FSA Friday - 7/27/18 - Child care costs affecting quality of life

Living Well

Fewer and fewer Americans are choosing to have children, with the primary reason being that child care is too expensive, according to a report conducted by The New York Times. And in a related survey from Care.com, the world's biggest website for finding family care, it found that families are spending a growing percentage of their household income on child care.

That's a lot of money. And the trend doesn't appear to be changing.

Care.com Survey Finds One in Three Families Spend 20% or More of Household Income on Child Care - Business Wire

As child care costs continue to rise, parents are finding it necessary to budget these expenses to ensure their children are being properly and safely taken care of. Initially, 77% of parents thought that costs of child care wouldn't affect their career decisions, but when it boiled down to it, 63% of parents reported that it did just that.

A large part of that is because childcare costs have only increased throughout the years. The U.S. Department of Health and Human Services defines affordable childcare as making up 7% of household income. In reality, nearly 3 in 4 families say it makes up 10% of their income.

From 2013 to 2017, the average weekly daycare and nanny rates have gone up more than $100. This might not seem like a lot at first, but it adds up to adding an extra $520 a year spent on child care, on top of what was already being spent. And it's affecting the way families live their lives… and even the ways their children grow.

Affordable child care may be as mythical as unicorns - Jill Cornfield, CNBC

While cutting back on date nights and cable bills seem like reasonable tradeoffs for more-expensive daycare, it's unlikely parents would risk the quality of the education and preparation their children need for school.

The article expresses concern about a widening school readiness gap, since the costs of quality child care are limited by the parents' ability to pay. Instead, people are becoming reliant on family and friends, who are certainly well-meaning, but might not be qualified to meet student development needs.

With less than 25% of preschool-age children enrolled in formal daycare, these centers aren't reaching as many kids as they could. And they're likely unable to hire top-tier employees to deliver the education these kids need.

While these articles don't paint a pretty picture, the first cites one of those ways being a Dependent Care Flexible Spending Account (DCFSA) - a plan we can get behind.

With a DCFSA, you can contribute a maximum of $5,000 a year if you're married and filing together with your spouse or if you're single. It drops to $2,500 a year if you're married and filing separately.

You can put this money towards a variety of childcare expenses, such as daycare, home care, summer camp and before-school/after-school care. And the money is tax-free. Fewer taxes equals more money in your pocket.

While this may not solve all of your child care expense problems, it can definitely help you devote more money to your child's well-being.

FSA Friday is a weekly roundup of the latest topics, tips and headlines to keep you updated on all things flex spending. It appears every Friday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram, YouTube and Twitter.

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