Paying for Child Care: When Does it Make Sense?

When my kids were little, the obvious choice for me was to stay home with them, not just from an ideological perspective but also from a monetary one- I wouldn't make enough money to make paying child care worthwhile. So instead I worked from home so the kids could be with me. This is something that many parents debate- is it actually worthwhile to pay for childcare? Here are some thoughts on the subject from a reader. Hope you find it as interesting as I did!

Child care services offer parents a lot of freedom and flexibility, but the costs can be substantial. For many parents living on minimum wage or a single income, paying for a full-time child care program is out of reach. Although costs can vary depending on where you live, they take up a large chunk of an average salary almost everywhere. This situation causes many parents to wonder if it makes any financial sense to pay for child care. It often seems more cost-effective for one of the parents to give up their job and stay at home.

So, when does it make sense to pay for child care?

You Only Have One Child

If you only have one child, paying for child care can be a good idea. This kind of arrangement allows both you and your partner to work full-time, and the child care costs can be thus more manageable. However, if you have more than one child, the cost of child care will almost double. Even though child care centres offer small discounts for siblings, the overall costs can still be prohibitive. In some cases, staying at home when you have more than one child is the most financially wise decision you can make. This is especially true if your salary is lower than the total costs of child care. On the plus side, by staying at home you’ll be able to play a much more active role in your children’s development and education. You could even consider home based child care.

You and Your Partner Have Great Earning Potential

If both you and your partner have well-paid jobs, paying for child care makes perfect sense because you both will probably want to keep working. In this case, giving up on one high income so that one of you can stay at home can cause more financial distress than paying for full-time child care. However, if one of you has a low salary, which barely rises above the costs of child care, consider the stay-at-home alternative. An important aspect to consider though is that stay-at-home parents don’t lose income only for the years they stop working. Their future earnings are also drastically affected. According to various statistics, each year out of the workforce causes a severe reduction in annual income and lifetime earnings potential.

You Are Eligible for Government Assistance

If you’re eligible for the child care subsidy, you have a good reason to consider paying for child care. Many governments offer financial assistance to help families who cannot afford the full costs of child care. There are several criteria your family has to meet to benefit from this form of government assistance. The amounts you can claim vary depending on your financial situation. If you’re in Australia, you can calculate your child care subsidy on Toddle.

You and Your Partner Love Your Jobs

Not everyone wants to be a stay-at-home parent. And some people love their jobs even though they earn little. If you love your job and don’t want to put your career on hold, paying for child care can give you the freedom to pursue your professional interests. If you love interacting with co-workers, being surrounded by people, tackling work-related challenges, and having a stable routine, don’t stay at home just to avoid child care costs. You may become miserable. And your spouse or partner may feel the same. The value of a job is not just monetary, so think about your well-being too when considering child care options.

Your Professional Skills Are Time-Sensitive

Re-entering the workforce after a long pause can be incredibly difficult in some industries. The longer a person takes time off work, the higher the risk of losing their professional skills. Moreover, for some careers, desired skills change over time. So, if you consider staying at home with your children, take into consideration the impact on your career. Not only that you will earn less, but you may find it almost impossible to return to the same position. Professional skills do get rusty in time, so this is a valid concern. If you’ve invested a lot in your career, you don’t want all that effort to come to nothing. So, in this case, paying for child care is a sensible choice.

When looking at the costs of having a child, child care is the most stress-inducing expense. Unfortunately, if neither you nor your partner can stay at home, you don’t have many options left. Some couples have family members nearby who can provide child care regularly. But if you’re not fortunate enough to have family members willing to help you, the only option is to use paid services.

For the parents reading, how did you make the decision whether to pay for childcare or not?