child care costs. But creating a savings plan can help you pay for child care and the other expenses associated with having a baby. While no one can replace you, with some time and research, you can find the child care solution that is a fit for your family and your bank account. The day may come that your little one doesn’t want to leave the nanny or day care center because of how much fun they’re having—which may reassure you that the child care decision you made is working for your baby—and for you.



This site is for educational purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

  1. Gerke, N. (n.d.). Child care spending is now more than 10% of household income for majority of families. Retrieved July 29, 2017, from: https://www.care.com/press-release-child-care-spending-over-10-of-household-income-p1186-q79563875.html

  2. Child Care Centers. (n.d.). Retrieved July 12, 2017, from: http://childcareaware.org/types-child-care/

  3. Why is a child care license important? (n.d.). Retrieved July 10, 2017, from: http://childcareaware.org/families/health-and-safety-in-child-care/licensed-child-care/

  4. Klass, M. P. (2016, May 31). Day care infections may mean fewer sick days later. Retrieved July 10, 2017, from: https://well.blogs.nytimes.com/2016/05/31/day-care-infections-may-mean-fewer-sick-days-later/?_r=0

  5. 2016, L. U. (2017, June 02). How much you'll spend on childcare. Retrieved July 12, 2017, from: https://www.babycenter.com/0_how-much-youll-spend-on-childcare_1199776.bc

  6. Topic No. 602 Child and Dependent Care Credit. (n.d.). Retrieved August 2, 2018, from https://www.irs.gov/taxtopics/tc602

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