Updated on 09.30.14

Rethinking The Costs Of Child Care

Trent Hamm

My wife and I are expecting our second child in September. As soon as we made the decision to have a second child, we sat down and did a number of calculations on the subject and we quickly realized that the expenses were going to be tremendous. Let’s walk through the expenses just a bit so we can see what’s happening.

The Cost of Having One Child


We live in an area where a nice three bedroom home costs about $160,000 to $200,000 a year. This means we would be making mortgage payments in the area of $1,500 a month, roughly.

Child care

We take our son to a place where the cost of infant care is $160 a week. When he reaches the age of two (which will happen later this year), the cost will go down to $130 a week. So, for now, the amount is roughly $720 a month for nine months out of the year (my wife is a teacher).

Additional costs

Our maintenance costs for our child (food, diapers, etc.) is somewhere around $25 a week.

What happens when we introduce a second child into the mix? The housing cost will stay the same, but…

The Cost of and Additional Child

Child care

With an infant and a two year old at our child care facility, they offer a $10 discount on the package, so the cost is $280 a week. This totals out to roughly $1,260 a month for nine months out of the year, an increase of $540 a month.

Additional costs

Our maintenance costs will go up but not quite double; we estimate $45 a week until our son moves out of diapers, then it will go down to about $35 a week, an increase of about $45 a month.

To look at how we’re going to come up with that extra $600 a month, we’re evaluating several options:

Considering Major Decisions

1. We look for new child care

I don’t like this option much at all, at least not in our area. We have our child in with what is widely considered to be the best “bang for your buck” high-end child care facility in the area. He loves it there and is building social skills with his peers in a safe setting. I simply do not feel as confident in any other facility we’ve visited.

2. She quits her job and we stay where we’re at

With our child care cost at $1,260 a month, this begins to approach my wife’s take-home pay, and since we’re both salaried, the option of her quitting her job (at least until both children are in school) begins to look appealing. My health insurance is solid (not quite as good as hers), but it would be adequate to cover them. This option eliminates child care costs and causes the smallest reduction in income.

3. I quit my job and we stay where we’re at

This is another option – I quit to be a stay at home dad. Again, that eliminates child care costs and allows us to keep our best insurance option, but the reduction in overall income is greater. Personality-wise, it makes more sense for me to be the stay-at-home parent than it does for her. This option eliminates child care costs and has the least impact on our lives as a whole, but causes a greater loss in income.

4. I quit my job, she changes her job, and we move

This is an option we’ve been looking at to target next spring. The advantage here is that we both have parents who live very near each other, but several hours away from us. My parents are both retired at this point and they would love to be free daycare for us a couple days a week. So, our plan here would be that my wife would seek a teaching position in that area and if one was located, we simply move back there. This would also likely involve me converting to a stay-at-home dad. Why do this, you ask? The biggest factor is housing costs. The area where we would move to has homes that cost 40 to 50% less than the homes do in this area, because not only is it rural, but there are no major cities anywhere close to the area at all. This option eliminates child care costs and reduces housing costs, but has the greatest salary reduction and causes the greatest change by far to our lives.

To me, the third option is the one that is the most pleasant, but it’s also the one that is going to require the most careful planning and probably require the biggest amount of cash in hand to make it happen. It also happens to be one that my wife is most uncertain about in terms of her own feelings.

What do these options hinge upon? The biggest factor in determining which one of these that we do is honestly the success of The Simple Dollar. If I knew without question that the current level of success of the site could be maintained, we would strongly consider option #3 – but I don’t know that.

What’s the bottom line, the point that I can take home? Personal finance is much, much more than just dollars and cents – it’s about making choices that not only enable you to live today, but also live tomorrow as well. When you look at a major purchase or a major life move, calculating the raw dollars is important, but it often doesn’t make up the whole picture.

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  1. Eric says:

    We live in a more modest area where a 3 br house goes for 100-150k ( for a reasonable sized place ). My mortgage + escrow of taxes and insurance is less than $800/month on our 1200sqft 3br home. My wife left her job to stay home with our daughter, despite the loss of monthly income, because we decided that it was better for all involved. These two intangibles are hard to quantify and can mean all the difference to your child.

    She will probably go back to work and we will but our daughter in day care between 1-2 years of age assume we don’t have another.

  2. Eric says:

    Oops. that didn’t make much sense… here are some of the intangibles.

    1) Child development

    2) Less stress from racing around getting the kid to daycare

    3) Less stress on parents trying to juggle day jobs and raising a child at night

  3. I think it really depends on the choices you make for your family and if you or your wife wants to work. Sometimes it’s better to stay at home and sometimes not.

    But one thing to consider is you are living in a very average area. Moving to a cheaper area would you ever be able to move back to a more expneisve area if you wanted to?

    I know once we leave our super high COLA we’ll never be able to afford it again. This is a very conscious decision on our part, and one of goals. To buy a single family home for less than $750k.

    I also wonder if your wife as a teacher she must have a very generous pension contigent on continous working. So would it be better for you to not work and stay at home because when you retire will you have a comparable pension to her? If she stays at home say 5 years, then gets a job, it’s might not be hard, but how will it affect her retirement?

  4. Lala says:

    I wasn’t sure if e-mail or this was the appropriate place to state this Trent, but I think you have a talent writing in a format that is easily accessible and relevent. I honestly do not read most blogs–but find myself logging onto your website to see what info is new.

    So with this new child on the way and since it sounds like you are already considering being a stay at home dad, why not try to publish articles whether it be a newspaper, magazine, etc. You would have even more time to write and develop articles.

    One more thought along these lines. Before child 2 is born, are there jobs near the place you currently live that would employ you as a writer (for a ‘profitable’ area). For example, I found that writing for pharmaceutical and medical education companies to be profitable — and with experience freelancers can be paid $50 to $100/hour if not more. Perhaps there is a similar field you can break into (law? finances?) — work there until your child is born, then quit and go freelance.

  5. Lisa says:

    You are in the lucky position of having several options. Sometimes that contributes to the problem. How? Well, if you didn’t have the grandparent option, you would search high and low for ways to make one of the other options work. For example, looking hard to find a house at the 160 price and getting financing to work with the lower childcare expenses in 3 years. It might not be preferrable but doable. My husband and I didn’t have the excellent childcare option you have so the priority was for me to stay home. We refinanced the house to lower that expense. We took a hard look at insurance (life, health, car) and then did what Amy Dacyzyn called black belt budgeting. I never stopped looking for ways to make it work. Sometimes it was an income opportunity and sometimes it was a new way to save money. As I look back it was one of the best decisions we made. Once the decision was made it was amazing how things just fell into place and worked out. Best wishes with which ever choice you make. Just be sure to keep the Simple Dollar going.

  6. corey says:

    Excellent finishing points. Finance is more than dollars and sense, and parenting and child care is way more than a cost and time margin. Well done! Good luck!

  7. j says:

    where do you live that a three bedroom house is 150k, i’m pretty amazed?

    great post

  8. Derek says:

    How timely, because my wife and I were having the same discussion this past week when talking about our plan for having children. We would really like to move into a bigger house, but she wants to quit her job and raise our children. That makes for quite the financial dilemma since her income makes for a significant portion of our total, and taking on a bigger mortgage seems like it would be impossible.

  9. Lisa Knight says:

    Not to sound like my Dad or anything, but if your wife teaches for a public school don’t forget to take her retirement package into account (like you wouldn’t, but just saying). I know our state retirement program for teachers is a huge thing & the reason lots of people stay here to teach.

  10. Don’t forget about the other monetary factors you forgo by becoming a stay-at-home parent. For example, you won’t be able to put as much away for retirement, and if your company matches any portion of your 401(k) you’ll be giving that up as well.

    Also, you’ll certainly miss out on cost of living adjustments and raises while you remain out of work force. In fact, you may end up returning to work at a much lower salary then when you left the work force, because it’s hard to convince employers that you’ve retained your skills, or kept up with the industry.

    Maybe you should consider working part time, but not giving up your day job completely.

  11. rhbee says:

    Another aspect of who stays home may come from the way a person views or values the time spent at home. While I was a teacher I went through several relationships and one marriage where I discovered that my partner had developed a lot of envy over “my time off” summers where I spent my time reading and studying and thinking (and doing all the house and yard work too). It sort of slipped up on me that my partner was suddenly taking more days off and was quicker to judge my activities than during the year when I was “working” too. I came to realize that this was a psuedo-shadow that was causing the problem but that didn’t keep it from darkening our days.

  12. Tammy says:

    Hoping it comes clear to you what is best for your family. It can be a tough call. As you describe it here, the bottom line is $600 more a month (tangible) while the intangible is splitting your attention between two careers and two children instead of one. It’s learning how to balance and knowing what you want for your family.

    Housing and automobibles are two areas with some flexibility depending on how “nice” you need it to be. Work for either of you will come down to what you can bring in for income above day to day expenses AND who will do what for or with the the children.

    Congratulations on the new baby coming in September!

  13. KMull says:

    Sounds like you being stay at home is best. Teacher benefits are the best, and it won’t affect her retirement. You could focus full time on TSD, and make mega millions. Okay, maybe not that last part.

  14. amanda says:

    wow – those child care costs sound so low to me! in my area, i’ve heard that infant child care costs can be more than $1500 per month. sounds like you guys have sooooo many choices compared to those of us who live in big (expensive) cities!

  15. plonkee says:

    trent, I’m sure at some point it will become clear which of these great options you should pursue, and it’ll work out. And if it doesn’t you’ll do something else, eventually it’ll be fine.

    I’d like to point out that you wouldn’t have these great choices if you hadn’t pursued your writing dream (and turned around your finances). Sometimes doing what we love can make us rich (even if its not strictly in monetary terms).

  16. Hazzard says:

    My wife and I struggled with that when we had our daughter. She ended up staying home for the first 3 years and we are so glad that she did. Now, our daughter is in daycare ($770 per month) and is thriving. Her social skills etc have drastically improved.

    If we were to have another, we wouldn’t have any choice but to have my wife stay home. Her income isn’t high enough that it would be beneficial to pay daycare for two kids.

  17. Mitch says:


    It’s a regional thing. On the other side, having lived in the Midwest all my life, my brain kind of explodes when I hear some of the prices in L.A. or NYC. $300K should be on the swanky side, you know?

    If you avoid the “big city”/elite suburbs, $150K can definitely buy three bedrooms in many parts of the Midwest. This includes the county I grew up in in Illinois (about 250,000 population) and the county now live in in Missouri (about 40,000 population). Five years ago I believe (but do not have stats handy) this was also true in some towns in St. Louis metro (e.g. Webster Groves, maybe also the Hill), but prices have heated up.

  18. Don says:

    My wife and I went through the same evaluation process a few years back. She decided to become a stay-at-home mom. Then, last year, we decided to move to a less expensive area of the country so we could afford private schooling. Both choices are proving to be excellent decisions.

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