7 ways we're saving money for daycare

September 20 | Guest post by SaraBeth
Daycare shirt by CottonPicken24

I'd heard all of these rumors about children being expensive, but I didn't really believe them. We'd been parents for nearly a year and managed just fine with a limited amount of penny squeezing thanks to the extra money I'd saved while we were pregnant to allow for extra cash during my maternity leave — and then the sucker punch came. We realized just how much daycare is going to cost us for infant category twins, and I'll just say this: it's a LOT.

When we started crunching the numbers, over 35% of our net income will be going to daycare expenses. Thankfully our housing costs are only 25%, but things are going to be a lot tighter than they used to be. We toyed around with the idea of me remaining home, but that just isn't in the cards right now financially and I really need some more adult interaction in my life than I've been getting. Even though our daughter Molly's vocabulary is up to five words, (six if you believe she's secretly learning German behind our backs because she yells "NEIN!" sometimes when she's in a bad mood), it still isn't cutting it adult conversation-wise. I also thought that I really need to give the whole working mom thing a good solid try while we work on rebuilding our pre-baby savings account.

At first I went into full blown panic mode, unable to sleep having nightmares about cheques bouncing everywhere and everything that could go wrong, then I started to take action and we came up with a plan. Here's what we've come up with so far:

Our cups budgeting system! Photo by author.

The Jars System

One of my favorite things to do when the minions go down for a nap is watching the television show Til Debt Do Us Part while I eat my lunch. One of the first things that host Gail does when she's helping a couple get out of debt and/or save money is put them on the jars system. To work the jars you allocate a certain amount of money to various areas of your non-fixed living expenses: Food, Transportation, Entertainment, Clothing and gifts, Other etc. and record how you spend it. You refill the jars weekly. We have been on the jars for about a month now, and although we don't record how we spend the money the jars have created good conversation about spending priorities, limited us to one weekly grocery trip and has curbed our late night convenience store binge substantially. The fact that when the money is gone, it's gone has been a good motivator.

Research and negotiate with your service providers

When I was looking at our monthly bills for cable, internet and phone in addition to the fact that we were paying a significantly higher mortgage rate than what is prime right now, I started to make some phone calls. By looking at the competitors, researching bundles vs. non-bundles and knowing what we were paying, I was able to negotiate a $60 a month total savings on our internet and cable package and a lower interest rate on our mortgage that saves us $76 of interest every month. A couple of hours of time has saved us over $1600 a year. I will be researching our house/car insurance this November when our contract expires.

Take inventory

We are really lucky that so many friends and family have been generous enough to pass on car seats and clothing to our children, so much so that we've barely had to purchase anything. This has saved us endless amounts of money. It makes sense to take an inventory of what you have clothing and supply wise for the kids regularly (at least seasonally) so you can budget for what you need or add the items to birthday and Christmas lists if the timing works out. Most parents are happy to get rid of old clothing and toys — so ask your friends who have kids a little bit older than your kids. The most helpful clothing is from children about a year older than your own because the sized clothing will work for the correct season.

For items like formula, diapers and wipes, talk to a friend or family with a bulk items department store membership — most people would be happy to take you shopping for discount items you need. We've also started to plan meals and take inventory of our fridge and cupboards before we hit the grocery store. This has forced us to use more leftovers, get more creative and eat a lot more healthy, which is never a bad thing.

Apply for an Income Tax Deduction

Do your research on whether or not childcare counts as a tax deduction where you live. We decided that we'd much rather apply to have less tax deducted from my pay each and every pay cheque than to be cash poor all year and get a large tax return come Spring. In Canada the form is called a T1 and you can ask your employer for a copy. Fill it out and send it in as soon as you can, processing takes 2-8 weeks and they may ask for additional documentation delaying the process even further. If you're approved your payroll will get instructions on how to adjust the tax on your income giving you the taxation benefit year-round as opposed to one annual lump sum refund. I'm currently on week four of waiting and check the mail with bated breath daily to see if/what our new, more cash lax budget will be or whether I have to provide more paperwork and start waiting all over again.

Prepare for emergencies

Our car is over 10 years old, our porch needs to be repaired, our washer moans as we process endless loads of clothing and our garage door has seen better days. Even though we can't afford a huge emergency fund these days, we're setting aside $100 a month for emergencies because we just know that all of these items will die within months of each other. If our tax reduction comes through with enough savings we'll be raising this to $200.

Turn off the lights

We've hit that magical time of year where most of the time, save for a few days, you can leave the heat and the air conditioning off and control the temperature of the house by opening and closing windows. This in addition to turning off unnecessary lights and doing your laundry and dishes at off peak hours you can save about $30-$40 a month on your utility bills.

Walk the line

Parking at the subway station by our house/day care is $4 a day, that adds up to $80 a month. Our daycare is exactly half way between our house and our local subway station, and has stroller parking. We are hoping to walk the minions to and from daycare every day until Christmas break and a couple of times weekly once the winter hits to save some money and wear and tear on our above mentioned "antique" car.

This is what we've come up with so far and it's working, for the most part. From time to time we need a few tweaks, but the system is helping us stay on track. I'm going to start an advent calendar for when Molly and Jack enter full day kindergarten and when the word "day care" can be ejected from our vocabulary. In the mean-time any additional money saving tricks and tips would be appreciated!

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  1. I had no idea there was such a thing as "peak hours" for electricity. I'm on PECO's site now looking up energy saving tips. We don't have kids, but we want to and we don't make much money, so methinks I'll be watching for helpful comments!

    1 agrees
    • This caught my attention, too! I have no idea if this is relevant in the USA (Maine, specifically), but if there is a better time for that high-energy appliance use, I would love to know what it is.

      1 agrees
      • I'm pretty sure that this is standard in the US. Peak hours are business hours (in my area, 7AM to 7PM on weekdays, I believe). That's why we do our laundry and run the dishwasher at night.

        1 agrees
    • Areas with smartmeters (google 'em, they're awful) have peak billing hours and off hours.

  2. Since you're in Toronto, we found that switching our internet to Teksavvy and cancelling cable for Netflix was not only awesome (great kids programming) but saves us over $100 per month! When we do need kids clothes, we shop at the local Value Village or "VV Boutique" as I prefer to call it ๐Ÿ˜‰ You can find kids clothes that are or practically brand new for a fraction of the cost. We meal-plan based on what the grocery store has on sale and find that eating more fresh veggies (never a bad thing) actually lowers our grocery bill. For electricity savings, we even unplug our electronics (they're all hooked up to a couple power bars anyways) at night and during the day when we're gone to save on the "slow draw" that electronics use even when turned off.
    I love the jar idea and tax idea too! looking forward to read other suggestions from readers. We have 4 boys under 8 between us so I feel your "financial pinch" pain! ๐Ÿ™‚

    3 agree
  3. Awesome! I KNEW this was a Toronto mom! Gail Vaz-Oxlade is our guru when you live in an astronomically expensive city like TO. Good job Sarabeth – you rock, mommy!

    1 agrees
  4. Not sure if you have it in Canada, but we have FreeCycle here- people post things they no longer want or things they are looking for — for free.

    We've gotten everything from Football Tickets (American) to bookcases. Always see a ton of kids clothing and toys posted too.

    2 agree
  5. This one seems a little silly but it is a good way to save a little bit at a time. I play a game with my change jar. Instead of getting annoyed or rolling my eyes at things I don't care for, I put a dollar or two in my jar. Every time I see a person wearing camo that isn't green, it's $1, for a woman $2. Every time certain songs come on the radio, or I get mad about something someone says about politics, it's another dollar.

    The key is to pick things that annoy you but you don't see every day. The annoyance gets turned into something positive, and you save money at the same time!

    5 agree
  6. FYI, you can get a substantial daycare subsidy even with both parents working. We had 2 in full-time daycare until a month ago when I went on Mat leave, and it saved us financially. Every municipality is in charge of their own subsidies, though, and some have year-long or longer waiting lists. Toronto might be difficult, but it's worth looking into. They basically request your T4s from the previous year and calculate, based on your household income, how much you pay into your daycare. The only catch is to receive it, you have to be using a licensed daycare facility, or a home-care that is run through a licensed agency, for example, Wee Watch, which is what ours was. They had monthly inspections, and could only have 5 kids under 5, and only 2 of those could be under 2. My kids got alot more attention than they would have in a center, and we were able to afford it. Just a thought.

    1 agrees
  7. A few things I've found helpful since going down to one income:
    – put $20 a week onto all bills, when the actual bill comes it is really manageable
    -use a supermarket app on my phone to build a shopping list. Not sure if these are available everywhere but mine sorts items into aisle I will find them in. Cuts down on impulse buys.
    – buy fresh food at the market. It is cheaper, local and cuts down on supermarket trips. We only go fortnightly now.
    – Ebay bulk toy and clothing bundles!

    1 agrees
    • I love this idea. We also combine any leftover jar money at the end of each week to save up for something bigger….like last week we had saved up enough to go to a restaurant for my birthday.

  8. We do a couple of other things too –

    1) Take advantage of Reward programs, ESPECIALLY Shopper's Drug Mart Optimum. They have a "baby" version of the reward system called VIP which gets you TONS of bonus points. My twins need really expensive vitamins and we haven't had to pay for any of them because we keep being able to cash in our points ๐Ÿ™‚

    2) Take advantage of bulk purchasing. We asked for a Costco membership for Christmas from my parents (a reasonable $55). When basics go on sale, we stock up! The only catch is that you have to have some storage space to really capitalize on this. If someone really loves you, you can ask for the $110 Executive card which gives you back 2% of your purchases each year. My mom has this one and she usually earns enough back to cover the cost of the membership so that it basically becomes "free". Another thing you can do to capitalize on Costco savings if you don't want a membership is to ask a member to buy you gift cards for Costco. You're allowed entry to the store without a membership if you have gift cards ๐Ÿ™‚

    5 agree
  9. Kinda like the jars except that I pay directly to the company involved. I divide all of our bills into a fortnightly amount (our pay frequency) and pay them that way. Eg if your electricity is $300 a quarter, pay $50 a fortnight. My gas I pay $9 a fortnight.
    Every now and again there is an 'extra' fortnight in a month which leaves you that much ahead. I now get bills where I owe 29cents, or am already ahead by as much as $100 towards the next bill. I call it my stress be gone method.
    When I do get ahead on something, I shave a bit off and put it towards a different bill so they can all be in advance. We still have a dreaded credit card debt and any extra shavings I normally throw towards this fortnightly payment. And we no longer use the cards!
    I operate the same way with savings. This way whatever is left in the bank after the automatic payments have gone through is what we have for the fortnight. No chance to spend more than we should because it's not there!

    6 agree
  10. Embrace your hippy roots!
    When financial strain hit us we had no choice but to evaluate our moolah situation, it was either that or lose our home.
    Don't waste money on chemical filled cleaning products. A spray bottle filled with white vinegar kills nasty germs, mould n bugs and mixed with bicarb soda can clean pretty much everything. Its magical stuff thats cheap and can be brought in bulk. Even the scariest looking escaped toddler skidmarks can be wiped away with ease. Also cut your sponges into little squares so they last way longer.
    Start a vege garden. Even if the thought of getting dirty sounds worse then a poke in the eye with a blunt stick. Herbs can grow in any container and really make home cooked meals extra special. It really helped us cut down on takeaway when we realised how bland it was. Even if you dont think you have the time, throw some seeds in your yard or into some big pots and give it a go.
    Even a half arsed attempt at gardening can grow loads of tasty produce that can really slash your grocery bill. Plus its a great learning experience for your kids. Even if you suck at it they still think your BFF is mother nature.
    If you or your partner are a little heavy handed with body wash, shampoo etc then save a spare bottle and dilute the products with water. They work just as well and means your luxuries can last longer.
    I'm a big fan of an aussie site http://www.cheapskates.com.au They rock and send out weekly emails with ideas/tips/questions. Its a nice little reminder to keep on the savings path rather then snapping from the pressure and fleeing into the nearest shopping centre to throw money in every direction like a novelty octopus lawn sprinkler. ๐Ÿ™‚

    6 agree
  11. I found that the cash in an envelope (or jar) does not work for me. There is no record of what the cash is used for. Sure "entertainment" is written on the envelope, but what was so entertaining that our whole entertainment budget for the month is suddenly gone two weeks in?

    I prefer to set up different checking accounts. Find a bank that has "free checking" (no monthly service charge, no minimum balance, and no transaction limits or requirements) and open as many as you need.

    I have one for household bills (utilities, mortgage, and insurance), one for medical, one for gifts, one for savings, one for gas and food, one for my husband and one for myself that's our "fun money" (mine is usually spent on yarn, bubble tea, and chocolate and husband's is usually spent on fast food, comic books, and video games). We have several different debit cards and internet banking makes it easy to monitor and transfer money as needed.

    Also try to go to a local bank or credit union!

    4 agree
  12. I'm not sure how much daycare is where you are, but have you looked into getting a nanny? It could be cheaper than paying daycare for two. You can check out care.com or a similar website to see what the going rate is in your area. I'm a nanny, and one of the families I worked for said it was cheaper to hire me than to put their children in daycare.

    1 agrees
  13. I feel your pain about daycare! When I returned to work from maternity leave, we tried all kinds of budget tricks like the envelope system, etc., but using cash (and remembering to have it on hand) just wasn't working for us. We now use this software called YNAB and LOVE it! Basically it assigns every dollar you bring in a job… very different software than "normal" budget software. They also hold webinars to learn how to use it and offer great tips on their website http://www.ynab.com

    I do not work for them in anyway… this is just what has worked for us!

    1 agrees
    • i LOVE ynab!! i just did the update where they have a "cloud sync" so that if i make a purchase and put it into phone app, it automatically syncs it to my computer and my husbands computer and his phone. which is great, because trying to do nightly syncs between all of our devices so we were both on the same financial page was a nightmare. now we always know how much money we have. ynab seriously was lifesaver!

      1 agrees
  14. I feel your pain about daycare! When I returned to work from maternity leave, we tried all kinds of budget tricks like the envelope system, etc., but using cash (and remembering to have it on hand) just wasn't working for us. We now use this software called YNAB and LOVE it! Basically it assigns every dollar you bring in a job… very different software than "normal" budget software. They also hold webinars to learn how to use it and offer great tips on their website.

    I do not work for them in anyway… this is just what has worked for us!

  15. One tip that works for us is to give ourselves an allowance… my husband and I each take out a certain amount of money every month in cash, and that's our spending money on personal stuff. It's a good system for us because otherwise I'd SWEAR he spends more money each month than I do, but he just tends to save up his money for big stuff while I tend to spend it rapidly on little stuff.

    You're already doing this, but I also recommend accepting any and all hand-me-downs!

    4 agree
  16. or move to quebec where daycare is publically subsidized – 7$/day. My sister in Ottawa has two kids and pays 100$/day. I pay 140 a month! She always says she's jealous. Plus the system actually generates revenue for the state – when parents go back to work they pay more income tax – voila.

    There's a 17 year old single mom at my son's daycare. She has the cutest twin girls. She studies and works part time during the day. In Ottawa she would be paying100 a day, not 14. There's NO way she could earn that in a day, even less be able to study. So thumbs up for socialized daycare.

    As for saving money, we love thrift stores for our son's toys and clothes. We organize clothes swaps with other parents. Everyone leaves with a huge bag of nice clothes, and is happy to know their own too-small pieces are going to a good home.

    2 agree
  17. Once the kids get a little bit older there are lots of simple ways to save (time and money). My favorite is buying one set of glass plates/cups/bowls etc… for each member of the family. Turn them over and have each person decorate their own with ceramic paint on the bottom. Then put away all of the other dishes in your house. If someone wants to eat, they have to wash their own dish after each use. This could save you tons on electricity and water bills from the dishwasher and create a teaching opportunity about personal responsibility and cleanliness. I read about this one from a mother of seven!

    Another idea my husband and I like works out well. We don't have a washer/dryer so we do laundry at our parent's houses instead of a laundromat. We keep the money that we would be spending per load in a jar, (it's mostly change anyway) and count it up at the end of the month. You tend to forget how much money you have in change!

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