There’s a thing I’ve noticed about the way some people think about how we should make decisions – they seem to think of every decision we make in terms of money. Of course, this is a blog about money, so naturally, money is the primary way we think about our decisions here. But as I’ve gained a little more perspective and life experience, I’ve also learned that the decisions we make aren’t – and indeed shouldn’t – be about money alone. Life is far too complicated for that.
Take the example of my career progress. I’ve seemingly gone the wrong way when it comes to my income, starting with my highest income when I was in my mid-20s, then steadily dropping over the years. My yearly income today is lower than it was 6-8 years ago. To most people, this doesn’t make much sense. Work, it would seem, is solely about money. Do the job that you can do that pays you the most.
But we know that money can’t be the only reason we work. Not only are certain jobs simply incompatible with us, but there are reasons why we don’t do particular jobs, even very high-paying ones. If you had the option to work 100 hours a week and make a huge salary, would you do it? Or might you opt for a lower-paying job with better hours that you enjoy more, supports your lifestyle, and fits you better? Your decision might be different depending on what you are looking for, but as we can see, it’s about much more than just money.
Daycare is one of those things that I used to think of as a purely monetary decision. Before I had kids, I would have thought the framework for deciding whether to send your kid to daycare was something like this:
- If you can make more at work than it costs you to send your kid to daycare, then you should opt for daycare.
- If you can’t, then you should quit your job and stay at home.
Yes, daycare unfortunately is about money – it’s the way our system works here in the United States (whether that’s the way it should be or not is another matter). I’m fortunate enough to be in a financial position where I can choose daycare.
But thinking that daycare is just about the monetary cost is a simplistic and naive way to think about it. And yet, I have a feeling that a lot of people without children seem to think that this is the way to think about daycare. In reality, though, it’s about much more than that. Sure, it’s about money. But it’s about much more than that too.
How Much Does Daycare Cost Us?
First, the money. Let’s look at the numbers for my current daycare situation. My wife and I send our son to a Montessori daycare located within walking distance of our house. Since we’re a one-car family, our daycare must be close enough that we don’t have to drive to it. My wife heads off to work early in the morning, so I’m the one that handles drop-off and pick-up, and without a car, it means I have to walk my son over to daycare, rain or shine. When there isn’t snow or ice on the ground, I bike him over to daycare. (On another note, I can’t even imagine how we would handle the daycare schedule if I was still working a regular 9-5 job where I had to be at the office at a specific time).
We have our son enrolled in the infant program, which is a full-day program for kids up to 16 months. Our daycare offers a 5-days per week option or a 3-days per week option. Infant programs are notoriously difficult to get your kid into due to lack of space, so when we signed up, our only option was the 3-day option. So, on Tuesday, Wednesday, and Friday, my son spends the entire day at daycare until I pick him up in the late afternoon. On Monday and Thursday, he’s at home with me.
And our daycare isn’t cheap. We pay $1,404 per month or a total of $16,848 per year. No matter what your situation is, spending almost $17,000 per year on childcare is a lot of money. The crazy thing is that daycare is currently our family’s largest monthly expense – larger even than our housing expenses. We live in a modest house right now, so our mortgage is only $882 per month. Even after paying property taxes and insurance, we still spend more on childcare than we do on our housing.
We’re spending a lot of money on child care – no doubt about that. Luckily, child care does get a bit more affordable as your children get older. My son is progressing pretty quickly and will be moving into the toddler room pretty soon. That’ll change his schedule to a 5-day per week schedule with regular school hours (8:30 to 3:30). I’ll end up gaining two days back, so that’ll remove a bit more pressure from my schedule.
The 5-day per week schedule currently costs $1,148 per month, saving us $300 per month in childcare expenses (total cost for the year will be $13,776 per year). If we want, we can add the extended day option, which will then make the 5-day per week schedule cost $1,390 per month. At the moment, we plan to transition him over to the 5-days per week. I’ll get us much work as I can during the day, then pick up my son at 3:30.
Does Daycare Make Sense For Me?
From a purely monetary standpoint, I still make more from my self-employment income compared to the cost of daycare. I’m not making huge amounts or anything from my writing and side hustles, but it’s enough that my income is still equal to what it was when I was working at my last job. And unlike my last job, there’s a lot more room for my income to grow and scale.
So from a purely monetary standpoint, daycare does make sense for me. It’s difficult to write without uninterrupted stretches of time and as long as I continue to write, I can continue to grow my business and hopefully continue to generate more income.
There are other reasons why we like daycare. My son was born during the pandemic, so he hasn’t been able to get much interaction with others. Just the mere fact that he’s been able to grow around other kids, even if just for a few days a week, I think is beneficial for his growth.
But even if I was barely breaking even, daycare would still make sense to me for one primary reason. I didn’t appreciate this before I became a parent, but I definitely appreciate it now. Being a parent is hard!
I used to think that parenting was something that people should want to do. But the reality is very different – at least for me. As much as I love my son and love spending time with him, it’s really difficult to interact, entertain, and importantly, foster a growing child for 8 or more hours per day, every single day of the week. Sometimes, I need a break. That’s worth paying for, especially since I’m fortunate enough to be in a position where I can pay for it.
It’s About More Than Money
Not too long ago, I watched a YouTube video from CNBC that looked at a family barely making ends meet to pay for childcare. In fact, the family was going into debt each month, as their income wasn’t enough to cover their expenses and their daycare costs.
Of course, as with any YouTube video, there were a lot of comments. Some of the comments pointed out that the mother wasn’t making much with the business she was doing and that she could simply quit doing that, stay at home, and be a full-time parent, saving themselves the childcare expenses in the process. It’s not quite that simple though and I’m willing to bet that the commenters that wrote these types of comments aren’t full-time parents themselves and don’t appreciate what having that break from full-time parenting does for you.
Paying for childcare works out for us because our family makes enough that this is a luxury we can afford. But even if it was a close call for us, we’d still probably opt for daycare, even if it meant hurting us financially in the short run. That’s how important the daycare decision is for us.
Yes, Kevin daycare is expensive. Maybe you can get a part time job there that might cover some of the daycare costs.
Here are some of the job openings at a Montessori school…Yes I realize you are in The Land of 10,000 Lakes.
> Technology Education Coordinator
> On Call Substitute
> Classroom Assistant
Just a suggestion…
Financial Panther says
Not something I’d want to do. I have more fun and can make more writing and doing other things.
ya, day care’s our largest expense as well. But it’s still cheaper than hiring a nanny. Ours is $384 a week – 3 days. That’s about $12.8/hr. This savings aside, I also wasn’t sure how dependable a nanny would be. So we went the day care route.
Financial Panther says
Hmm, when you break it down by hour, it doesn’t seem that crazy.
FP, you live in the Midwest, correct? We are in a HCOL area on the East Cost where a reputable daycare costs $2,700-$2,900 a month (full-time). A Montessori school is even more.
Financial Panther says
Yes, I live in the midwest. Definitely imagine it’s even more expensive in the HCOL places like NYC, LA, SF, DC, etc.
What’s your thoughts on Montessori schools? Do you think it’s worth it? Would love to see more parenting posts.
Financial Panther says
To be honest, I really don’t know what the Montessori is all about. We just went with this daycare because its the closest one to our house and has good reviews.
I’m not sure what your household income situation is, but we have two kids in daycare in the midwest, paying about $34,000 total this year. However, with the latest stimulus bill we should get about $7500 from the Childcare Tax Credit.
Otherwise, do you have access to a dependent care FSA? They have increased the contribution limit to about $10,000 for those.
Agree! Also, staying at home would incur the opportunity cost of a career break or add to the one already incurred depending upon the length of the maternity leave.
Mrs. FCB says
Totally agree. It’s also a very, very temporary cost, at least assuming you don’t then do private school. And it’s often worth it, even if it is a loss for those years, just to stay in the work force and keep building your career or business. It’s definitely not just about the numbers.