Borrow, budget, bargain to save on child care expenses


That's how much you'll spend on your child from birth to age 17, according to the USDA. From food to clothes to health care to education. But there's one more expense that's a part of this number that families often forget about or downplay: child care.

Did you know that child care is the biggest annual expense for most families? The average family spends about $18,000 a year on it. Yet 42 percent don’t budget for it, according to

Here is some advice on how families can budget from Holly Perez, consumer money expert at Intuit and spokesperson for

Step 1: Learn How Much Care Will Cost You
Whether you've put a deposit in on a day care center, made an offer to your dream nanny or signed with an au pair agency, you should have a sense of how much child care will cost you, monthly. Be sure to also factor a child care tax break (up to $1200 back) and savings using your company's flexible spending program (up to $2000 on care expenses).

Step 2: Figure Out Where You Currently Spend Money
Create a list of all the things you spend on — before kids. And add up how much you've spent on them in the past year. This list can be really eye-opening for families to see where they're spending most.

Step 3: Find Places to Cut
Perez advises that you now go through your discretionary spending (as in the non-essential) and see what can be cut — or minimized. The most common places people can make room are with coffee runs (make instead of buy), restaurants (limit eating outside the home), gas (start carpooling or taking public transit more), clothes (buy consignment) and groceries (buy in bulk). You might also need to cut back on vacations, gift spending, beauty/spa services, technology upgrades and gym memberships. There may be less expensive options that can still provide an enjoyable lifestyle.

Whatever you do, don’t cut from your “Emergency Fund” savings. Perez reminds that this special pocket of money is critical to your family. Especially now. “A job loss or other unexpected traumatic event can cripple a family’s budget. Prepare for the unexpected and try to set aside money to cover three months of expenses,” she advises. Also try to budget money to set aside for your 401k savings and a college fund for your kids.

Step 4: Track Discretionary Spending
Assuming you have cut and re-allocated your paychecks to afford child care (and if you haven't, you might need to find a less expensive option), you now need to hit your new numbers. Remember your main culprits. "Many families have no idea how much they spend on dining out, travel, entertainment or clothing," Perez says. "Budgeting is a matter of knowing what you earn, what you owe and where money is spent."

Step 5: Allow for Changes Over Time
Yes, your salaries are bound to increase (thank goodness!), but you also might have another child or your first child may have new expenses as he gets older — especially in terms of activities and interests. Those soccer, violin and T-ball lessons can add up. Perez likes to keep "3 B's" in mind when trying to save money over time:

  1. Borrow: equipment, instruments, uniforms
  2. Bargain shop: consignment stores, deals online, etc.
  3. Budget: factor activities and equipment in to your new annual budget so you don't get surprised!