Any parent who has ever had a kid in daycare know just how insane the cost can be. But since most parents have to work to make ends meet, daycare or private childcare is absolutely necessary. However, what often ends up happening is that parents are actually working simply to pay the costs of sending their children to daycare. Working parents are caught in a Catch-22, and now new analysis from HotPads shows that parents are spending almost as much money on daycare as they're spending on rent.
That is a grim and kind of scary reality to face. The numbers show that the average cost of childcare in the United States is $1,385. The cost of rent averages out to be somewhere in the $1,500 range. That's a difference of $115. That is not a lot of money.
According to Care.com's Care Index report, the national average cost for in home childcare is $28,354 a year. Some families barely make that much in income. The national average cost for in center care is $9,589 a year. The cost of childcare is 31 percent of the median income. It has often been said that your rent and other bills shouldn't exceed 30 percent of your income, but childcare alone goes over that, even if only by a small amount.
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HotPads notes that 35 percent of people who rent have children in their homes. The cost of living is constantly rising, the median rent across the United States has risen 2.3 percent in the past year alone. Naturally, the cost of childcare has also gone up, it is 1.6 percent higher than last year, per data from the Bureau of Labor Statistics. HotPads focused much of their attention to metro areas where the cost of living is often focused. Metro areas usually also have a higher amount of people who rent places to live rather than purchasing homes.
In smaller market metro areas like Pittsburgh, PA, Memphis, TN and Louisville, KY renters are actually spending upwards of $180 more in childcare than they are spending on rent monthly. In different cities in California, namely San Jose, San Francisco, and Los Angeles, renters will spend less in childcare. California is an expensive state to live in regardless, and the costs of childcare are also high to begin with. So even though they're spending less on childcare, it's still likely higher than in other places.
When you see statistics like this, it's disheartening. If people own their homes and pay a mortgage, which is often cheaper than rent, they are likely spending a lot more on childcare than they do on home payments. With that reality facing you, how are you ever supposed to get ahead financially?