This Is How Much the Average American Spends on Child Care

Inflation has forced families to stretch their dollars further over the past two years. Rising food and housing costs have strained many Americans' monthly budgets. And the increasing cost of child care puts even more pressure on many families.

Here's how much American families are paying in child care, why costs have gone up, and a few suggestions on how to save on child care expenses.

Nearly half of parents spend $18,000 annually on child care

According to Care.com's 2024 Cost of Care Report, 47% of parents spend more than $1,500 per month on child care -- totaling more than $18,000 annually. These expenses include babysitting, daycare, sending their child to a family care center, or a nanny.

For some Americans, the cost of child care significantly impacts their finances within the first five years after having a child and continues to eat into their family budget. The report says families spend 24%, on average, of their household income on child care.

Even more concerning is that more than one-third of families are tapping their savings account to pay for child care. Unfortunately, there isn't an end in sight for the high costs.

Government programs enacted during the pandemic to help parents with child care costs officially ended in September of last year, which could put an additional strain on families this year. About 54% of parents expect to spend $600 or more in child care per month than last year, which could mean a $7,200 increase in expenses compared to 2023.

Here's what's driving child care costs higher for parents, according to the report:

• Inflation
• Child care centers increasing their rates
• The end of government-sponsored child care funding programs

How to help lower your child care costs

About 37% of parents say child care costs are among their top three financial concerns. If you're having trouble fitting the rising expense into your budget, here are a few money-saving suggestions.

1. Open a dependent care flexible spending account (FSA)

One of the best things parents can do to help them with their child care expenses is to open a dependent care FSA. These tax-advantaged accounts let you put up to $5,000 in pre-tax dollars into the account. The money is then used for approved child care expenses and lowers your taxable income for the year. Just remember that you'll have to spend all of the money in the account before the end of the year, or you'll lose it.

2. Consider need-based child care assistance

Many states have child care assistance programs for parents.​​ These can be vouchers, certificates, subsidies, or even free child care programs like Early Head Start or state-funded pre-kindergarten. You can learn more about these programs and how to qualify at ChildCare.gov.

3. Claim the Child and Dependent Care tax credit

Some parents may be able to claim this tax credit, which lowers their tax bill based on qualifying child care expenses. With it, you can claim 20% to 30% of your child care expenses, up to $3,000 for one child or $6,000 for two or more children.

4. Consider alternative working options

For some families, having one parent stay home is cheaper than paying for child care. According to a recent report from Motherly, 25% of Gen Z and millennial mothers were a stay-at-home parent in 2023, and of those, 42% said they chose to do so to spend more time with their kids or because child care was too expensive. Many dads stay at home as well and no matter which parent is at home, finding a work-from-home position can help with finances. If you're trying to balance child care costs with work, you may want to consider gig work that allows you to do both.

Child care costs probably won't come down any time soon, so taking the time to consider how your family will cover the expenses is more important than ever. Taking advantage of available state-funded programs may be a good start.