*The cost of childcare and its effect on working parents is a guest post. If you are interested in having your writing hosted on A Modern Mom’s Life, please visit my Guest Posting page.*
Raising a child is not a joke, especially in a country where 20% of parents (mainly working parents) go into debt due to the childcare cost. Since 2017, the cost of child-care has gone up faster than inflation in more than 60% of Canadian cities. If reports are to be believed, parents are enrolling their unborn children for daycare even before giving the good news to the would-be grandparents.
Childcare is the second-highest expense for working parents after their mortgage. The ever-increasing cost of daycare, nannies, and after-school sitters are eating up a significant portion of working parents’ income.
More than 50% of working parents in Canada use daycare for preschool children. Nearly 70% of households where both the parents are working use childcare services for their preschool children. It should also be noted that 49% of working parents do the same thing for taking care of their children, mostly aged between 5 years and 14 years.
Childcare costs have increased significantly in the last few years, which is taking a toll on the finances of working parents. They have to spend almost $200 in Quebec and $677 in Ontario each month to enroll their children in full-time childcare.
Top 6 cities where the cost of childcare is quite high
Survival strategy for working parents to combat childcare cost
Working parents are taking several initiatives to afford the childcare cost. Some parents are bringing babies to the office where it’s allowed. Some organizations are allowing new working parents to bring infants at the workplace for the first 6 months or more. That may sound illogical for the first time. But if you think a little deeper, you’ll understand the real motive of the organizations. They are getting work delivered without any hassle.
Look into bringing your child to work, or taking work home to your child.
Babies are happy when they are with their moms. Mothers also can save quite a lot on daycare when they look after their babies at the office. On the other hand, employers can also get the full attention of employees at work. So, the program works.
What about the other working parents who are not getting full cooperation in their workplace. Well, they are either changing their careers or their workplace to afford childcare costs. Some are even switching to better jobs with a higher pay scale. Others are opting for part-time jobs. They don’t have any other option actually.
Some parents are looking for affordable alternative options to manage childcare costs like child-friendly coworking space. Others are opting for in-home daycare for young children. Some are even exploring childcare-cooperatives that offer various kinds of childcare services at an affordable cost. For instance, babysitting services and academically structured programs.
Explore Government programs
Working parents have another option to combat the rising childcare cost, and that is the Canada Child Benefit (CCB). Eligible parents, with children under 18 years, receive tax-free monthly payments from the government. Now, the choice is yours. You can use the amount to get rid of your growing credit card bills quickly. Or, you can again use the money for your kids. Make sure you have the taxpayer identification number of the childcare center. You’ll need this number to claim the tax credit.
A few more tips to save money on childcare cost
Both working and stay-at-home parents can use these 3 tips to save money on childcare in Canada. If you’re a new mom, then I’m sure these tips would help you a lot:
1. Take advantage of Child Care Fee Subsidy:
This subsidy is mainly available in Toronto where eligible working parents can get subsidies to cover the expenses of a licensed daycare for kids below 12 years.
2. Keep all the receipts with care:
If you have enrolled your child in an eligible daycare, then don’t forget to ask for a receipt. As per the law, you can claim a tax deduction of $8000 annually for kids who are below 6 years. You can also claim a tax deduction for up to $5000 for each child who is between 7 and 15 years from the spouse with a low income. It’s almost like an RRSP deduction where you can probably save thousands through tax refunds.
For instance, your annual income is $50,000. If you qualify for the $8000 tax deduction, then you would probably get $2100 as a tax refund. You can use the refund to offset childcare costs and pay down your growing credit card bills.
3. Stash cash in a separate bank account:
Depending on the subsidies you’re eligible for, you could be receiving money from various sources like Canada Child Benefit or tax refunds. You may receive money monthly, quarterly or annually. Keep the money aside in a separate bank account for your daycare expenses. When you receive windfall or tax refunds, put that money in this account. The biggest benefit of doing this is that you can cover the rest of the expenses from your budget.
For instance, if your annual daycare cost is $12000, then this means that you have to spend $1000 per month. If you have received around $1000 from government benefits and $2000 from tax refunds, then you have to pay $9000 for daycare in the next year. This implies that you have to pay $750 every month. Technically, you have to pay $250 less every month.
Be calm and patient. The daycare expenses can wreak havoc on your financial health. However, if you can manage all the expenses and stay out of debt, then consider yourself the winner of the game. Take a break from your other financial goals during the daycare years. It will help you avoid getting into debt problems.
Stacy B Miller is a writer, blogger and a content marketing enthusiast. Her blog kissyourmoney.com vents out her opinions on debt, money and financial issues. Her articles have been published in various top-notch websites including Oak View law Group where she works as the content editor. You can connect with her in Facebook and Twitter.
My last words:
We are just now cutting down on our childcare expenses. With my oldest being 11, my girls can come home after school and we’ve dropped the large after-school-care bill from our monthly spending. I’m not surprised to read these statistics – raising kids is an expensive job!
How do you afford child care – or what budgeting tips can you share with fellow working parents? Leave them in the comments!