ISSUE 01 - OCTOBER 2026
The Childcare Edition
Welcome to Bump to Budget, your new every-two-weeks guide to making some of the biggest decisions that come with having a baby.
We're here to help you work out what's actually worth your money, and what's right for your family.
First up: Childcare.
🤔 The Big Decision
How much can you really afford to spend on childcare?
Finding someone you trust with your baby is already a huge decision.
Then you see the price.
According to Child Care Aware of America's 2025 Price & Supply report, the national average price of childcare in 2025 was $13,184 a year. Center-based infant care is even higher, at around $15,000-$15,700 a year, depending on how the national figures are calculated.
And where you live makes a big difference.
So before comparing daycare centers based purely on their weekly rate, work out your real childcare budget.
Start with these four questions:
1. What does care actually cost?
Ask for the full price, including registration fees, deposits, meals, late pickup charges, vacation policies and what happens when your baby is sick.
A cheaper weekly rate isn't necessarily cheaper over the year.
2. Does your employer offer a Dependent Care FSA?
This is especially worth checking in 2026.
The federal limit has increased from $5,000 to $7,500 per household ($3,750 if you're married and filing separately), the first increase since 1986, under the One Big Beautiful Bill Act. That means eligible families can put more pre-tax income toward qualifying dependent-care expenses.
Employers aren't required to adopt the new limit, so your plan may still cap contributions lower. Check your benefits before assuming the daycare price is the amount you'll effectively be paying.
3. Could you qualify for the Child and Dependent Care Credit?
If you're paying for care so that you, and your spouse if filing jointly, can work or look for work, you may qualify for a federal tax credit, according to the IRS. Married couples generally need to file a joint return to claim it.
One thing to know: you can't claim the credit on the same expenses you've paid through a Dependent Care FSA. If you're using both, they need to cover different dollars. The IRS explains how the two work together in Publication 503.
Eligibility depends on your circumstances, so don't build your budget around it until you've checked.
4. What are you actually comparing?
Daycare isn't the only option.
Price out the realistic alternatives available where you live: daycare center, home daycare, nanny, nanny share, family help or a combination.
The answer isn't always whichever has the lowest monthly price.
Commute time, flexibility, paid closures, backup care and whether the hours actually fit your working day all have a financial value too.
🪙 Budget Breakdown
The number to know is: $13,184
That was the national average annual price of childcare in 2025, according to Child Care Aware of America.
For a two-parent household, that's around 10% of median household income. For a single-parent household, it's around 33%.
And there's another surprising comparison: in every state with available data, the price of center-based care for two children exceeds median rent (Child Care Aware of America).
That's why childcare shouldn't be treated like any other household bill.
It's one of the biggest financial decisions many families will make during the baby years.
⌚ Quick Win : Under 15 Minutes
Check your work benefits before you choose childcare
Set a timer for 15 minutes.
Open your employee benefits portal or message HR and search for:
Dependent Care FSA (and the limit your plan allows)
Employer childcare benefits or subsidies
Backup childcare
Childcare partnerships or negotiated discounts
The big one for 2026 is the Dependent Care FSA.
If your employer offers one and you're eligible, the federal limit is now $7,500 per household. Just remember that most FSAs are “use it or lose it”: money you don't spend by the end of the plan year may be forfeited, so estimate carefully if your start date isn't fixed yet. Your plan documents will say whether you get a grace period.
It's worth knowing what's available before you decide what childcare you can afford.
🏆 Best for Baby
Don't just tour the room, ask what a normal day actually looks like
A beautiful daycare and an impressive activity schedule don't necessarily tell you what your baby's experience will be like.
Ask practical questions:
Who will be looking after my baby most days?
How much staff turnover have you had in the infant room?
How do you handle naps and feeding?
What happens when my baby is upset?
And perhaps most importantly: can I speak to another parent whose baby currently attends?
You're choosing the people who could spend a significant part of your baby's week with them.
Take the tour seriously, but take the answers you get back even more seriously.
❓Worth The Save
WORTH THE SPEND
Childcare that actually works with your life
Paying slightly more for care that's reliable, close to home or work, and covers the hours you genuinely need may beat saving money on an option that constantly requires backup plans, early pickups or extra time off work.
Look at the whole cost, not just tuition.
WORTH THE SAVE
Don’t overlook your employee benefits
A Dependent Care FSA isn't as exciting as finding a daycare you love. But in 2026, eligible families can put up to $7,500 of pre-tax income toward qualifying care, if their employer's plan allows it.
That's one piece of admin worth doing.
One Last Thing…
The ‘best’ childcare isn't necessarily the most expensive.
And the smartest financial choice isn't necessarily the cheapest.
It's the option that gives your baby care you feel good about and leaves your family's finances somewhere you can live with.
That's what this newsletter is all about.
Best for your budget. Best for your baby.
See you in two weeks,
The Bump to Budget Team
This information in Bump to Budget is general information only and isn’t tax, legal or financial advice. Tax rules, benefit limits and eligibility can change and depend on your circumstances.
Check with your employer’s benefits team, the IRS (irs.gov) or a qualified tax professional before making decisions. We are not affiliated with any childcare provider, employer benefits provider or organization mentioned in this issue.