CNBC: Majority of parents spend 20% or more of household income on child care, report finds

The cost of child care in the U.S. has been increasing, and many families spend more than what the government considers affordable. 

Two-thirds of parents, 67%, spend 20% or more of their household income on child care, according to a recent report by that surveyed 3,000 U.S. parents. That’s up from 51% who reported spending that much in 2022.

While 79% of families anticipate spending more than $9,600 per child this year, many are spending significantly more. On average, families spend 27% of their household income on child care, which for 59% of parents surveyed means shelling out $18,000 a year per child, found.

For perspective, the U.S. Department of Health and Human Services considers 7% of income to be affordable for child care.

“Child care is claiming a disproportionate amount of household incomes, and a decade of rising child care costs should be a wakeup call that the system as we know it completely fails the vast majority of families,” wrote Tim Allen, CEO of, in a statement.

Why child care costs are so high

Rising fees at child care centers are contributing to the growing costs of child care, as well as inflation and changes in parents’ work status, according to

Many day care centers shuttered during the pandemic, leaving the few that stayed open with limited slots available. That resulted in long waitlists — and fees to get on those lists, said certified financial planner Sophia Bera Daigle, founder of virtual firm Gen Y Planning.

Some child care centers ask for a non-refundable waitlist fee, which can be around $75, as well as a “new child fee” upon enrollment into the center, which can range from $100-$600, said Daigle, who is also a member of the CNBC FA Council. The new child fee is usually used to fund teachers’ education, books and materials for the classes, she added.

“People are on waitlists for day cares way longer, it’s hard to get their kid into day care in a lot of metropolitan areas,” Daigle said.

Parents are also facing changes in their work situations. Some who had fully remote jobs during the pandemic are now having to go back to the office some or all of the time and are faced with new child care needs, added Daigle.

However, the bigger challenge is access to care, said Carolyn McClanahan, a CFP and the founder of Life Planning Partners in Jacksonville, Florida. With fewer providers, if a family can’t find or access child care, one parent may be forced to leave the workforce, cutting off a second stream of income.

“It’s hard not to be a two-earner family,” said McClanahan, who is also a member of the CNBC FA Council.

How to plan ahead for child care costs

Some families are relying on their friends and family members, or even relocating to be closer to family. Others are working multiple jobs or adjusting their work schedules, found.

Financial advisors say there are several other ways parents can plan ahead to help cover child care costs. Here are a few things families may want to look into:

1. Start building emergency savings early
Child care is just one of many expenses that come up when you have a family, and so it’s important to think about having cash reserves. Set up an emergency fund before you start having kids. “Make sure you have plenty of savings to weather the storm of the challenges of having a child,” said McClanahan.

2. Try to eliminate high-rate debt
Eliminating any monthly debt payments before you have a baby can be helpful in reducing expenses and freeing up money in your budget for day care costs, said Daigle. She points to high car payments as an example. The average monthly car payment reached $733 in the second quarter of the year, according to auto site Edmunds. “If they’re able to pay off their car before the baby comes, that can be really helpful,” she added.

3. Research company child care benefits
Many employers offer what’s known as a child care FSA or dependent care FSA, which typically allows you to set aside up to $5,000 per year using pretax dollars from your paycheck, said Daigle. Families can use those funds to cover qualifying expenses for eligible dependents.

“You can submit a reimbursement ... for basically the first $5,000 that you’re paying in day care costs,” she added.

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