Childcare costs and financial independence

Childcare Costs – Balancing Finances & Family When Working Toward Financial Independence

As parents, it’s easy to meet single professionals in their late 20’s who are well on their way to an early retirement (or already living the dream) and think two things: “Darn, I wish we would have started earlier” and, “But they don’t have kids!” FIRE envy aside, one big question working families with kids must tackle is how to deal with childcare expenses.

If we both work full-time, how can we minimize childcare expenses? Should one of us cut back to part-time or fully stay at home? What other sources of income can we create to offset these costs? What is best for our kids and our family right now?

These are all questions we’ve asked and over the years, we’ve tried quite a few different arrangements with work and childcare to find the right balance between finances and what is best for our family.

Here’s our experience and tips for managing costs.

A Bit of Background

When our first son, Little I, was born in 2010, I knew I would return to work full-time as a non-profit fundraising manager. I loved my job, my employer was extremely new-parent flexible, and the bottom line was we needed the income.

To minimize the sting of a $1,700 a month childcare bill (average in Seattle in 2010 for a newborn in daycare), we both flexed our hours to reduce the number of hours we needed childcare. Eric went into work earlier (from ~ 6am to 2pm) and I adjusted my hours to work later (~ 11am to 7pm). Instead of needing childcare for 8 to 10 hours a day, we hired a nanny for ~5 hours a day and saw savings (and other benefits of having in-home childcare – ahem, cleaning and cooking!).

After our second child was born in 2014, we started doing the math and realized that with two daycare costs (the older now in preschool and the younger needing infant care), my net paycheck at 40 hours a week (with 2 full-time childcare expenses) would be the same as me working 10 hours a week (with part-time preschool cost only).

Consider this… Nearly one in three families (32 percent) report spending 20 percent or more of their annual household income on child care. ~ 2016 Survey

With this realization, and with the desire to spend more time with our second child during his infant years, I started cutting back my hours. I was already working remotely from home and had much legacy with the company, so they were happy to work with me.

I asked to reduce my hours from full-time to half-time (with an hourly pay raise so my salary was ~75% of what I made at full-time hours). They said yes. A few months later, I asked to change from a W-2 employee to a contractor with a max of 15 hours a week and again with an hourly pay raise – and they said yes.

These negotiations allowed me to reduce my hours worked (and reduce stress) while still making the income/childcare dilemma worth it for our family.

From this point on, I’ve worked 0 to 20 hours a week, with varying needs for childcare and varying income (depending on the gig). About a year and a half ago I went back to work for about 3 months and found out quickly that, even though the numbers looked really (really) good on paper, our littlest son was not thriving in daycare and the additional stress on the family was not worth it.

I quit and started to re-evaluate how we could still reach our FI goals without me going back to a 9-5.


Enjoying TIME and ADVENTURES with these mini Mustachians (Photo: Laura Castro)


A Slightly Slower Path to FI

Currently, I work part-time from home for an awesome nonprofit (content and social media management). Our second grader is in public school and our youngest is in part-time preschool. Another bonus of moving from a high-cost of living area to a low-cost of living area is daycare costs are 40% lower.

While my pay working for a small non-profit is not as high as it was working for a growing software company, it feels like the best of both worlds. It allows for me to contribute to our income while also having professional growth (and a bit of personal time) that I crave.

The bottom line is we are choosing a slightly slower path to FI than if I were to return to a higher income full-time job. As a positive, though, this makes us even more motivated to find additional income streams to increase our income and increase our savings percentage to stay on track with our financial independence goals.

Tips for Managing Childcare Costs & Finding Balance

Work and childcare decisions are extremely personal. Everyone seems to have an opinion. Do what is best for you and your family.

Here are some tips we’ve learned along with way to help find that balance.

If both parents are working full-time, look at creative ways to reduce the number of hours you need daycare. Can you flex schedules? Can you work from home a day or two a week? Look at all daycare options such as co-ops, nanny shares, Au Pairs, etc. There are often creative and less expensive solutions, depending on your specific situation.

Negotiate with your employer and ask for what you need. If you want to work part-time, could you find (or negotiate) a job to make the same amount with a reduced schedule? Could you manage a part-time job (or side hustle) from home and work during naps or at night?

What looks great on a spreadsheet may not be what is best for the family. This can sting, especially if you have aggressive FI goals. Don’t be afraid to try different things to find that balance between reaching financial goals while meeting the needs of your kids/partner.

Start a very open conversation with your partner. Make sure you understand each other’s expectations and desires, and talk about them often. I’ve found these can change over time. I always envisioned myself as a working full-time mom; those feelings changed when we had our second child.

Find additional income sources to offset increased expenses or reduced income.

There is a cost to working (commuting, buying work clothes, etc.). By having a parent stay home, we are able to reduce other costs like groceries – by simply having TIME. Factor these into your considerations. I’ve also discovered there is a very real cost to stress. Sure, we all make sacrifices to reach our financial goals, but it’s important to practice self-care and enjoy your life along the way.


One of our favorite family activities – hiking!

Related: Permission to Let Go of Things That No Longer Serve You

Reaching financial independence with two young children has it’s challenges and figuring out how to maintain or increase your savings rate with childcare expenses (and/or reduced income) can feel like a puzzle. Be creative, try different scenarios until you find the right fit, and seek to find balance between family finances and family happiness.

What creative solutions do you have for childcare or for reaching financial independence with young children? We’d love to hear your experience. Comment below!


3 thoughts on “Childcare Costs – Balancing Finances & Family When Working Toward Financial Independence

  1. Kate says:

    Great post! Pretty similar to the situation that we are in but I guess we have cheaper childcare options but less the chance to move to a cheaper area ( doesn’t help that Singapore is a city state!) we do rope in the grandparents to help with childcare as well and they are great caregivers, having raise two of their own and it’s great bonding time for them with the kids.

    Liked by 1 person

  2. Mindy G. says:

    Love this post and this family-centered approach to FI. We are also a 4 person family with 2 young kids. I work flextime and partly from home and my husband works on a European schedule, basically meaning he gets full time pay for a 75% position.


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