The U.S. Census Bureau estimates there are 82.18 million families within the United States in 2017. The average family size is 3.14 people, and an estimated 42% of families have children who live at home, under the age of 18.
Families are waiting longer before having children, sometimes until their thirties and forties rather than the traditional twenties. The Centers for Disease Control and Prevention’s National Vital Statistics Report found that the average age of women having children in 2013 reached a record high at 26. More women are making education and career a priority in their twenties, postponing child rearing.
The economy has also created an environment in which pursuing a career and starting a family at the same time is difficult to achieve, partly due to the high cost of childcare. Parents spend an average of $9,733 for full-time care for toddlers and an average of $233 each week for after-school care. Add the cost of full-time childcare during the summer months, and 1/3rd of households with children under the age of 18 spend 20% or more of their income on care for their children.
Finding quality care for children during summer months, which fits into your budget is a challenge. With summer vacation lasting approximately three months, reducing summer costs can help you manage day-care expenses the other nine months. Explore the following options to lower costs, while still providing your children with the enrichment activities that will create a memorable summer holiday.
One of the most popular places to send school-age children is summer camp. You can find savings by reserving the same camp for multiple weeks, multiple children, and in some cases, income-based discounts. Early registration, also offers discounts, most often between January and March, which can produce significant savings. An estimated 21% of families receive a discount on camp registrations.
The type of camp you choose can greatly impact the price. Day camps cost less than overnight camps. YMCA, church, and government-sponsored camps, such as programs offered through the local parks and recreation departments, cost less than private camps run by individual companies.
Regardless of what type of camp you choose, explore scholarship options, which can create a discounted camp experience. Camp scholarships are available in both private and public programs. Think of a scholarship as a tuition grant, given to families showing financial hardship. Qualifications vary across camps. The President of American Camp Association, Ann Sheets, stated, “90% of resident camps and 89% of day camps offer scholarships.”
Begin the scholarship process as soon as you decide on a camp to attend. The definition of financial hardship varies and can cover a range of income levels. Summer camps offer a limited number of scholarships and award funds typically on a first-come-first-serve basis.
Summer camps have a range of price points and include opportunities which allow children to explore interests. There are camps focused on a specific topic such as Karate, ice skating, or science. Some camps help children focus on skills needed in the next grade, or a sport. General camps will provide a wider range of experiences, including camp songs, games and swimming.
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One cost-effective way to provide care for summer children is by partnering with friends or neighbors who have children of similar ages. You can create a neighborhood co-op to swap out childcare needs with other parents or hire a nanny to care for multiple children and split the cost.
Creating a neighborhood co-op requires coordinating with other families to ensure everyone has the needed care during their work schedule. This program works best when two or more families work opposing shifts, which allows you to establish a routine of care that does not alter much from week to week.
The idea of a babysitting co-op is to find several like-minded parents who will take turns watching each other’s children at no cost. The structure can vary based on the needs of the group. You can use the group for occasional daytime or evening sitting, or regular playgroups. The key benefits are the low cost and flexibility to make arrangements that work for everyone in the group. The challenges are that everyone must communicate effectively to ensure each child receives care when needed.
Nannies provide professional childcare, and when splitting the cost with others, can offer a lower cost than other options. Children remain at home or in a neighbor’s home most weeks, allowing for less structure and more free time. A nanny is an employee, which could create tax ramifications and other considerations. Outlets such as Care.com can help you locate the right individual to care for the children and have applicants with prescreened background checks.
The IRS provides two key ways to reduce the cost of summer childcare through tax savings. The first is to utilize employer child care benefits via a flexible savings account and the second is through the childcare tax credit.
Childcare Tax Credit applies to out of pocket expenses you incur to provide childcare for your child. You would qualify for the credit if you paid for daycare, babysitting, some summer camps, and other care of a qualifying child under the age of 13 or a disabled dependent of any age. The tax credit applies for up to 35% of qualifying expenses of up to $3,000 for one child or $6,000 for two or more children.
A Flexible Spending Account (FSA), allows you to contribute pre-tax dollars toward the cost of childcare. Eligible dependent care services including summer day camp, preschool, before and after-school programs, and child daycare. The 2018 Dependent Care FSA, also known as the Dependent Care Assistance Plan, can accept up to $5,000 for married couples filing jointly or a head of household.
You cannot double dip and count FSA dollars towards the childcare tax credit. However, you can claim both if you have expenses beyond the funds in your FSA account.