Child Care Is So Expensive—If I Didn’t Rent My Home, I Don’t Know If I’d Be Able to Afford It

Whether you’re currently a parent, a soon-to-be parent, or even just a dog parent, one thing is certain across the United States: Child care is expensive. The cost of daycare increased 24% between August 2020 and August 2025, according to data from the Bureau of Labor Statistics. So if it feels like you’re paying more now than ever for child care, it’s because you are.

When my husband and I were figuring out how our 7-month-old daughter would be cared for while we were at work, we had to see what we could afford.

Investopedia’s research team looked into the actual costs and found that the average annual cost of child care ranges from $6,251 to over $50,000, depending on your state and type of care. And if you have a younger child, like an infant, you’ll likely pay a higher amount than a toddler or child.

Nannies may seem more affordable, with some charging just $20 per hour, but that can add up very quickly. On the other hand, daycare fees made it seem like that route was completely out of reach—especially if we ever wanted to save money for a house.

We ultimately decided on daycare, and now we’re paying about $2,100 per month. For some, that may be an easy payment. For others, it’s like another mortgage or rent payment. 

Here’s how our budget breaks down and why we’re so happy we didn’t buy a house before having a baby.

Daycare Is Like Making Another Monthly Rent Payment

My husband and I moved into a new apartment before having our daughter. Our two-bedroom, two-bathroom apartment in New Jersey costs us $2,600 per month—a steal in my opinion, considering our location just 40 minutes outside New York City.

However, we did consider buying a house for a short period of time before settling on this apartment.

The average New Jersey single-family home costs $562,460, according to Zillow. With 20% down and a mortgage rate of 6.45%—the average for New Jersey in mid-September, according to Zillow data provided to Investopedia—plus $1,000 per month in taxes (welcome to New Jersey), that’s a monthly payment of about $3,900. With home insurance, it could be closer to $4,000.

That’s a difference of $1,400 per month between renting and buying. A good savings, it’s still not enough to cover our monthly daycare costs of $2,100. If we didn’t rent and had bought a home, we’d be able to pay for daycare, but we wouldn’t be able to save much money per month.

Paying for Daycare Is Like Buying a New Car Every Year for Three Years

Our daycare for our one infant daughter is $530 per week. At that rate, we’ll be paying $27,560 per year for daycare. We need to pay for daycare every year until she turns 3 years old, when she can go to pre-K in our town. A brand new 2026 Toyota Corolla costs less than that annual cost. And our apartment, at $31,200 per year, is not much more.

When you add the costs of rent and daycare, we pay about $4,700 per month. That leaves room for us to pay for groceries, car insurance, gas, and other household bills. Plus, we can still save a little into our high-yield savings accounts.

If we owned a house, we’d be paying about $6,100 per month, leaving us little room to save money after paying for all of our bills and living expenses.

So, How Does Anyone Afford Child Care?

Studies show that average child care costs can add up to more than 19% of your monthly take-home pay. That’s a huge portion of a monthly budget.

The first thing to consider is whether it’s worth it for your family. My husband and I, who both work from home at least a few days per week, found that daycare helped us focus on our jobs better. With our daughter cared for outside the apartment, we never had to listen to her crying for a bottle or fighting a nap with a nanny or babysitter.

Plus, when we looked at the day-to-day cost, we found daycare was a better value. We pay about $106 per day for daycare, and our daughter can stay there from 6:30 a.m. to 6:30 p.m. if needed. That breaks down to about $9 per hour, which is much more affordable than a $20 per hour babysitter or nanny.

Now, just because it seems like a good value doesn’t mean it feels that way when we pay $530 per week. The good news is that our daycare offered a promotion when we signed up, where we got our fifth week free. It’s only a savings of $530, but every penny counts right now.

Another way to potentially save money is to pay for a nanny share service. This is when one nanny watches more than one child. You may split the costs with the other family, reducing what you pay per hour for the nanny. For example, if a nanny charges $25 per hour, and you split that cost 50/50 with another family, you’d only pay $12.50 per hour.

The Bottom Line

Child care is expensive. Housing is expensive. And if you’re a millennial like me, then you’re very likely unsure of how you’ll afford to do anything until your kids are in school. So if you have to pay for daycare, it’s OK to rent and save the single-family house for the future. Daycare isn’t bad, especially when it’s more affordable—and reliable—than other options. And if you choose to go the nanny route, consider a nanny share to save money.