The average cost of daycare for many parents can impact whether it’s cheaper for a secondary income parent to stay at home and look after multiple children or if it’s more cost-effective to get a job and pay for daycare.
Some jobs also offer daycare as part of their overall employee package, which can be a significant benefit for parents, which should be considered when applying for jobs and comparing base salaries.
Detailed below are all the details you need on the average cost of daycare so you can make informed decisions.
How Much Does Daycare Cost Per Month?
The average cost of daycare in the united states is $930.11 per month, which for many median income households is up to 18% of the total household income, which makes daycare unaffordable for many families.
Daycare costs are added on top of the other expenses required for children, including an average of $1,500 per month for a baby’s basic needs.
Consider that daycare costs are per child, so if you have multiple children below school age that need daycare, the costs compound for every child that needs care.
The federal government states that 7% of a household’s income is considered affordable for daycare, but no US state’s average daycare costs fall below 7%.
Average Costs Of Different Types Of Daycare
Due to the high average cost of standard in-center daycare, which is $11,165 annually, many parents are looking at alternative options for childcare. These can include nannies, at-home childcare, shared childcare, and even utilizing free childcare with family and friends.
Average monthly cost based on daycare types:
|1 Child||2 Children|
|Family Care Center||$1,200||$2,280|
|After School Baby Sitter||$976||$992|
In-center daycare is often still a cheaper option at $930 per month on average, but as the number of children increases, the viability of other options starts making more sense.
Other options can be especially beneficial in places with lower median incomes but high daycare demand, which increases average prices and amount of household income required for daycare.
You also need to factor in the time and cost needed to drop off and pick up your children, and if there are issues at a daycare center and they shut down, then you’re left with no alternative options.
During the pandemic, there have been multiple outbreaks at facilities that have caused daycare centers to shut down and left parents without daycare at short notice.
Another problem being faced with in-center daycare is that the average price per year is going up, with a 47% increase this year over last and an 87% increase from 2019. This is due to staffing shortages and limited capacity at the facilities that is forcing them to turn some parents away.
Hiring A Nanny For Daycare
The average cost for a nanny that looks after one child for a month is $2,448. This is a significant jump in price over many other one child options; however, as you have more children and other time issues, the price becomes more affordable.
The average increase for a nanny from 2019 until now is only 8% which is a much slower rate than many other daycare providers. So as time goes on, the price differences could even catch up.
Unlike In-center daycare, the price for additional children does not almost double; the average hourly wage for each additional child may only be $1 – $2 more.
A nanny or shared caregiver can provide the oversight of your children at your home for a lower price in some cases, and if your children are at quite different ages, the nanny can handle all of them. Whereas childcare is often split into different facilities with different pick-up and drop-off times.
Family Care Center
The average cost of a family care center is $1,200 per month for one child, though there is more availability in many locations, and the prices can be much lower for smaller facilities.
A family care center will often have fewer children, smaller facilities, but it does have fewer adults to look after the children, which can be an issue if any need to call out sick.
Children will get more personalized attention, and often there is a curriculum to follow instead of just letting them play or do what they want during the day.
Hiring A Babysitter
The average cost of a babysitter that looks after your children during the afternoons after school is $976 per month with a minimal increase for additional children. It’s an affordable option for after-school care or if parents have differentiating schedules that conflict with daycare centers.
Depending on the babysitter, you may be able to adjust the daycare schedule based on your needs and their availability, and it’s an almost as cheap option as standard In-center daycare.
It’s even more affordable if you have multiple children that need to be looked after, as the price only jumps by a few dollars an hour for additional children to be looked after.
Family And Friends
One option that families are looking at to reduce costs is using family and friends to provide daycare. While the cost is often minimal or $0 per month, there are significant issues that can arise from using unlicensed homes.
You don’t get standardized care or a home that has been built out for younger children specifically. You likely won’t have educational programs set up for children as it will be simply an option to watch children.
The other issue you face is that family and friends may be looking after too many children, resulting in them being shut down or simply losing track of your child.
Average Cost Of Different Quality Daycare
Each type of daycare option available to families differs in what the children actually do during their time there. In lower-cost facilities, it’s a place for the children to be watched and kept safe, while more expensive facilities provide programs to enhance the skills and knowledge of children.
|Age Range||Low Cost Facilities||Higher End Facilities|
|Family Child Care||$12,670||$28,920|
The age range of the children changes the average base cost of daycare and the average cost of higher-end daycare.
While it may seem strange to pay for the higher-end facilities, many families are looking to give their children the best chance for success in life. Most of the higher-end facilities aren’t just better looking facilities; they are focusing on education and improving the cognitive and physical abilities of children of all ages.
You also see in base facilities many people returning to the workforce, including seniors working in daycare who are looking for additional income. Unfortunately, their education levels may not be up to current standards, and health issues are more likely to affect their availability.
The average cost of base daycare for infants is $16,430, which provides the minimum legal requirements for infant daycare. The average price for higher-end infant daycare jumps to $29,440.
Higher-end infant daycare facilities pay their workers more, and the education level of the employees is much higher with a focus on early childhood development.
The higher-end daycare facilities provide programs and activities designed to improve your infants’ learning capability, spatial awareness, and generally give them a leg up in learning from professionals trained to assist in these areas.
You’ll also find that the food choices are higher quality and the caregiver to infant ratio is much lower, which provides much more personalized attention to the infant.
The average base cost of toddler daycare is $13,200 per year, which provides average ratios of children and some educational options. The higher-end toddler daycare facilities cost on average $23,190 and provide premium educational options for toddlers.
The higher-end facilities are able to attract higher educated and better candidates by providing higher pay and can often be higher than standard teachers. Often you’ll have caregivers with master’s degrees.
Facilities will provide enhanced educational programs to bring the best out of toddlers for maximum learning abilities and keep their minds active throughout the day based on the most recent research.
The average cost for preschooler daycare is $10,540 for base daycare options and $17,390 for higher-end options. The biggest differences in the different types of daycare will be the ratio of adults to preschoolers, educational level of caregivers, and educational programs.
The higher-end facilities are often feeders into top schools for children and give them a leg up on their future educational achievements.
With fewer preschoolers, there is much more individualized attention and higher levels of educational programs to keep preschoolers engaged, active, and learning throughout the day.
Family Child Care
The average cost for family child care is $12,670 on the base end and $28,920 for the higher-end facilities. These types of daycare options don’t group children into age groups, and many different ages will be in the same facility.
You get all of the same benefits as the infant, toddler, and preschooler options, but it allows you to keep your children of different ages together.
Higher-end daycare options will have even less children than the bigger facilities and still provide the highest quality education for each level of the child. It also means that your child can stay with the same caregivers for a longer period of time, which can be much more comforting for the child and parent.
Average Cost Of Daycare Increases
The average cost of daycare has significantly increased over the past few years, with the most recent jump being 47% for In-center daycare options. Other daycare options like nannies have increased less, with the most recent nanny average cost increasing by 8% over last year.
The cost of daycare has increased by 214% since 1990, and when compared with inflation increases, daycare is outpacing any other cost that families are seeing increase with a 4% increase due to inflation.
The pandemic and lack of minimum wage increases have been significant problems that have caused the average cost of daycare to increase so significantly. In 2021, at least 6,957 licensed daycare facilities were closed across the US, which puts more burden and demand on other facilities.
Average Cost Of Daycare By State
The average cost of daycare by US state ranges from $5,436 in Mississippi to $24,243 in Washington DC annually. Typically higher-income states have a higher average cost for daycare; however, the demand for daycare vs. workers also plays a factor in the cost.
|State||Average Annual Cost|
Government Help For Daycare
The IRS provides up to $3,000 per year as a child tax credit which can be used towards daycare. Parents can receive up to $300 per month for each child under six years old and up to $250 per month for each child between 6 – 17 years old.
Household incomes impact your eligibility for the tax credit, with single-parent households earning $75,000 or more or dual-parent households earning $150,000 or more having reduced or zero benefits from the tax credit.
This subsidy is not permanent, and the US government is supporting extending it, but so far, it may not be available for 2022 or will be delayed.
Benjamin is a certified financial advisor, with over 10 years of experience in the industry. He is knowledgeable about various business and financial topics, such as retirement planning and investment management. Ben has been recognized for his work in the financial planning industry. He has also been featured in various publications.