Household income and daycare expenses

[Anonymous]

Hi all! Does anyone have a gauge of what you should be spending on daycare expenses should be a relation to your household income? I know its not a question to ask in a vacuum without seeing a person's full budget, but I am trying to get a sense of whats normal around here.

We have a 2 year old son and are going to start trying for a second baby soon. DS goes to daycare in Old Town Alexandria (we live outside of Old Town) and right now are paying $1656/mo for his tuition. Infant rates at his daycare are $1892/mo and they have small sibling discounts (10% and 5% respectively).

Our pretax HHI is $270K. We have a small mortgage ($2300)- bought a small, cheap house (when we made less and were a little too risk averse) that we are quickly outgrowing and are considering selling/renting out for a larger home.....one small car payment, no debt and are able to save fairly well in our retirement, college and emergency savings accounts while still living well and taking vacations.

I recognize our lifestyle will change with another kid and a larger mortgage ($3500/$4000) and am prepared for that.

But when I think of $40k plus a year on daycare costs, I start breaking a sweat! I think (hope!) we can afford it, but are we spending too much? We are happy with the daycare and DS loves it so I would prefer not to move and find a cheaper option.

And at what point do you consider just hiring a nanny? I dont know what they go for in this area but I imagine $50k++ and employment taxes, etc. Its likely out of the question, but I am always curious about what the breaking point is on daycare vs. nanny.

Thank you!

[Anonymous]

I don't have an answer for you, but our HHI is $150K and we have two in daycare. DD is in a preschool for $1600 a month, and DS is in a home care for $1200 a month. He will transit to her school and it would be about $3000 per month. It will be $36K for us and we have significantly less income than you. We didn't do nanny because we wanted to keep DD in a classroom setting and cannot afford nanny for 2 and part time preschool for her.

[Anonymous]

I mean, I can share my details with you but I think you're kind of asking the wrong question. At least where I am (DC), there AREN'T a lot of options. So of course I think we're spending a PREPOSTEROUS amount on childcare but I don't know what the alternative would even be, short of leaving the city or quitting my job, so we just do it.

HHI $300k.
Mortgage $2500/month
We have two kids in daycare right now, each are about $2200/month, so we spend $4400/month - or a whopping $52,800 per year - on daycare.

It sucks a ton but we only have one year of overlap before our oldest starts in public prek, so we are just sucking it up. This is not the year to hit our savings goals.

[Anonymous]

Figure out if another daycare or a nanny would be overall cheaper and easier for you with two. Are you able to do an au pair in your home? I wouldn't even begin to think about a new home until you drop daycare costs, at least one but ideally both.

[Anonymous]

Most people spend more on daycare than their mortgage. So about 20-30%. We went with a cheaper option, but yeah we're still paying about 32k a year for two kids in daycare. It does hurt, but it is what it is.

[Anonymous]

Ha. Your initial question actually made me laugh, and I’m really not trying to be mean, I just don’t understand how anyone with children in this area can approach childcare costs from a “how much should we spend as a percentage of our income” perspective. The overwhelming majority of households with 2+ (and often 1 kid) are most likely thinking how can I get my kid into quality care anywhere. The percentage of your income is generally whatever you find availlable when you need it that isn’t going to drive you straight to bankruptcy, at least within a year or two.

Our HHI is around $220k with a mortgage la little less than what you want to upgrade to and for our two toddlers in the Nova burbs at a center we pay $3700/month.

Also, the nanny v. daycare breaking point is not just financial. If you’re just thinking about having a second, that puts your first at maybe 3-3.5 when you will need care for the new baby. It depends on your kid, but my 3 yo would not thrive being home with a nanny and baby. Some would, some wouldn’t, but you’d be pulling him out of a stimulating daycare environment where he has structure and is around kids his own age to be at home with someone juggling the demands of an infant and likely catering more to an infant schedule.

[Anonymous]

Anonymous wrote:Ha. Your initial question actually made me laugh, and I’m really not trying to be mean, I just don’t understand how anyone with children in this area can approach childcare costs from a “how much should we spend as a percentage of our income” perspective. The overwhelming majority of households with 2+ (and often 1 kid) are most likely thinking how can I get my kid into quality care anywhere. The percentage of your income is generally whatever you find availlable when you need it that isn’t going to drive you straight to bankruptcy, at least within a year or two.

Our HHI is around $220k with a mortgage la little less than what you want to upgrade to and for our two toddlers in the Nova burbs at a center we pay $3700/month.

Also, the nanny v. daycare breaking point is not just financial. If you’re just thinking about having a second, that puts your first at maybe 3-3.5 when you will need care for the new baby. It depends on your kid, but my 3 yo would not thrive being home with a nanny and baby. Some would, some wouldn’t, but you’d be pulling him out of a stimulating daycare environment where he has structure and is around kids his own age to be at home with someone juggling the demands of an infant and likely catering more to an infant schedule.

+1 to your last paragraph. I'm the PP above w/ the $4400/month daycare costs for two kids. I *think* I'm probably at the break even point for a nanny, but I just can't bear to pull my oldest out of daycare. She loves it so much and it is SO good for her. I would feel bad for her at home with a nanny and a baby all day. Plus, the overlap is only for a year and then I'd be firing my nanny and trying to find daycare again so it just sounds like a huge headache in general.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ha. Your initial question actually made me laugh, and I’m really not trying to be mean, I just don’t understand how anyone with children in this area can approach childcare costs from a “how much should we spend as a percentage of our income” perspective. The overwhelming majority of households with 2+ (and often 1 kid) are most likely thinking how can I get my kid into quality care anywhere. The percentage of your income is generally whatever you find availlable when you need it that isn’t going to drive you straight to bankruptcy, at least within a year or two.

Our HHI is around $220k with a mortgage la little less than what you want to upgrade to and for our two toddlers in the Nova burbs at a center we pay $3700/month.

Also, the nanny v. daycare breaking point is not just financial. If you’re just thinking about having a second, that puts your first at maybe 3-3.5 when you will need care for the new baby. It depends on your kid, but my 3 yo would not thrive being home with a nanny and baby. Some would, some wouldn’t, but you’d be pulling him out of a stimulating daycare environment where he has structure and is around kids his own age to be at home with someone juggling the demands of an infant and likely catering more to an infant schedule.

+1 to your last paragraph. I'm the PP above w/ the $4400/month daycare costs for two kids. I *think* I'm probably at the break even point for a nanny, but I just can't bear to pull my oldest out of daycare. She loves it so much and it is SO good for her. I would feel bad for her at home with a nanny and a baby all day. Plus, the overlap is only for a year and then I'd be firing my nanny and trying to find daycare again so it just sounds like a huge headache in general.

+2 from a PP. There are just too many factors to consider to make it purely about finances. We pay more than we *need* for childcare, but our kids have had such a terrific experience at their center, and the continuity has made our lives much easier, that it feels well worth it to us.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ha. Your initial question actually made me laugh, and I’m really not trying to be mean, I just don’t understand how anyone with children in this area can approach childcare costs from a “how much should we spend as a percentage of our income” perspective. The overwhelming majority of households with 2+ (and often 1 kid) are most likely thinking how can I get my kid into quality care anywhere. The percentage of your income is generally whatever you find availlable when you need it that isn’t going to drive you straight to bankruptcy, at least within a year or two.

Our HHI is around $220k with a mortgage la little less than what you want to upgrade to and for our two toddlers in the Nova burbs at a center we pay $3700/month.

Also, the nanny v. daycare breaking point is not just financial. If you’re just thinking about having a second, that puts your first at maybe 3-3.5 when you will need care for the new baby. It depends on your kid, but my 3 yo would not thrive being home with a nanny and baby. Some would, some wouldn’t, but you’d be pulling him out of a stimulating daycare environment where he has structure and is around kids his own age to be at home with someone juggling the demands of an infant and likely catering more to an infant schedule.

+1 to your last paragraph. I'm the PP above w/ the $4400/month daycare costs for two kids. I *think* I'm probably at the break even point for a nanny, but I just can't bear to pull my oldest out of daycare. She loves it so much and it is SO good for her. I would feel bad for her at home with a nanny and a baby all day. Plus, the overlap is only for a year and then I'd be firing my nanny and trying to find daycare again so it just sounds like a huge headache in general.

Yup! Hiring a good nanny is a lot of work. Plus figuring out taxes and health insurance was just too much for me (I file financial disclosure forms and needed everything to be correct and legitimate). I also think if you have a good nanny, you'll want to sign your kids up for classes that the nanny takes them to, which adds up also.

[Anonymous]

OP here. Thanks to everyone for their responses!

I dont think we are thinking of his with the goal being at or under some threshold but I needed a gut check and was worried that I needed to consider other options. Especially with a potential change in mortgage.

We originally had DS in a cheaper daycare and moved him to his current (not because of money, but other issues) so I know there are a few other options out there that can save us a little. I accepted long ago that it is what it is for availability and cost in this area.

Another factor I didnt mention is that we are likely going to opt for Catholic school after daycare. I always knew it was going to be a few years of a slog and we will have a dip in school costs but not significant.

Re. Nannies not being just about money - totally understand and completely agree. I like the structure and routine he gets at daycare. DH and I always chuckle when he comes home knowing a new song or surprises us and knows a new animal or color. And I generally feel more confident in a daycare decision over one provider. DH and I both travel for work and not having the dropoff/pickup race every day would be nice. A girl can dream! Hey its training for the school years!

[Anonymous]

OP I have 3 kids- two at St. Anthony’s in Old Town ($3200/month) and one at St. Mary’s ($834/month including aftercare). Once the younger two are in elementary we plan to move out of state or to Arlington because the idea of us making these payments forever makes us cringe on our $300k HHI. The problem is once they are in elementary the payments don’t disappear- camp is $400/week plus you still have to pay for St. Mary’s during the summer months. We’d rather put the tuition money into their 529s.

[Anonymous]

Anonymous wrote:OP I have 3 kids- two at St. Anthony’s in Old Town ($3200/month) and one at St. Mary’s ($834/month including aftercare). Once the younger two are in elementary we plan to move out of state or to Arlington because the idea of us making these payments forever makes us cringe on our $300k HHI. The problem is once they are in elementary the payments don’t disappear- camp is $400/week plus you still have to pay for St. Mary’s during the summer months. We’d rather put the tuition money into their 529s.

Yep. I’ve never understood the appeal of Old Town or Alexandria for that matter for anyone with 2 or more kids making under 400-500k HHI. Expensive area with old homes and bad schools.