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NEW YORK ( TheStreet) -- Child care is one of the largest expenses related to raising a child today. Parents needing day care can expect to pay about $4,600 per year in Mississippi to nearly $15,000 per year in Massachusetts.
Most expectant parents, however, don't have a clear idea when it comes to planning for child care. Unlike a 529 plan, where money is set aside for future college costs, a solid child-care plan is largely unheard of.
Although no tax-advantaged plan has yet been designed to encourage saving for future day care or nanny costs, would-be parents should be able to create a good child-care plan on their own in three steps:
Step 1: Decide early what type of care the child will receive.
Joseph Clark, managing partner at the
Financial Enhancement Group, believes it's important to answer these questions well in advance: Will the child be put in a day-care center or a family child-care home? Will the child need a nanny?
"Would-be parents should figure out their monthly child-care costs and put that in a savings account or reduce their spending by that amount to see if they can absorb the financial pressure," says Clark.
report from Child Care Aware of America breaks down the costs of full-time child care in every state. It includes average fees for both child-care centers and family child-care homes.
In New York, for example, the average cost for infant care in a day-care center is about $14,000 per year or $1,167 per month. In this case, Clark says, the couple should set aside an amount to cover the first six months of care, or around $7,000.