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Finding Quality (Not Costly) Childcare

There's no way around it: High-quality childcare is a big-ticket item. Working parents spend an average of 8 percent of their gross income, or roughly $4,000 annually, on childcare, according to U.S. Census Bureau statistics. And that percentage can balloon if you live in an expensive urban area. How can you make this investment more affordable without sacrificing top-quality care?

Get With The Program. If your employer offers a dependent-care assistance program, sign up. These plans allow you to direct as much as $5,000 of your salary each year into a special account for childcare expenses. Because your contribution is free from federal and Social Security taxes, and usually from state and local taxes as well, this can easily save you $2,000 or more a year. One caveat: To qualify, you must pay your caregiver on the books.

Let Uncle Sam Help. If your company doesn't have dependent-care assistance, be sure to claim the federal child and dependent-care tax credit that the government provides. The credit can save a middle-income family earning more than $28,000 a maximum of $480 for one child, and $960 for two or more. As with the dependent-care program, however, you must provide a taxpayer ID for your caregiver to claim this tax break.

Find Cheaper Alternatives. Family daycare is typically less expensive than a formal center; a foreign au pair is usually less expensive than a nanny already living in the U.S.

Share The Care. If you use a nanny, you can literally cut your costs in half by sharing your caregiver with another family. Or, if you know another working parent or two in your neighborhood whose part-time office hours complement yours, consider organizing a caregiving co-op, in which each parent cares for the kids for part of the day or on certain days of the week. "Not only can this arrangement save you a lot of money, but your kids also get the benefit of socializing with other children," says Susan Seitel, publisher of Work & Family Newsbriefs. "Everyone wins."