Money Management

Childcare is a major expense for many families. Keep reading to learn how you may be able to save while still ensuring your children are in good hands. 

Covering the costs of childcare can quickly drain your bank account, as daycares can cost thousands of dollars per month. If you are struggling to afford the costs of daycare or are even ending up in credit card debt because of high care bills, you may be looking for solutions to slash your spending.

Finance guru Dave Ramsey has some suggestions, including these six tips. But could they work for you?

1. Try to work from home or do a split schedule with your spouse

Ramsey’s first recommendation for trying to reduce childcare costs is to try to use it less. And he has a few different suggestions to do that.

“Some day care centers charge by the day instead of the week,” Ramsey said. “If you can swing working from home once a week while also taking care of your kids, that could help you save a lot of money.”

He also suggested trying to work opposite schedules with your spouse so one of you can be home with the kids.

Obviously, if you’re able to make this happen, this could dramatically reduce your care bills. But you need to consider the impact on your career and your marriage before adopting this approach. If you lose out on work opportunities because you can’t effectively work from home or if you never see your spouse because you’re splitting care time, the downsides of this approach may be too great.

2. Get help from family

Ramsey also advised asking family members if they can help to provide you with some childcare assistance so you can reduce your reliance on paid care.

“If you have family members nearby who are willing to help, take them up on their offer,” Ramsey said. “Grandparents would probably love the extra quality time and cuddles.”

This is a great suggestion if it’s feasible for you, but it won’t always work — especially if you don’t have family members willing to commit to a reliable schedule and you must be at work on set days.

3. Be strategic in spacing your children

If you can space out your children so you only end up having one child in daycare at a time, Ramsey said this can help you to foot the bill more easily. Of course, family planning doesn’t always work out exactly as you’d like, so you may not have this option.

You may also prefer to have your kids closer in age so they can develop a better relationship with each other — and you can potentially score sibling discounts for having two kids in childcare at the same time.

4. Ask about scholarships

One of Ramsey’s best suggestions for reducing childcare costs is to ask your daycare if they provide any scholarships or discount opportunities for families. While they may say no, it’s worth asking if you’re having a hard time and in a best case scenario, they’ll have lower priced options for you.

5. Take advantage of tax credits

Another great suggestion you absolutely should listen to is to take advantage of the opportunity to save on taxes in order to reduce your care expenses.

Ramsey recommends a Dependent Care Flexible Spending Account (DCFSA) or qualifying for the Child and Dependent Care Credit.

“A DCFSA is a pre-tax benefit that parents can use to pay for dependent care services, like day care, preschool and summer day camps,” Ramsey explained. While you do need to use the money in your plan during the year you contribute to your account, putting money into a DCFSA that you’re sure you’ll use for childcare is an easy call.

6. Consider a nanny share

Finally, Ramsey suggests considering a nanny share, which would mean getting together with other families to split the cost of a nanny. This can come out cheaper than daycare and allow your kids more one-on-one attention (depending on how many children the nanny is looking after). But you’d need to make sure you find the right family to share a nanny with and the right childcare professional as well.

Each of these options is worth considering to help you save on childcare, and the right one will depend on the specific needs of your family.

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Pet emergencies happen. Read on for tips on how to cope with one financially. 

Owning a pet can be an unbelievably rewarding experience. But it can also be an expensive one — especially when your pet gets sick or hurt.

Healthy Paws Pet Insurance reports that a single growth or tumor in a dog costs an average of $300 to $1,600 to treat. Meanwhile, the average cat infection costs $300 to $2,000 to treat.

Even if you do a good job of trying to keep your pet healthy, you unfortunately never know when they might get sick or end up getting injured. So it’s important to know how to cope with a major medical expense. Here are three tips for swinging the cost of an emergency vet visit.

1. Have a pet insurance policy in place

Pet insurance won’t necessarily pick up the entire tab when your animal is injured or gets sick. But it might cover the bulk of your emergency vet bill, or at least a sizable chunk of it.

Now, you might ask, “Why don’t I just save the money I’d spend on pet insurance and use it to pay for my animal’s care?”

You could go that route, but consider this. You might spend $50 a month on pet insurance for your dog, or $600 a year. But 12 months after adopting your dog, you might end up at the vet with a $2,000 medical bill, the bulk of which an insurance policy would’ve covered. Suddenly, you’re in a financial jam.

2. Have a fully loaded pet emergency fund

Even if you have pet insurance, it’s still important to have money in your savings account earmarked for pet emergencies. For one thing, there are certain medical expenses your pet insurance policy may not cover, such as the cost of treating a pre-existing condition.

Also, even with insurance, you’re generally looking at picking up a portion of the tab yourself. So you’ll need money in the bank to ensure you don’t wind up with credit card debt.

Finally, many pet insurance policies require you to pay your vet bill in full when your pet receives care and then submit a claim for reimbursement. In some cases, you’ll get your money back fairly quickly, but you don’t want to land in a situation where you’re forced to carry a credit card balance forward for a couple of months, thereby racking up interest on it.

3. Don’t be afraid to negotiate

You may be in a situation where you don’t have pet insurance, or your policy won’t cover the issue at hand. If that’s the case, be frank with your vet and try to negotiate. Your vet might agree to give you a reduced rate for the service they’re providing, or otherwise allow you to spread out your payments over multiple months so the cost isn’t as much of an immediate burden.

When you own a pet, you have to accept the fact that you might end up with a medical emergency on your hands. Buying pet insurance is a great way to mitigate that risk, but it’s also important to have savings and be prepared to put your negotiating skills to good use.

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Childcare has gotten expensive. Should you borrow money to cover the cost? 

If you’re struggling with the ever-rising cost of childcare, you’re not alone. Care.com reports that in 2021, the average cost to put a single dependent in a childcare center was $226 a week. Ouch.

Even if you have school-aged children, you might still fall into the trap of incurring sky-high childcare costs due to having to pay for camp during the summer, when school isn’t in session. And if you’re tired of raiding your savings account to pay for childcare, then you may be considering paying for it with a personal loan.

Personal loans can be a reasonably affordable option when it comes to borrowing money. But whether it pays to take one out to pay for childcare is a different story.

It takes money to make money

There are certain costs many of us incur in the course of holding down a job. For some of us, it’s commuting. For others, it’s maintaining a business wardrobe. And for you, it might be childcare.

But if you’ve reached the point where you’re contemplating taking out a personal loan to pay for childcare, then it may be time to rethink your work situation.

Let’s say childcare is costing you $2,000 a month because you have more than one child who needs full-time care. Meanwhile, let’s say you bring home $2,500 a month in your paycheck. All told, you’re netting $500, and you might need that money to stay afloat and keep up with your bills. But there may be a way to earn $500 — or more — without having to bear such expensive childcare costs.

For one thing, if you’re married or live with someone, you could try working part-time during the hours when your partner is home. That way, they can watch the kids and you can work without having to pay for care.

Another option may be to find a job that allows you to work remotely. Doing so may not negate the need for childcare, but you might be able to reduce the amount you spend on it.

Also, certain skills might lend to lucrative freelance work that takes less time than the hours you’re currently working now. That could help you cut down on childcare costs, too.

Let’s say you’re a web designer and work 40 hours a week for an employer. If that situation is only netting you $500 a month after you account for childcare costs, you may want to see if you can find an independent gig that will pay you $2,000 a month for, say, 20 hours of weekly work. Then, if you’re able to only spend $1,000 a month on childcare, you’ll net $1,000 a month. And remember, if you’re efficient at what you do, you may find that you’re able to accomplish more by venturing out independently and not having to waste time in meetings.

Don’t resign yourself to childcare debt

Many parents struggle to cover their childcare costs. If you’re at the point where you think you need a loan to help pay those expenses, perhaps a change is in order. And if you adjust your work schedule, you may find that it not only saves you money, but lends to a better quality of life on a whole.

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Adopting a dog? Read on to see why you might end up paying more to insure your home. 

Adopting a dog can be a wonderful experience. But it can also be an expensive one. From food to supplies to pet insurance, you might incur a number of costs in the course of welcoming a dog into your home.

Adopting a dog might also have an impact on your homeowners insurance. And that’s something you’ll need to prepare for.

Your costs might rise

When homeowners insurance companies write policies, they take different risk factors into account. Adopting a dog can be considered a means of adding to the risk of property damage. Because of that, your homeowners insurance premium costs might rise once you adopt a dog.

Also, it’s common for homeowners insurance to include liability coverage, which protects you in the event that someone sustains an injury on your property. If you bring a dog into the mix, there’s the potential for that dog to attack the delivery person who comes to your door, or to knock over a visiting child and injure them. And so your premium costs might rise once that risk comes into play.

Your coverage options might be more limited

Some homeowners insurance companies exclude certain dog breeds from coverage. These commonly include pit bulls, rottweilers, German shepherds, and other large breeds, or breeds with a reputation for aggressive behavior.

If the breed of your dog prevents you from keeping your current coverage, then you may need to shop around for new coverage. Or, you may be able to keep your coverage in some capacity but purchase a separate canine liability policy.

Keep in mind that some homeowners insurance companies do not exclude specific breeds. Rather, they focus on a given dog’s bite history instead.

State Farm, for example, expressly says on its website, “It’s not the breed, it’s the dog bite.” As such, State Farm does not even ask about dog breed when homeowners apply for insurance. If you’re adopting a pit bull, for example, or a similar breed that may have a reputation for aggression, then it could be wise to look at homeowners insurance companies who take a similar approach.

No matter what you do, don’t lie

You may be tempted to withhold the fact that you’re adopting a dog from your homeowners insurance company, or to lie about its size or breed. Don’t do that.

Lying like that will commonly void your homeowners insurance policy, which won’t help you one bit. A far better bet is to be truthful and seek out alternate coverage if you need to.

Another thing you may want to do is talk to your homeowners insurance company before adopting a dog. Doing so might spare you a host of headaches.

If you’re not drawn to one particular dog breed and it turns out your homeowners insurance company bans certain breeds, you might know to steer clear of them. Of course, that’s a good plan in theory, but it may not help if you visit your local animal shelter and fall in love with a delightful pit bull puppy. But it’s still a good idea to have that information ahead of time so you know what you’re dealing with.

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Term life insurance can be reasonably affordable. Read on to see if there are age limits for getting it. 

You’ll often hear that the younger you are when you apply for life insurance, the more affordable your premiums are apt to be. And you might also have a greater need for life insurance when you’re younger.

Let’s say you’re in your 30s with a spouse and two young children, and you’re the sole breadwinner in your household. In that scenario, if you were to pass away suddenly, your family would no doubt be left in a financial lurch.

Your need for life insurance may not be as pressing once you’ve reached your 50s or 60s. At that point, your kids may be grown and out of the house, leaving you with fewer people to support.

But you may reach a point later in life when you decide you want to first put life insurance in place. Term life insurance can be a far more affordable option than whole life insurance, since it only covers you for a preset period of time and does not accumulate a cash value.

But is there such a thing as being too old for term life insurance? Or can you apply at any age?

Your age matters

It’s possible to put term life insurance in place at an older age. But you might have a hard time doing so depending on just how old you are.

Insure.com says that most term life insurance companies will not sell a policy to applicants over age 75. And if you’re over the age of 60, you may be able to get a shorter-term life policy, but you might struggle to find an insurer to write you a 20- or 30-year policy.

See, life insurance companies try to limit the risk they take on. Writing a 20-year term life insurance policy for a 65- or 70-year-old could easily mean having to pay out on it. And there’s a greater chance of having to pay a death benefit in that scenario than with an applicant in their 30s or 40s.

Even if you manage to find a life insurance company that will write you a longer-term life policy at a later age, you might face very costly premiums in exchange. And at that point, you may be better off just socking that money away in savings or an investment account for your beneficiaries rather than paying for a life insurance policy.

What about whole life insurance?

Just as you’re apt to pay more for term life insurance if you apply at a later age, so too are you likely to pay more for whole life insurance. The difference, though, is that whole life insurance tends to be far more expensive to begin with, so you may find that the cost is downright prohibitive.

That said, whole life insurance covers you for the rest of your life. If you’re 70 years old and can only get an insurance company to write you a 10-year term policy, you may decide to opt for whole life insurance if you want coverage that will last beyond that point.

All told, your options for buying life insurance get more limited as you get older. So it’s a good idea to consider putting life insurance in place at a younger age. And if you’re already older — say, nearing or at retirement age — you may want to consider whether you really need life insurance in the first place.

If you’re worried about your loved ones having to bear the cost of a funeral and final expenses, you could always set aside funds from your savings or Social Security benefits for that purpose. And you may find that doing so makes more financial sense than paying up for life insurance.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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