(NEWS10) – There is no question that raising a child is expensive, but with costs rising, some families are finding themselves paying as much for child care as they would a college education.
The cost of one year of undergrad at a SUNY college is around $24,000.
The average cost of out-of-the-home child care in New York State comes out to around $15,000. According to the Wall Street Journal those costs have been increasing at a 2.9% annual rate since 2009. If your wages haven’t been rising to match that increase, keeping up with the costs is no easy task.
“We pay more in child care than we do in our mortgage. I’m living month to month basically,” says Natasha Pernicka, a mother of three. “We just keep saying to ourselves, soon they will all be in elementary school and things will really change.”
Pernicka has three kids ages six, four, and one. Last year she and her husband paid over $32,000 to put them all into daily childcare. They’ve even had to change care centers several times to try and cut that cost.
“I think as a parent you feel guilty, because you want what’s best for your kid,” says Pernicka. “So you’re trying to find it, and sometimes you just can’t afford what you think would be the best option.”
New York State sets the market rates for childcare based on several criteria including, the type of care provider, the age of the child, duration of care, and location.
Depending on any combination of those factors parents can end up paying anywhere between $98 and $371 a week.
To cover that cost, financial advisor Hugh Johnson says prospective parents need to start saving as much as they can, as soon as they can.
“People don’t realize the magic of compounding,” says Johnson. Put away a hundred dollars per paycheck; that may sound like a lot but you’ve got to put it away. You’ve got to be disciplined.”
While building your savings Johnson says parents need to find a way to make their money work for them. He says parents need to do more than put their money in a savings account and expect significant growth over time based on interest.
“You’ve got to save. You’ve got to save as much as you possibly can. You’ve got to save in something that is going to grow not at a savings rate, but at something more than that,” said Johnson. “Which means an investment account. Which probably means taking a little bit of risk; probably means buying some stocks, or mutual funds or exchange traded funds; a lot of ways of doing it.”
“I think it’s a nice sentiment, but the reality, I think, is far from that,” says Natasha Pernicka. “Especially for people who have college loans and other expensive bills.”
Until things change, there are other much cheaper, and lesser known childcare ideas to consider. Parents can hire a traditional nanny, but what happens when they call out sick?
“Sometimes the mom or the dad will stay will end up staying home. Some moms I know will swap with each other; it’s called a child-care co-op,” says Pernicka. “For my friends that have kids that have parents in the area, a lot of times grandparents will watch the kids and that’s a huge financial saver for people. A life saver is really building a support network around you and asking for help.”
It really comes down to saving and planning. Save what you can and be diligent and disciplined with those savings.
And as Pernicka says, don’t be afraid to ask friends and family in your community for help. As the saying goes, “It takes a village to raise a child.”