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Don't Forget to Budget for Childcare

Childcare is the largest expense for many parents with young children—ahead of even housing or food. And while 75 percent of U.S. families saying they are surprised or overwhelmed by the cost of care, more than four in 10 don't budget for it, according to a recent study by, the world's largest online service for finding and managing family care.

Childcare is the biggest single budget item for the average family with children, costing about $18,000 per year, the study found. But with 84 percent of single parents working, and 63 percent of families having two working parents, childcare isn't optional; it's a necessity.

Weekly costs for a family with an infant and a preschooler vary widely across the nation. For example, a family in Dallas will on average spend $276 per week on daycare and $438 per week on a nanny, compared with families in Boston who pay an average of $664 and $531 per week, respectively, for the same care needs. Louisiana and Maryland top the list for the most wallet-friendly states for care, while Oregon and New Mexico are among the most expensive.

So how can parents better prepare for care costs?

Review your options.

Research what childcare costs in your area. "In-home is typically the most cost-effective option, while a daycare center can be the most expensive," says Sheila Lirio Marcelo, founder and CEO of To save money, consider hiring a caregiver with another family. Or, hire a nanny who can bring his or her child along to play with yours.'s pay and nanny tax calculators are a good place to start in determining your budget, how much you can afford to spend on childcare, and what options make the most sense for your family.

Flex it.

"Research family leave acts and flexible work schedules, such as picking up earlier or working from home," Marcelo says. "Flexible scheduling improves work/life balance and absenteeism, for both men and women."

Sign up for a flexible spending account.

Many employers offer flexible spending accounts (FSAs), in which families can set aside up to $5,000 pre-tax for childcare expenses. Additionally, some businesses offer childcare reimbursements for working parents, on-site daycare or membership to services such as The study found that only 31 percent of employees currently take advantage of benefits like FSAs.

Get tax breaks.

According to the survey, 52 percent of parents aren't aware they're eligible for childcare tax breaks. Be sure to claim the federal child and dependent care tax credit.

More stats from the study are listed in's graphic below.