Summary: Out-of-pocket childcare costs consume on average ~15% of Australian households disposable income, and this proportion is even higher if you have more kids under 5, or earn less than the median income.
However, there are various ways to minimise unnecessary childcare costs and optimise childcare-related decisions such as: where to live, the priority of a child-friendly job, how many days to work, what childcare service to use and the involvement of unpaid carers like relatives and other parents.
In this post, I'll collate relevant information, options and strategies. Common, well-known methods are simply linked to or noted. Lesser known strategies are described in more detail.
Our Situation: We have one child (Luka) and Lisa and I split up the week looking after her. Lisa works 2-3 days a week from 8am - 5:30pm. I am fully home-based and do 1-2 days "work" - mostly volunteer work currently. Luka won't attend any paid childcare till around 3 years age. After that, she'll gradually scale up kindergarten program attendance till school age.
Details:
1. Common cost-saving strategies
a. Living closer to relatives that want to spend time with your kids
b. Optimising use of the Child Care Rebate and Child Care Benefit
c. Sharing a nanny
See:
> DoughRoller - 32 Ways to Save Money on Childcare
> Baby Center - Parents' tips: how to make childcare by a grandparent work
2. If you're using long-term childcare factor the difference in costs into your decisions on where to live and work in terms of convenient access to more affordable childcare locations. Once you've found desired, affordable options get on the waitlist ASAP
Most childcare in Australia is delivered privately and there is no cap on fees. The variance in fees can be massive and this variance within a city is mostly driven by supply vs demand imbalances combined with what well-paid parents in the area can afford to pay.
For example, in affluent parts of Australia's major cities,where at least one parent is certain to be earning over $100,000 a year, limited supply can drive up prices fast - as the highest-income household's sustain demand at any price under $250/day.
Consequently, if not in the top 20% of household income in such areaa, it would be a mistake to move to a supply-constrained location and be trapped into paying such inflated costs.
High land prices also flow into rents and thus the areas with the highest land prices and most restricted opportunities to build or expand childcare facilities will also have higher cost inflation.
Areas with more supply than demand are also much more likely to compete such that some offer cost-saving services such as make-up days to replace public holidays and greater flexibility in use.
Nevertheless, in most parts of most cities, the differences in costs can vary massively from one suburb to the next and even within the same suburb. So you may not need to move homes or jobs. You just need do your research and plan for the most convenient access to more affordable care. Obviously, the most affordable, quality options will have the most demand and thus getting on their waitlists as early as possible and chasing them up is essential.
The best childcare search websites are often commercial not government sites and show vacancy, cost and review information as well as enabling you to more easily access waitlists and subscribe to vacancy alerts.
For example: CareforKids.com.au
3. Create the most optimum arrangements for part-time and flexible work so as to maximise after-tax (and welfare) household income and minimise the amount of expensive full daycare services used
For most households it makes financial sense for at least one parent to work part-time - and generally both if that's feasible and desired. When you take extra tax, childcare costs, the childcare rebate cap (currently $7,500 per child per year) and child-related welfare (mostly based on your income level) into account, there is certainly little marginal return from parents working 10 days full-time per week rather than 9 or 8 days.
For many households - particularly those where at least one parent has a modest income and there are multiple kids under school age - it makes financial sense for one or both parents to more extensively shift to part-time work or even spend longer periods not working.
See:
> DoughRoller - How to Determine If Your Salary is Worth the Cost of Child Care
4. Ensure you are actually using paid services optimally and not paying for days/times that aren't used
The most obvious example is public holidays, when childcare centres are closed but most charge the full daily rate to parents who are enrolled for that day of the week (typically a Monday or Friday).
The easiest method is simply for at least one parent to work part-time and avoid using term-based childcare services on Mondays and Fridays.
Another common and predictable circumstance is family holidays or periodic days when the child won't be going to childcare. In this case, you would use being home part-time or other more flexible care arrangements to cover the day of the week when you'll be least likely to utilise paid childcare fully.
Finally, there are a few childcare centres that offer "make up" days for public holidays or don't charge the full rate, so these may be worth researching or asking about upfront.
Ensuring your utilisation rate of paid childcare is optimal is especially important if you typically exceed the annual cap (currently $7,500 per child) for the Child Care Rebate. In this case, each unused day is costing you the full daily rate ($100+).
See:
> Why pay for child care you don't use, like on public holidays?
5. Use cheaper kindergarten options in the year or two before primary school
All states in Australia provide some sort of direct or indrect assistance to subsidise the cost of eligible kindergarten programs. The aim is to prepare all children for school in the year before it starts.
In Australia, this typically means that eligible kindergarten programs can be much less expensive for 4 year olds. Even though 3 year old kindergarten programs exist, they would be more expensive in terms of cost per hour (typically 3 year old programs run for fewer hours).
The reason for specifying "eligible kindergarten programs" is because many childcare centres now include kindergarten programs right up to school age but most of these run for long daycare hours and thus at the same cost as long daycare.
Consequently, if you can make the shorter hours of 4 year old kindergarten fit your circumstances it can be a good way to save money while preparing your child for school.
Because kindergarten programs are typically run for both 3 and 4 year olds and there are some special government subsidies for certain 3 year old programs, there tends to be a spreading of subsidies across programs. Consequently, one can often find inexpensive 3 year kindergarten programs (typically 2 half days) or find that some 4 year old programs are only slightly cheaper per hour than 3 year old programs from the same centre.
The cheapest kindergarten programs are often run by local government with fees set on a term basis.
See:
> Live in Victoria - Kindergartens in Victoria
> City of Yarra - Kindergartens
> ELA FAQs - Kindergarten
6. Use libraries and playgrounds instead of paid Out of School Hours (OOSH) care
Out of School Hours (OOSH) care is supervised care and recreation for school-age children and is most typically used for shorter periods before and after school and costs around $10 for 1 hour before school and $20 for around 2 hours after school. If your child uses it before school and after school it would cost around $30/day.
However, if you choose a safe and walkable location to live in and a school near a library or park, it may be feasible to instruct your child to use these facilities on their own when they are independent enough.
Even more feasible is to team up with other parents in doing this, such that there is one adult supervising the group (even a relative) till school starts or parents arrive for pickup. Also, there is nothing wrong with offering some payment if such arrangements can't be perfectly reciprocal.
For example, the new North Fitzroy library and community hub is across the road from North Fitzroy Primary School. And Edinburgh Gardens is across the road on the southern side of the school.
7. Establishing reciprocal (and paid where necessary) child-minding and dropoff/pickup relationships with nearby parents
This is one of the most underutilised methods of saving money that virtually all parents wistfully think about but few actually make happen. However, the benefits are huge in terms of saving money, flexibility and developing relationships between families and directly between kids.
It can readily be used for:
- Before and after school supervision and pickup or dropoff
- Brief and emergency minding
- Reciprocal babysitting (e.g. evenings out)
It can also be used with trusted parents for:
- Informal home-based occasional care and daycare
- Making it feasible to spend more days looking after your kids by co-locating with another parent (e.g. when you have multiple kids and spend time with another family in either your or their home)
8. Using cheaper Occasional Care for a few hours rather than whole days of more expensive care
When a whole day of paid care costs you $100-$200, it is highly advantageous to replace it with cheaper occasional care if feasible. Interestingly, occasional care is often available inexpensively via local government recreation or childcare centres and neighbourhood houses. For example, $6 for 1.5 hours at a local government recreation centre. Or $18 for 4 hours at a local government childcare centre.
This may mean working part of the day or more flexibly, or using relatives for part of the day and occasional care for the rest.
See:
City of Yarra - Child care
9. Minimise waitlist fees by asking about the likelihood of getting accepted in your required timeframes and actively chasing up with your most desired childcare centre
Waitlist fees are now common for all except local government services. Instead of paying them to several childcare centres who you'll never hear from again, ask about the likelihood of being successful and focus on the ones with a realistic chance.
Ask about how early you can and should register. For example, if you register at birth and are offered a place before you need it do you end up at the back of the waitlist by declining? Or can you call up when you do need a spot and remind them you've already made it to the top of the waitlist before?
If you only need childcare on 1-2 days a week, it is often possible to circumvent the waitlist process by simply calling or emailing regularly to find out if a spot has just come up.
There are various effective strategies for getting a place and it is best to expend the effort to follow these rather than pay waitlist fees at far more centres than necessary.
See:
> Kidspot - 12 ways to get your child into daycare
Further Info:
ABC News
> Articles tagged "child-care"
SBS
> How other countries address affordable childcare
SMH
> Childcare is expensive, but not working costs more
news.com.au
> Kidspot survey reveals: What mums really think of childcare
Herald Sun
> Childcare fees: How much you pay No relief in sight as map shows parents
Kindergartens
> Isabel Henderson Kindergarten
mychild.gov.au
> Information on child care and early learning
Baby Center
> Your guide to choosing childcare
CareforKids.com.au
> Cost of child care
Parents.com
> Try This Trick: Turn Your Phone Into a Baby Monitor
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