Affordable Child Care Could Be Even Harder to Find as Federal Funding Ends

Raising a child is hardly an inexpensive prospect. Recent research from The Ascent found that it costs about $300,000 to raise a child from birth to 17 years of age, depending on the rate of inflation. And while housing is the most expensive aspect of raising a child, child care and education expenses account for 16% of the cost.

Meanwhile, Care.com reports that 67% of parents are currently spending 20% or more of their annual income on child care. And given that the weekly rate for a daycare center has reached an average of $284 on a national level, it's no wonder so many parents are raiding their savings accounts just to secure care.

But soon, the cost of child care might rise even more for a large number of people. And that could be financially catastrophic.

A loss of federal subsidies could result in higher costs for parents

During the pandemic, child care centers needed funding to stay afloat. As part of the American Rescue Plan, the massive 2021 relief bill that put $1,400 stimulus checks in Americans' bank accounts, the government provided states with almost $24 billion in stabilization funds to keep child care providers open.

But that aid expired at the end of September. And now, many child care centers are at risk of closing due to a lack of funding. Once that happens, parents will have fewer choices for securing care -- and they might have to pay up because of that.

That assumes, of course, that parents who lose their child care providers are even able to find new ones. There are regulations in place to help ensure that care centers don't take on more enrollees than they can handle. So if a large number of daycares shutter in the absence of federal aid, some parents might actually have to give up their jobs and lose income due to having no options.

How to keep your child care costs down

In many cases, there's not much you can do to keep your child care costs down other than shop around in your area and compare rates among providers. But remember, we're talking about having your child (who may be an infant or toddler) cared for. So saving $20 a week may not be worth it if it means moving your child over to a care center whose reputation isn't so stellar, or that doesn't have the same number of staff members as one that's a touch more expensive.

That said, one way you might be able to cut down your child care costs is to negotiate your working hours with your employer. This strategy might especially work if you have a co-parent or partner who's raising your child with you.

Let's say your partner works a traditional 9-to-5 job but is home by 6 p.m. to take over child care. If you're able to get your employer to let you work from 2 p.m. to 10 p.m., you can potentially pay for just a half-day of daycare and bank the difference.

Of course, working those hours may not be optimal. But remember, once your kids are old enough to attend school, the cost of child care might drop, since at that point, you're only paying for before- and after-school care. So it may be worth the sacrifice for a couple of years.

Another thing worth doing is signing up for a dependent care FSA through your employer if it's offered. You'll be eligible to contribute up to $5,000 tax-free to pay for child care expenses, which means you won't be taxed on $5,000 of income. Granted, your total tab might well surpass $5,000, but you can at least reap savings on part of that cost.

All told, child care is an unavoidable expense for a lot of people. If you're able to shrink it even a little bit, it could work wonders for your financial situation.