The High Cost of Child Care in America
My wife and I were talking about kids last night. Let me preface this with we don't have children at the moment, but we were trying to figure out how families can afford kids now a days.
Child care in America has become an overwhelming financial burden for many families. As costs continue to rise, parents find themselves grappling with difficult decisions, sacrificing savings and cash flow to afford quality care for their children. I figured it would be a good time to dive into the impact of child care expenses on families and the challenges it creates.
Child care costs in the United States have been steadily increasing over the past few decades. Post Covid things seemed to accelerate even worse. According to a report by Child Care Aware of America, the average annual cost of infant care in a licensed center is more than $9,000, with some states like Massachusetts and California exceeding $20,000 per year. These figures often rival or surpass the cost of in-state college tuition, creating an enormous financial strain on families. Across the US, there are 33 states where childcare is more expensive than college. We are in a crisis now because child care cost are even outpacing inflation at the moment... Check out this trend from Yahoo.
One of the most significant impacts of high child care costs is on family savings. Many parents find themselves dipping into their savings to cover the monthly expenses associated with child care. This can deplete emergency funds, delay home purchases, and hinder long-term financial goals such as retirement savings. The need to prioritize immediate child care expenses often means that families are unable to save adequately for future needs, creating a precarious financial situation.
In addition to draining savings, child care costs significantly affect the day-to-day cash flow of families. For many, child care expenses represent one of the largest monthly outlays, second only to housing costs. This financial pressure can lead to a paycheck-to-paycheck existence, where families have little to no disposable income after covering essential expenses. The stress of managing tight budgets can impact overall well-being and quality of life which negatively impact parents and children.
The high cost of child care often requires that both parents work full-time jobs to make ends meet. This can create a challenging dynamic, especially for families with young children who require extensive care. The necessity of dual incomes can limit the time parents spend with their children, leading to concerns about work-life balance and the quality of family life.
Not to mention the cost of child care has significant implications for workforce participation, particularly for women.
It's a conversation my wife has had with me many time. Many women face the difficult decision of whether to return to work or stay at home due to the high cost of care. In some cases, the cost of child care may outweigh the potential earnings from employment, leading to a reduction in workforce participation. I know in our circumstance that would be the case.
I don't know how we fix this, but it's definitely something weighing on my mind right now. I'd like to hope maybe my Hive blogging could supplement my income to help cover this costs, but as most thing with "American Dream" i just don't think that will be the case at this moment.
I'd like to know your thoughts on child care or how you manage it if you do have kids. finance
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This is one of the big reasons that my ex-wife didn't work after my daughter was born. We were already seeing the insane costs with our son. He was school age by the time my girl came along, so the ex just stayed home for the most part. She worked some after we split, but not much because I was coughing up enough child support where she didn't really have to work that much... Hence why I am broke now, lol, and they are almost 25 and 20 now. It doesn't get any better until they start doing for themselves, lol.
Like with my cousin, her teaching salary alone was barely covering childcare, and the kids kept coming home sick, so she just said screw it and quit and started staying home with them. That led to homeschooling. They are well mannered kids for sure, although a bit sheltered, lol. But at least they have some good life skills.
It's a real issue if the women wants to work considering the stats say that they are most likely to exit the workforce. It's just crazy that childcare and parents are not more supported when everyone keeps saying we have a kid shortage.
I don't have kids, but I will share my opinion on child care. Child care is a critical aspect of society as they are the future.
My opinion is every parent either fathers or mothers should take sometime to learn investing and start practicing because that's a way to create multiple streams of income remotely and still have time for the kids, that's how I view, things aren't getting cheaper neither is the income from one source increasing with it. Thanks for sharing.
I think an investment fund is a good idea. I was just telling my wife if we are to have a kid it might be worth throwing 200-500 in an account a year in advance then to continue a fund of a similar amount for a child up to 18 even at 200 that’s $43k in a account
That's an awesome idea.
hmmmmm, i never really gave it serious thought.. i guess the just 'find' the money with the more kids u have? :P
I only have 2.. girl, boy.. and then I decided that was enough for me!
the boy EATS most of the cost, I think..
That was me back in the day. My mom used to say us boys would eat them out of house and home. Looking back we were not that well off so I bet it was stressful in reflection.
👊😉😂😂 yup! but it's all good.
Most the people I know who have kids and have to pay child care end up getting a pretty big tax break for it come March or April. At least they used to. I don't know if that is the case anymore. If you use that money wisely, it helps ease the burden, but most people probably don't do that.
I did not think of that aspect.
It looks like the Child tax credit for michigan is expected to increase. The base child tax credit is currently worth $2,000 per qualifying child, and it is expected to be adjusted for inflation for tax years 2024 and 2025. This could amount to a roughly $100 increase in the credit each year.
This still is not even close to what it cost but I guess anything counts.
I think there is something else too. I remember my friends getting like thousands back on their returns because of their daycare.
You are correct I did not know there were too different credits.There are two federal tax credits that aim to support families with young children. The Child and Dependent Care Tax Credit (CDCTC) is targeted to help working families offset the cost of child care, while the Child Tax Credit (CTC) supports families in managing the high costs of raising a child, and is most often used to cover everyday household expenses. Enhancing both of these credits would have a real impact on the economic stability of families, leading to long-term benefits for young children and families.
The only issue is the credit is nothing compared to the cost. The credit rate phases down as income increases until it reaches 20% for families with an AGI of over $43,000, meaning the maximum credit rate available to families at this income level is $600 for one dependent or $1,200 for two or more dependents (20% of $6,000 in expenses).
Gotcha!
Nothing like reading through tax code...
It is true that one should think about all such things first and then think about the child, but this is not the case here in our country. Here people first have a child and then think about the expenses but this should not be done.
Yeah that is very tough to do for a person like me. I have to plan out everything.
The rising cost of childcare is unsettling, making it much harder for a family to cover these costs when they are on a low income. Meanwhile the children have to be brought up. nothing to do
I can't imagine how hard it would be to raise children on a low income. According to a U.S. Department of Agriculture study published in 2017, the average cost of raising a child from birth through age 17 was $233,610 for a middle-income married couple with two children. This estimate was based on a family of four and excludes any college costs.
It's an issue that I have heard from quite a few friends and family members. The prices of things have gone up and it's a tough sacrifice. I don't have kids but one of my friends bought a house because they were expecting a kid using some of their savings, and they cut back a lot after the prices of everything went up. In a way, I would try to make sure that you have enough of a saving.
I think savings is critical but cash flow may be more important. I'm just. Wondering how other do it
I think to an extent and if I should even compared it with my country Nigeria, I will say there is a well detailed structure for even the raising of children in America much more than in my country
I would agree the fact is it's really expensive here. I want to give any future children better than what I had it. I can try to do that at my level but the direction of world is a scary place.
Children are the heritage of Tomorrow and should be well catered for..in fact they are the future and so they must not be tampered with actually Il
They are the future and need to be treated as such. America is doing such a disservice for our future
Even within our country, the living cost, whether of children or of us, has become very high