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Child Care: Is It Worth the Cost?

What factors do you need to consider when debating paying for child care or being a stay at home parent?

By Brittany Mollica, CFP

As a parent, you’re frequently bombarded with important decisions to make: what foods to feed your family, what school district and neighborhood to raise your child in, what pediatrician to use, how much screen time your child can have - the list goes on. One of those important decisions is whether or not to pay for child care. Of course, this is a privileged decision to make and many families don’t have the option given the staggering cost of child care.

Brittany Mollica

Brittany Mollica

For families who are in the position of paying for daycare or a nanny, it can still be a complicated decision to make because there are many factors to consider - some of these factors are financial, some are less quantifiable. While every family should make the decision that is uniquely best for them, it is wise to weigh the potential advantages of either choice:

Advantages of paying for child care:

  • Additional household income. One clear advantage of sending your child to daycare or hiring a nanny is that you can go to work to provide additional income for your family. That additional income can greatly help with cash flow and with managing lifestyle expenses, although the extent of this benefit (and whether it’s worth the cost of child care) will be directly related to how high your salary is. 
  • Access to retirement savings plans and other employee benefits. By continuing to work, you might have the opportunity to participate in your employer’s retirement plan. These retirement plans become even more enticing if your employer offers a match on your contributions into the plan. As a general financial planning rule: the more money that you can put away for retirement AND the sooner you can start saving, the better! So this can be a valuable benefit. In addition to that, you may also have access to a wide variety of other appealing employee benefits such as health insurance, life insurance, disability income insurance, legal services, and company stock programs. 
  • Continued career progression. The tough truth: if you spend several years not working, it can be challenging to get your career back on track. If you’re passionate about what you do, it may be worthwhile to keep working so you can continue to progress in your career. 
  • Improved mental health. While parenting is an important and rewarding job, it can be great for your mental health to set aside time to pursue your own hobbies, activities, and work. Spending time on your interests can help you be more present in all of your life roles - as parent, partner, colleague, or friend. 
  • Socialization and education for your child. And of course, your child can benefit from time at daycare or with a nanny! This opportunity for socialization and education at an early age can be helpful for their growth.

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Advantages of being a stay-at-home parent:

  • Minimize monthly expenses. Unsurprisingly, not having to pay for child care is a huge benefit to being a stay-at-home parent. The average cost can vary wildly, but many families spend more than $1,000/month on this alone. Removing this potential expense can improve cash flow and allow you to increase your monthly savings. If you have more than one child that would need a caretaker, the savings multiplies if you stay home to care for them. 
  • Additional time spent with children. Being able to spend extra time with your child as they’re growing up is a huge reason to want to stay at home. This time spent with your child is irreplaceable and priceless - you can’t assign a dollar amount to the value of those moments. 
  • Access to retirement savings options. Thankfully, you don’t necessarily lose access to all retirement savings vehicles simply because you aren’t working. For example, if your spouse has earned income and you meet certain income guidelines, you could make a spousal contribution to a traditional or Roth IRA. 
  • Options for remote work. With the recent rise in availability of remote work, it’s entirely possible that you could find a job that allows you to work from home while watching your children. Assuming you want to continue working, this could be a great option that still provides flexibility.

There are many factors to consider when deciding whether to go back to work or be a stay-at-home parent, and either option can make sense depending on your family situation and values. The advantages of returning to work tend to be more quantifiable but will be affected by your potential salary and employee benefits. The value of being a stay-at-home parent is less tangible, but cost-savings will multiply if you have numerous children. And remember, what works best for your family might be entirely different than what your friends or relatives choose to do.

Your financial advisor can help you evaluate the financial implications of either option by discussing the impact of added income, added expenses, or added retirement savings to your financial plan. However, the bottom line is that financial planning and decision-making is about more than just the numbers, and every family will need to decide what is ideal for them.

About the author: Brittany Mollica, CFP®, CSLP®

Brittany Mollica is a financial advisor at Hilltop Wealth Advisors, a fee-only wealth management firm located in Chapel Hill, NC. She primarily works with young professionals, helping them lay the foundation for a successful financial future through holistic financial planning and strategic investment management. Brittany can be contacted at

This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.

Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment loss.

The information contained herein is believed to be true as of the date of publication. It may be rendered out of date by subsequent legal or tax-rule changes, as well as variable economic and market conditions.