Saving for Daycare/Nanny etc.

[Anonymous]

FTM here nearing my third trimester. I'm curious when others started saving for daycare/childcare costs and how much they set aside every month. DH and I have a joint savings account for this purpose but looking at costs for the Bethesda area, it feels like we're already behind. What were others' strategies for saving?

[Anonymous]

We didnt have kids until we would pay for a nanny with cashflow. I did lower my 401k just to the match for the first year and then my salary grew.
We also didnt really take expensive vacations the 18 months before i got pregnant since we were trying for a while.

[Anonymous]

We didn't save before hand, rather waited until we could afford daycare as a monthly expense.

[Anonymous]

We paused 401ks to get through that most expensive first year of baby care with our first baby.

[Anonymous]

Anonymous wrote:We didn't save before hand, rather waited until we could afford daycare as a monthly expense.

Could you explain what you mean by you waited? Did one of you stay home from work with the baby?

[Anonymous]

I hope you are on wait lists now if planning for infant care. Didn’t you run numbers prior to deciding you could afford a kid?

[Anonymous]

As soon as I started TTC, I tried to set aside the cost of daycare into my savings every month to get used to the effect it would have on my budget. I wasn't quite able to manage it then, but what I was able to put aside in that year or so helped bridge the gap until my tax withholding updated to reflect my new status as a parent and I can now cover daycare out of my monthly salary. For kid number 2 (currently pregnant), I expect I will reduce my 401K contributions for the first couple years until I'm not paying two daycare slots or until I get a raise. I also use my companies childcare FSA, which makes a huge difference this year, although I expect it won't help after they drop the threshold again.

[Anonymous]

Anonymous wrote:I hope you are on wait lists now if planning for infant care. Didn’t you run numbers prior to deciding you could afford a kid?

NP. What an awfully judgmental response. Sorry we aren’t all knowing sages like you are.

OP, if you already have a savings account going, that’s great. Like other PP we also reduced 401K contributions for a short period of time while we got used to the extra expenses.

[Anonymous]

The nice thing about starting to save is that you're used to living on less already. So if you can save $1000 a month, not only do you have $3k a month in savings, but you're used to living on less, and it hurts less to all of a sudden be shelling out $2k per month in daycare (since you were already saving $1k). So yes, I'd recommend it.

We were actually saving aggressively for a downpayment, and then bought a place and started childcare around the same time, so a lot of our downpayment savings just shifted over to childcare. So we were used to living on less, but we didn't have any savings that we were planning to use for childcare.

The sticker shock on childcare for an infant though is crazy. When I was looking downtown in 2019, the absolute dirt cheapest place was $2200 a month for an infant. There were literally no cheaper options. Presumably there will be a few more options out in Bethesda - but yeah, the numbers get rough

[Anonymous]

Lowered 401k to pay for nanny

[Anonymous]

Hopefully you have an extra $3k a month sitting around.

[Anonymous]

We didn’t use a nanny, for starters. But you will have childcare costs for a long time - the hugest ones for five years, so you would need to save a massive amount to our monthly deductions from the savings worth it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We didn't save before hand, rather waited until we could afford daycare as a monthly expense.

Could you explain what you mean by you waited? Did one of you stay home from work with the baby?

No, we waited until we had a HHI that was high enough to support adding monthly daycare costs to our budget. It meant waiting until I got a promotion before we could have a kid. Then my DH got a new job and we could have a second kid.javascript:void(0);

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We didn't save before hand, rather waited until we could afford daycare as a monthly expense.

Could you explain what you mean by you waited? Did one of you stay home from work with the baby?

No, we waited until we had a HHI that was high enough to support adding monthly daycare costs to our budget. It meant waiting until I got a promotion before we could have a kid. Then my DH got a new job and we could have a second kid.javascript:void(0);

Me again. I understand this doesn't help you at all. I would start saving if I were you if you cannot afford daycare out of pocket today. Do you have a daycare picked out?

[Anonymous]

Look into at home daycares too. They're usually half what a daycare costs and many are excellent.