Time to read : 5 Minutes
Feeling like you need to sell a nonvital organ to cover your childcare expenses? Let’s talk about the cost of early education and how to reduce the pressure on your budget.
Going back to work should mean more money for your balance sheet, right? Wrong. Not when you have kids.
And not when you’re facing childcare costs which can add hundreds of dollars to your weekly expenses.
How much does daycare really cost?
Per year, one estimate suggests it's about $28,000 per year per child for full time care.
In reality, childcare costs depend on the type of care you need and number of hours, the day rate charged by your provider and how much (if any) you can claim back as a government subsidy.
This is means tested based on household income.
It’s a complex calculation (which always equals expensive), but here are some key figures:
Centre based daycare (also called long daycare) charges an average hourly fee of $10.80, which works out at $118.80 per day for an 11 hour day.
Family daycare charges an average hourly fee of $10.90, which is $119.90 per day.
Preschool costs between $45 and $80 per day
A nanny will cost you around $30 per hour or $77,756 for a full time, salaried professional.
Other considerations, such as whether you need to pack food, formula or nappies for your child at daycare, should also be factored in.
Can families actually afford childcare?
But... part time female workers only earn $745.80 after tax.
If you’re paying for three or four days of care for your child, that doesn’t leave much in the kitty.
Most parents (and chiefly women) return to work because we have both a financial and emotional need. And yet it’s hard not to despair at these figures.
Is the government doing anything to help?
The federal government subsidises your childcare fees based on your household income and how many kids you have. Here's how it breaks down.
People earning up to $72,466 can get 85% of childcare costs subsidised by the government.
Households who earn over $72,466 can get between 50% to 85% subsidised.
The salary limit for households to get government support is $356,756. Anyone who earns over this will pay the full amount.
Higher subsidies can also apply for second and subsequent children based on circumstances.
Maximise your childcare savings
Childcare is expensive. But you still shouldn't pay more than you need to.
1. Use your childcare subsidies. All of them.
It can take time to use Services Australia to work out what level of childcare subsidy (CCS) you're eligible for but if you can stick with it - you could save thousands of dollars every year.
There are also additional childcare subsidies and tax benefits for grandparents and those transitioning to work.
2. Shop around to find the best deal
Types of care can range in format, length and, mostly importantly, price.
Preschools tend to be less expensive than a long daycare, but offers limited hours
Check! Your favoured family daycare may not be eligible for government subsidies.
Prices for any of these options can range from $50 to $200 per day before subsidies so it’s worth comparing.
3. Lean on your support network
While none of us want to burden our loved ones, asking a relative to spend time with your child one day per week means one less day at childcare and one less expense.
The bottom line
Finding the right care for your child — a place where they can feel safe and thrive in their first five years — is obviously the most important consideration.
But financially the cost of childcare is a big challenge for many working parents.
Services Australia isn't the easiest site to navigate so ask your child's daycare if anything's not clear.
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
