Paying for Child Care: Everything You Need to Know

​There are a multitude of ways parents can balance working life and raising their children. Some parents change careers to something with more flexible hours. Other parents alter their schedules or reduce their amount of working hours. However, these options are not always possible, and this creates one of the most significant dilemmas in modern parenthood. How do parents provide the best opportunities for their children to thrive and have enough money to pay for them? When it comes to caring for their children, many parents are in a position in which a choice must be made: who is going to stay home to take care of the kids and put their career on hold, and who is going to continue working?

An alternative solution to use or continue using a professional child care provider while remaining in the workforce. For most working single parents, and even many households with two working parents, professional child care is the only solution to this problem. This creates a dire need for affordable, quality child care for young children. However, the cost of high quality child care has dramatically increased over the last two decades. Child care costs have been shown to be more expensive than the median housing rental costs in all 50 states, making it essentially unaffordable for most parents. Many will opt for lower cost child care while acknowledging that this choice usually decreases the quality of care their child receives. Though naturally, this creates a few questions: is the high cost of child care worth the expense, and is there a more flexible way to pay for these expenses?
​

Research has shown that consistent child care helps children better understand and prepare for a structured education system. Child care and preschool programs have also demonstrated an increase in cognitive and social skills before beginning kindergarten. High-quality child care has also been linked to a reduced need for remedial tutoring and even decreased rates of juvenile delinquency. It is important to note that the cost and quality of child care are dependent on various factors such as age, geographic location, and type of setting. Unfortunately, many low and middle-income families struggle disproportionately to afford child care. Children of color, English language learners, and children from low-income families are often the ones who benefit the most from educational high-quality child care. Children who take part in high-quality child care programs are also less likely to rely on public assistance and are more likely to have increased earnings over their lifetime.
 
The federal government issues child care and development block grant funds to states and counties across the nation. These funds are distributed at the local level to eligible low-income families. The demand for these daycare and child care services is so high that certain parental participation criteria are sometimes attached to the funds. Not all low-income parents can meet these conditions, and there are frequently long waiting lists to become eligible. The subsidy money does not go far enough to provide high-quality care for everyone. This places an unequal and higher burden on lower-income parents. They must work to survive and provide for their children, and in turn, their children may receive lower-quality child care due to lack of access. This may further and continue income inequality into the next generation.

High-quality child care can be expensive, but it has clear benefits for both parents and children. Working parents can keep an active work schedule if they can send their young children to child care. For many parents, it is an appealing option to leave the workforce to care for one’s children full-time. However, in the long run, this may not be the best solution because of the potentially long-lasting effects on a family’s long-term financial security. The effects can influence the finances of parents in a variety of ways, such as loss of potential work experience or promotions, decreased earnings, and a reduced likelihood of ever returning to work. For many families, it can be the factor withholding their ability to save money for housing, college, or retirement. Leaving the workforce may hinder families from future financial growth and security. 

There are also important tax credits that can help parents afford some of the high costs of child care and save additional money. The primary tax credit that benefits all parents with dependent children is the child tax credit, which can be worth up to $2,000 per qualifying child. Parents that use a professional child care provider are entitled to claim the child and dependent tax credit. The tax credit can be used to claim expenses on qualified professional child care providers or various household services that benefit the well being of the child. The child and dependent tax credit apply a tax credit of 20-35% on the first $3,000 spent on professional child care. For two children, this increases to a maximum incursion of $6,000. The specific amount able to be applied to the tax credit is determined by the income of the parent or parents. Working parents using child care should take advantage of this and other tax credits, which we will explore more in-depth in our next blog post!

Most families pay for the majority of their child care using cash or debit transactions. There are other, more flexible ways parents can manage those payments. When surveyed, many parents stated that they would be willing to use a credit card or enroll in a program to finance some of their child care expenses. Financing can help parents manage the immediate financial burden in a more convenient and workable way. Child care financing is one of the best ways parents can take back control of their lives. It can allow parents the chance to return to the workforce with the knowledge that their children are well taken care of.

With Jump Start’s line of credit program, we want to present an easy, innovative solution to the problems of being a working parent while also receiving high-quality care for your child. Our company aims to alleviate the burdens of being a working parent by providing financial options and flexibility to child care payments. We are able to offer a dedicated line of credit for up to 24 months of child care for children aged 2-6. By partnering with qualified child care centers, we can reduce monthly payments up to 50%. We create an empowering way for working parents to relieve some of the financial stresses of child care. We also want to be as transparent with our line of credit program as possible, so we offer no hidden fees, no application fees, no prepayment penalties as well as a fixed rate of interest. This allows parents to take advantage of our program as they need it to spread the costs of child care over time. It also ensures that working parents have access to child care when it is needed most.

The goal of our company is to provide credit to meet the needs of working parents and in turn, reinvest in future generations. We believe parents should not have to choose between their careers and the wellbeing of their children. Jump Start is a compassionate solution to a pressing dilemma facing parents today.

 Apply for free today!


Sources: 

https://childcare.gov/index.php/consumer-education/get-help-paying-for-child-care

https://www.ccrcca.org/parents/paying-for-child-care

https://www.forbes.com/sites/sleasca/2017/07/31/cost-of-childcare-babysitter-nanny/#36ba71314ffc