Isn't That Rich Podcast

This week, we dive into a topic that’s on every parent’s mind: the true cost of childcare. Spoiler alert: it’s expensive—really expensive. Whether you're thinking about daycare centers, hiring a nanny, or even relying on family to help out, the cost of caring for little ones can take a huge chunk out of your wallet.

We’ve done some serious research on this, talked to friends across the country, and had a few eye-opening moments ourselves. Let’s break down the reality of childcare in America—hold onto your wallets, folks!

Childcare Options: What Are the Choices?

When it comes to childcare, parents have a few options, each with its own pros and cons. The most common ones are:

1. Daycare Centers: These are your go-to, licensed facilities that offer structured environments for infants up to school-age kids. They're reliable, with trained staff and social interaction for your child. But, they can also be expensive and often have long waitlists.

2. In-Home Care (Nannies): A dream come true for many parents—nannies offer one-on-one care in your own home. Some even take care of household chores. The downside? This option is pricey. We’re talking six figures in some cases!

3. In-Home Daycare: Think of this as a middle ground. It's more affordable than a nanny but more personal than a large daycare center. The tricky part? Finding one you trust.

4. After-School Care: If you have older kids, after-school care is another option, though it still comes with a price tag.

Childcare Costs Across the U.S.: Hold Onto Your Wallets

Now for the fun part: just how much does childcare cost? Let’s break it down city by city, so you can get an idea of what parents across the U.S. are dealing with.

Raleigh, NC:

Our first stop is Raleigh, where our friend just had a baby and started her childcare search. Infant care at a daycare center? Try $2,350 a month, which adds up to nearly $28,000 a year. She ended up hiring a nanny, which costs around $39,936 a year—yep, that’s nearly a full salary!

Kansas City, MO:

In Kansas City, our friend with a three-year-old and an infant is shelling out $35,790 annually for daycare. That’s three times her mortgage! She’s paying $399 a week for her infant and $295 a week for her three-year-old.

Denver, CO:

This is where things really blew our minds. Infant care in Denver can cost up to $2,800 a month, or $33,600 a year. That’s just for one child! And don’t forget the extra costs for before- and after-care, which could push your total over $40,000. Oh, and by the way, there’s a two-year waitlist for many daycare centers in Denver. If you're planning to have a baby there, you might want to get on that waitlist before you even think about having kids!

Minneapolis, MN:

Our friend in Minneapolis is paying about $16,380 a year for part-time care at a Spanish immersion school for her 3-year-old. When her daughter was an infant, the cost was closer to $20,280 annually. The cost is slightly lower in the suburbs compared to major cities like Denver, but it’s still a significant financial commitment. The price can rise sharply if you need full-time care or if your child is younger.

Childcare in Southern Illinois: More Affordable, But Still a Big Deal

So, we’ve talked about the mind-blowing childcare costs in big cities, but what about closer to home? Good ol' Southern Illinois. You might think, "It’s got to be way cheaper here, right?" Well, yes... and no. It’s definitely more affordable compared to places like Denver or Raleigh, but it’s still a major expense for families.

Breaking Down the Costs in Southern Illinois

We called up all the daycare centers in our area (yes, Jill went full investigative reporter mode), and here’s the breakdown we found:

• Infant Care (0-2 years old): $285 per week, or $14,820 a year
• Toddlers (2-3 years old): $230 per week, or $11,960 a year
• Preschoolers (3 years and up): $200 per week, or $10,400 a year

Now, for Southern Illinois, those numbers might not seem as shocking as the $30,000+ you’d pay in bigger cities, but it’s still a huge chunk of change. And remember, these are just daycare costs—this doesn’t include all the extras like diapers, formula, clothes, and everything else that goes into raising a kid. When you factor all that in, families are still feeling the pinch.

What If You Have More Than One Kid?

Here’s where it really hits home: If you’ve got two or three kids in daycare at the same time, the costs can skyrocket. For example, if you have three kids under three, your yearly childcare bill is going to be a whopping $41,600. That’s nearly the median household income in some parts of the country!

To put it in perspective, that’s basically a side hustle, a full-time job, or a significant lifestyle change just to cover childcare. And here’s the kicker: there are no family discounts. Yep, no bundle packages for having multiple kids in daycare at the same time. If you’ve got two in daycare, you’re paying full price for both. Ouch.

The Waiting List Situation

You wouldn’t think there would be a waiting list in Southern Illinois, but surprise—there is! If you’re looking to enroll your baby in daycare, don’t wait until your maternity leave is over to start looking. You might have to get on a list 6 to 12 months in advance! We couldn’t believe it either, but almost every daycare center we called mentioned their waiting lists.

The takeaway? If you’re even thinking about having a kid, it might be worth calling your local daycare now and asking about their wait time. It's like trying to get into the hottest restaurant in town, except, you know, for baby care.

In-Home Daycare: A More Affordable Option?

We also dug into the cost of in-home daycare, which can be a more affordable option. In-home daycares are run by individuals out of their own homes and tend to cost less than the big daycare centers. One local provider told us she charges $160 per week, which comes out to about $7,600 a year—half the price of a traditional daycare center.

However, in-home daycares can come with a few restrictions. The provider we talked to mentioned that she doesn’t take infants under 18 months, which could be a deal breaker for some families. Additionally, because these setups are smaller, they may not have the same level of staff or resources as larger centers, so it’s important to weigh the pros and cons.

What About Babysitters?

Of course, if daycare isn’t your thing, there’s always the option of hiring a babysitter. But even that comes with its own set of costs. Around Southern Illinois, the going rate for a babysitter is about $12 an hour for one child. Add a couple more kids to the mix, and you’re looking at around $15-$18 an hour.

Let’s do some quick math here: If you hire a babysitter for an 8-hour day at $15 an hour, that’s $120 a day. Over a 5-day workweek, that’s $600 a week. And guess what? That adds up to $31,200 a year. Babysitters are convenient, but they’re not exactly a budget option if you need full-time care.

Plus, good babysitters are worth their weight in gold, and if you’ve ever found a sitter who’s both reliable and great with your kids, you know that they’re in high demand. Many parents end up juggling multiple sitters just to keep up with their schedules.

Help is Out There (If You Know Where to Look)

When we started diving into the true costs of childcare, one thing became clear: families are shelling out a lot of money to make sure their kids are in good hands. But here’s the good news—if the price tags are making you break out in a cold sweat, there are programs designed to help. Enter the Child Care Assistance Program (CCAP), which can be a game-changer for families who need financial support for daycare expenses.

So, what is CCAP, and how can it help you keep some of that hard-earned cash in your pocket? Let’s break it down.

What is CCAP?

According to the Illinois Department of Human Services, the Child Care Assistance Program (CCAP) is a state-administered program that helps lower-income families cover the cost of childcare. In Illinois, the program is managed by the Illinois Department of Human Services (IDHS). Basically, if you qualify based on your income, the state will pitch in to help pay for daycare or childcare services.

This program is a lifeline for many families, allowing parents to continue working or attending school without breaking the bank. But here’s the catch: not everyone qualifies. The amount of help you can get depends on your household income, and you need to reapply for the program every year to continue receiving benefits.

How Do You Qualify for CCAP?

Qualifying for CCAP isn’t automatic—you have to meet specific income requirements based on your family size. And let’s be real, these income limits are pretty tight. Even a slight bump in your salary could push you out of eligibility, which can make navigating the system a little tricky.

Here’s a quick rundown of the maximum annual income limits for CCAP eligibility in Illinois:

• 1-person household: $32,328/year
• 2-person household: $43,440/year
• 3-person household: $55,974/year
• 4-person household: $67,500/year

Let’s put this into perspective. If you’re a single parent making $33,000 a year, you no longer qualify for CCAP as a one-person household. The problem? As we saw in our research, the cost of infant daycare alone can be $14,820 a year in Southern Illinois—and that’s on the lower end compared to big cities. So, even with a full-time salary just above the income limit, paying for childcare without assistance can eat up almost half of your income. It’s a tough situation for a lot of families.

And if you’re a two-parent household making $45,000 a year, you're just over the limit for a two-person household. This is where things get frustrating—just because you earn slightly more doesn’t mean you can suddenly afford childcare out of pocket. Families in this “gray area” often struggle to make ends meet because they earn too much to qualify for assistance but not enough to comfortably afford childcare on their own.

The “Cliff Effect”

One thing seen time and again with CCAP (and similar programs) is what’s called the cliff effect. This happens when families get a small raise that pushes them just over the income limit for assistance, and suddenly they lose all their benefits. What’s frustrating is that the raise might only add a few hundred dollars to your annual income, but losing CCAP could cost you thousands in childcare expenses.

Imagine making an extra $1,000 a year—sounds great, right? But if that raise bumps you out of CCAP eligibility, you could end up paying an additional $10,000 (or more) in childcare costs. Suddenly, that raise doesn’t seem so great. It’s a tough reality for many families, and it’s part of why programs like CCAP need more attention and better solutions.

How Much Does CCAP Help?

The big question everyone wants to know: How much will CCAP actually help me save? Well, that depends on your income and family size, but the program is designed to cover a significant portion of your childcare costs.

Once you’re approved, you’ll still pay a co-payment, but it’s based on a sliding scale. Families with lower incomes pay a smaller co-pay, while those on the higher end of eligibility pay a bit more. The idea is to make childcare affordable without completely subsidizing the cost.

For example, if you’re a single parent with one child and you qualify for CCAP, your co-payment could be as low as $85 per month (depending on your income). Compare that to the typical cost of $1,235 per month for infant care in Southern Illinois, and it’s clear that CCAP makes a huge difference. This could be the key to balancing work and family without going broke.

How to Apply for CCAP

Applying for CCAP might sound intimidating, but it’s actually a pretty straightforward process. Here’s what you’ll need to do:

1. Check Your Eligibility: First, head over to the Illinois Department of Human Services (IDHS) website, where you can use their eligibility calculator. This handy tool will help you determine if your family qualifies for assistance.

2. Gather Your Documents: Be prepared to submit proof of your income, household size, and work/school schedule. This usually includes recent pay stubs, tax returns, and a letter from your employer or school.

3. Submit Your Application: You can apply online through the IDHS website or visit a local Child Care Resource & Referral (CCR&R) agency for help.

4. Reapply Every Year: CCAP isn’t a one-and-done deal. Every year, you’ll need to resubmit your application and provide updated financial information to stay in the program.

Other Ways CCAP Can Help

The best part about CCAP? It doesn’t just cover traditional daycare. The program can also help with after-school care, summer programs, and even care provided by a relative or family friend (as long as they meet the program's requirements). So, if you have a unique childcare situation, CCAP might still be able to help lighten the load.

CCAP Can Be a Lifesaver—But You’ve Got to Plan Ahead

The biggest takeaway from our CCAP deep dive? Plan ahead. With income limits and yearly reapplications, it's crucial to keep track of your earnings and stay on top of the paperwork. If you’re close to the income limits, you’ll want to weigh the pros and cons of taking a raise that could push you over the edge. It’s all about strategizing to make the most of the benefits you qualify for.

The Child and Dependent Care Tax Credit: A Little Help at Tax Time

Now, let’s talk about another way to offset the steep cost of childcare: the Child and Dependent Care Tax Credit. If you’re like most people, when tax season rolls around, you're probably looking for every possible deduction or credit to lower that tax bill. Well, if you're paying for childcare, this credit can be a real lifesaver.

What is the Child and Dependent Care Tax Credit?

The Child and Dependent Care Tax Credit is a federal tax benefit that allows you to claim a percentage of your childcare expenses when you file your taxes. The goal? To help working parents offset the cost of daycare, nannies, or even summer camps while they’re at work or attending school.

This tax credit isn’t just for kids, either. It can also be used for the care of dependents, like elderly parents who need care while you work. But for today, let’s focus on the childcare part of the equation.

How Does It Work?

The credit allows you to claim up to 35% of your childcare expenses, with a maximum of $3,000 for one child or $6,000 for two or more children. So, let’s say you spent $6,000 on daycare last year for your toddler—if you’re eligible, you could potentially claim 35% of that amount, which would be $2,100 in tax credits.

Keep in mind that the percentage of expenses you can claim depends on your income. Families with lower incomes can claim the full 35%, but as your income increases, that percentage goes down. Even if you’re in a higher income bracket, though, you can still claim 20% of your childcare costs.

Here’s a quick breakdown:

• Income below $15,000: You can claim 35% of your childcare expenses.
• Income above $43,000: You can claim 20% of your childcare expenses.

What Can You Use It For?

This tax credit isn’t just for traditional daycare. You can claim expenses for a variety of childcare options, including:

• Daycare centers (licensed, of course)
• In-home daycare providers
• Nannies
• Before and after-school programs
• Summer day camps

So, whether you’re dropping your kids off at a licensed daycare facility, paying for a nanny, or sending them to a summer camp while you work, you might be able to claim a portion of those costs on your taxes.

What Are the Limits?

The IRS has some rules (of course). Here are the key ones:

• The child must be under 13 years old for you to claim the credit.
• Both parents (if married) must either be working or attending school. If one parent stays home full-time, the family won’t qualify for the credit.
• You need to keep track of who you’re paying for childcare—and you’ll need their Taxpayer Identification Number (TIN) or Employer Identification Number (EIN) when you file your taxes.

It’s Not a Refundable Credit, But It Still Helps

One thing to note: this is a non-refundable tax credit. That means you can’t get a refund back if the credit exceeds the amount of taxes you owe. However, it can still help reduce your tax bill. For example, if you owe $3,000 in taxes and you qualify for a $1,500 credit, your tax bill drops to $1,500—definitely not a bad deal!

Dependent Care FSA: A Smart Way to Save on Childcare (If You Qualify)

We’ve already talked about the high costs of childcare, but did you know there’s a way to save some serious cash with pre-tax dollars? Enter the Dependent Care Flexible Spending Account (FSA)—a special account that helps you cover childcare expenses while lowering your taxable income. Sounds amazing, right? Well, it is… if you qualify.

Can Everyone Open a Dependent Care FSA?

Not exactly. There are a few boxes you need to check before you can open one:

1. Your Employer Must Offer It: Dependent Care FSAs are employer-sponsored, so if your workplace doesn’t offer it, unfortunately, it’s not an option for you. And if you’re self-employed, you’re out of luck too.

2. Work Requirement: Both you (and your spouse, if applicable) must be working, looking for work, or attending school full-time. The whole point of a Dependent Care FSA is to cover the costs of care while you’re earning a paycheck or pursuing a degree.

3. Eligible Dependents: The expenses have to be for a qualifying dependent, like a child under 13 or a spouse/dependent who can’t care for themselves due to a physical or mental condition.

If you can tick all those boxes, then you’re good to go!

How Does It Work?

Here’s the fun part: You can contribute up to $5,000 per year (or $2,500 if you’re married and filing separately) to your Dependent Care FSA. The money comes out of your paycheck before taxes, which means it lowers your taxable income and helps you save.

You can use the money for:

• Daycare centers or babysitters.
• Before- and after-school programs.
• Preschools and summer camps.

Then, when you pay for these childcare expenses, you just submit the receipts to your FSA provider, and they’ll reimburse you from your account.

Watch Out for the “Use-It-or-Lose-It” Rule

Here’s the kicker: Dependent Care FSAs are use-it-or-lose-it, which means if you don’t spend all the money in your account by the end of the year, it’s gone. So, you’ll want to plan your contributions wisely!

Can You Combine This with Tax Credits?

You sure can—kind of! You can use both a Dependent Care FSA and the Child and Dependent Care Tax Credit, but you can’t double-dip. So, if you max out your $5,000 FSA, you can only claim the tax credit on expenses beyond that. It’s all about finding the right balance to save the most.

Why Should You Bother?

If you’re eligible and your employer offers a Dependent Care FSA, it’s a no-brainer. Between reducing your taxable income and getting tax-free money for childcare, it’s one of the best ways to make those sky-high costs a little more bearable.

Creative Solutions: The Power of Community

Don’t underestimate the power of a support network! Some families have gotten creative by sharing nannies with neighbors or joining community childcare co-ops. And let’s not forget the importance of leaning on family. As Jill put it, she’d love nothing more than to help her brother by watching her nieces and nephews for a week—no questions asked!

Childcare’s Impact on Life Choices: More Than Just the Money

The cost of childcare isn’t just a number on your budget—it affects almost every major life decision. From how many kids you decide to have, to whether both parents can stay in the workforce, the financial weight of childcare creates a ripple effect in families. Let’s unpack how these costs shape everything from family size to career choices.

How Many Kids Can You Afford?

Remember when people used to say, "Have as many kids as you want!"? Well, these days, that conversation is more like, "How many kids can we afford?" With the cost of daycare rivaling a full-time salary, family size is no longer just a personal decision—it’s a financial one.

Take Southern Illinois, for example. If you have three kids under three, you’re looking at a childcare bill of over $41,600 a year! And if you’re in a big city like Denver or Raleigh, that number could jump to over $80,000 a year. For many families, those numbers make the decision for them. Suddenly, the idea of three kids under three seems more like a financial nightmare than a family goal.

A lot of families now space their kids out more or decide to have fewer children altogether because paying for multiple kids in daycare at the same time just isn’t feasible. It’s a tough call that many parents face—whether to grow their family or keep their budget intact.

Timing Parenthood: Do We Wait or Jump In?

The timing of when to have kids has also become a balancing act. Instead of the typical “let’s just go for it” approach, couples are running the numbers, asking themselves if they’re financially ready for kids. For many millennials, waiting until they’re more financially stable means having children later in life.

But here’s the catch: By the time you’re financially ready, you might be hitting your peak earning years. That’s when you’re trying to climb the career ladder, save for retirement, and maybe even buy a home. Add in the fact that daycare can cost upwards of $30,000 a year in some cities, and suddenly you’re forced to decide between career progression and daycare costs. It’s a double whammy that leaves many parents feeling like they just can’t win.

Should One Parent Stay Home?

Here’s one of the biggest decisions parents face: Does it make more sense for one of us to stay home? Let’s be real: If daycare costs $35,000 a year and you’re making $40,000, is it worth it to keep working?

For some families, especially those with lower-paying jobs, the answer is a hard no. It’s just not worth working if nearly all your income goes straight to daycare. And let’s be honest—no one wants to feel like they’re working just to cover childcare costs.

So, what happens? Someone stays home. And while more men are taking on the role of stay-at-home dad (it’s 2024, after all!), this decision still mostly falls on women. That means many moms are stepping out of the workforce, often sacrificing career advancement, promotions, and long-term earnings to take care of their kids.

The flip side? If both parents want to work but the costs are so high, families face a different kind of stress—knowing that a huge chunk of their paycheck is going straight to daycare. It's a classic "damned if you do, damned if you don’t" scenario.

Retirement, What’s That?

For families who decide to keep both parents working, the cost of daycare often means something else has to give. And a lot of the time, that “something” is long-term savings—specifically retirement. Those big chunks of money going toward daycare often mean parents can’t contribute as much (or anything) to their 401(k)s or IRAs.

This is especially tough because your 30s and 40s are prime time for building wealth and saving for the future. But if you're paying $30,000 a year in childcare costs, contributing to retirement savings can feel like an impossible task. The long-term impact? You might end up playing catch-up when it comes to retirement, all because of those hefty daycare bills during your kids’ younger years.

The Big Move: Back to Family for Help

Another side effect of high childcare costs? Families are moving closer to their parents for help. It's not uncommon for young couples to relocate back to their hometowns or nearby suburbs just to get a little extra support from Grandma and Grandpa. After all, free (or nearly free) babysitting can be a total game-changer.

This decision often leads to trade-offs, though. Moving back to your hometown might save you thousands on daycare, but it could also mean giving up career opportunities or the city life you love. It’s a juggling act, with families trying to balance the financial benefits of being close to family with the lifestyle they want.

The Emotional Impact: So Much to Juggle

Beyond the dollars and cents, the emotional toll of managing childcare is real. The stress of balancing work, finances, and being there for your kids can feel overwhelming. Many parents are left feeling stretched thin—guilty about leaving their kids in daycare, worried about keeping up at work, and stressed about paying the bills.

It’s a constant tug-of-war between career and family, and for many parents, the pressure to “have it all” feels impossible. Let’s be honest—there’s no “one size fits all” solution here. Whether you decide to stay home or keep working, there’s always that nagging feeling of, “Am I doing the right thing?”

Final Thoughts: Navigating These Tough Choices

At the end of the day, the cost of childcare is about so much more than just the money. It shapes families’ decisions about when to have kids, how many to have, and whether both parents can stay in the workforce. It’s an all-encompassing factor that plays a huge role in shaping modern family life.

But here’s the thing—no two families are the same. What works for one family might not work for another, and that’s okay. The most important thing is to explore your options, whether that’s looking into tax credits, negotiating daycare rates, or finding creative community support. It’s all about figuring out what works best for your family, and finding ways to make it work for you.