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How to Choose the Child Care That’s Right for You—Financially and Otherwise



Having a child is one of the biggest decisions a couple can make. The second largest decision? Choosing which child care is right for their family. With all the options out there, settling on just one can be a challenge, as every family’s situation and needs are different.

On top of that, in my 10 years of helping new parents financially plan their families, child care also tends to be the second largest monthly expense, after housing. And contrary to what you might think, it’s not an expense that some parents can choose not to budget for. Even if you have one stay-at-home parent, you’ll still need to pay for some babysitting and child care, as it’s an important part of maintaining a healthy relationship with a partner—not to mention provides a necessary mental break for both.

But with all the options out there—nanny, daycare, in-home care center—which one is right for you and your family? And how much will care for your baby really cost? Each approach has different pros, cons, and yes, price tags, to consider. I’ve broken down a few so that you can select the child care that makes the most sense for your family. All costs I’ve outlined here are based on my experience advising families, and could be a good range for understanding your own expenses.

Childcare Option #1: Hire a Nanny

A nanny is a single caregiver who takes care of one or more children in your home. Most families pay between $15-25 per hour for the care of one child. When you have two children with a nanny, it is usually at the upper end of this range. If you need a full-time nanny who’s there 40 hours per week, at those rates, it might cost you around $2,400-$4,000 per month.

The Pros:

  • Flexibility: You can work with your nanny to set a schedule that works best for your family.
  • Location: A nanny typically comes to your home, so there’s no drop off required. Plus, he or she can help with the morning routine and even household chores when kids are napping.
  • Health: Staying at home means your baby won’t be regularly exposed to other kids and their germs and is less likely to be sick. Plus, even if he or she does come down with something, your nanny is there so you don’t have to stay home from work.

The Cons:

  • Cost: This is the most expensive childcare option, unless you do a nanny share (which can cut the cost in half!).
  • Finding the Right Fit: Choosing the right person for the job is a challenge. As the boss, it is your job to make all the hiring and firing decisions, and this can be a big strain for some parents.
  • Reliability: Nannies are human, too. They get sick and might not be able to come to work, leaving you to stay home or scramble for a last-minute sitter.

Childcare Option #2: In-Home Daycare

In-home daycares, which care for multiple kids at the same time, is usually the least expensive option. Many parents I work with report paying between $45-70 per day for full-time care, which equates to $900-1,400 per month. Licensed small home daycares can have up to six children, and no more than half can be infants. These ratios vary by state and can be more conservative.

The Pros:

  • Affordability: It’s definitely cheaper than a nanny. Plus, most in-home daycares often options like shorter schedules or half-days that can be a great fit for a parent working part-time.
  • Socialization: One big bonus of this type of childcare is that your little one gets to make friends, learn from other children, and get used to other adults caring for them.
  • Reliability: In-home daycares are run by multiple caregivers, so *someone* will always show up to work.

The Cons:

  • Defined Schedules: Most daycares have very defined pick up times, which can be difficult if you need to work late.
  • More Sickness: More kids, more germs. Eventually your child will get exposed to these things, but if they’re in daycare it’ll happen sooner rather than later. Also, when your child gets sick, he or she won’t be able to go to daycare, and you or your partner will have to stay home.

Childcare Option #3: Daycare Centers

These types of centers have several caregivers watching larger groups of children in a bigger classroom-like setting. The child to caregiver ratio requirements vary by state—California law, for example, requires 4:1 for children under nine months old.

The costs of daycare centers can be very high for infant care (almost as much as a nanny) but go down as your children get older and the ratio of caregivers to children gets higher. Average costs, according to the parents I’ve worked with, can range from $1,600-$1,900 per month for full-time care.

The Pros:

  • Proximity to Work: Day care centers tend to be centrally located in cities and often provide early drop-offs and late pick-ups—perfect if your schedule tends to be unpredictable.
  • Socialization: Just like in-home care, your children get automatic friends. Also, most centers have enrichment programs like music or language learning at no extra cost
  • Well-Trained Staff: Caregivers must fulfill training requirements in education or early childhood development, so you can trust that your little ones are in good hands.

The Cons:

  • Cost: Despite having more children, many daycare centers employ more caregivers than required by law and, thus, relatively high overhead costs. This leads to higher costs to pass onto parents.
  • More Sickness: Again, more kids, more germs. If your child gets sick, they cannot go to daycare, and you will need to stay home or find a last-minute sitter.

While there are many factors to consider, the decision really comes down to: What will work best for your family and what you can afford? You may need to try a few different options before you find the right fit for you.

And while these numbers seem steep, remember that they’re only temporary. Once your children move on to kindergarten, the cost will go down, and you can put that money toward saving for college.

Want help financially planning for your new family? Consider working with a SoFi Wealth advisor as you prepare for the joys—and financial implications—of parenthood.


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