Child Care | Money Sense, May 2012

Written by on May 1, 2012 in In This Issue, Money Sense - No comments

Care Costs

Modify your budget to prepare for child care expenses

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As school ends and summer begins, child care is on the minds of many. And for those with a baby on the way or a young one who needs full-time care, the cost can be overwhelming.

According to the U.S. Census Bureau, more than 11 million children under age 5 are in some type of child care setting each week.

Money SenseThe U.S. Department of Health and Human Services recommends parents spend no more than 10 percent of their family income on child care. However, Indiana families exceed that percentage on average, with 13 percent of married couples’ annual incomes going toward an infant in a center, and 41 percent of single mothers’ incomes.

These costs can put a strain on any budget and need to be planned for from day one.

As soon as a couple learns they are expecting, they need to add a child category to their budget, says financial planner Peter Dunn.

“For those nine months, they should start going without a portion of their income to save for pregnancy expenses –– not only to accumulate money, but, more importantly, to remove that level of spending from the budget, so they’re used to living without it for child care,” he says.

To alleviate these costs, parents either need to reduce their expenses by the cost of child care or eliminate the entire income of one person so that he or she can stay home.

“People try to handle the expense without cutting in other areas, and that’s the biggest mistake I see,” Dunn says.

You may have to sacrifice by cutting extras like dining out, but don’t sacrifice quality care. Find an option that works for both you and your child, whether center-based child care, family child care providers, in-home caregivers or trusted relatives or friends.

By the Numbers

Average annual fees for full-time care in Indiana

> Infant: $9,200
> 4-year-old child: $7,000
> Before/after-school for school-age child: $4,400

> Infant: $5,900
> 4-year-old child: $4,950
> Before/after-school for school-age child: $4,400
Source: Indiana Child Care Resource and Referral Network

4 Steps to Finding Quality Care

Interview — Call about openings, licensing, hours, cost, financial assistance, transportation and meals. Ask how they handle discipline, sick children and emergency situations. Visit and look for a responsive, nurturing atmosphere.

Check references — Ask parents about the caregiver’s reliability, discipline, communication and values. Find out if the facility meets regulations.

Make the decision for quality care — Which provider best meets the needs of your child? What options are affordable for your family?

Stay involved — Maintain good communication about your child’s growth and any issues or concerns that arise. Ask your child about his or her day and activities.

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