THE HIGH COST OF CHILD CARE
For some families, it can be up to $22,000 a year per child. So when you have three little ones, the choices can be tough,
When Carlos and Stephanie Gavilanes had their son Santiago two years ago, child care was a no-brainer.
She was going to take a year off work, since she kind of had an in with the boss anyway: her husband Carlos, owner of the Shoeless Joe’s Sports Grill on King St. W. and Duncan St., where she is the marketing manager.
That plan lasted all of six months.
She returned to work much earlier “because we really needed her” to promote the then-new restaurant location, her hubby explains.
Fortunately, they were able to find a safe place for little Santiago since a relative runs a home-based daycare.
But this year, as they expected a sibling for Santiago while expanding their Shoeless family with a new location in Burlington, their plans went a bit sideways again: two weeks ago Stephanie gave birth to twin boys, Salvador and Reyes.
“With three babies on board, we have a lot of things to figure out” on the child-care front, says the proud papa.
The Gavilanes are hardly alone in the all-important debate over who will take care of the kids and all the financial considerations that go along with it.
Not many parents have the luxury of working together and rearranging schedules last minute. Even baby Prince George’s parents have reportedly hired back Prince William’s childhood nanny to help as they return to their royal duties, though they originally hoped to do all the work themselves.
“Sometimes it’s not a financial decision. It’s more of a lifestyle decision,” says financial planner Mike Morgan of TD Waterhouse on Bay St.
Still, the money issue “comes up all the time” with clients, who consult him when they are expecting. “We look at overall household income. If it’s high enough to sustain your expenses when the baby is born, it makes sense to stay home that first year on maternity leave,” he says.
You are entitled to 50 weeks of Employment Insurance benefits, and some employers will top that up by a certain percentage for a set number of weeks, he says.
“It’s a reduced income on mat leave, but it’s OK because the daycare costs haven’t started yet.”
Morgan said the cost of sending a child to daycare runs anywhere from $14,000 to $22,000 a year, with the most expensive daycare facilities in downtown Toronto.
Using the example of someone who makes $50,000 a year, or about $41,000 after tax, the parent would have about $20,000 left over after figuring in daycare costs.
A single parent is obviously far more restricted financially.
“There’s no rule of thumb. A nanny is a great solution in a dual income household if you have more than one child,” Morgan said, noting many do light cleaning and laundry while watching the kids.
Harmony Nanny, an agency based in Pickering, says on their website that the average cost of a nanny is $10.77 per hour and a maximum 48 hours a week, unless otherwise agreed to in the contract. It works out to $1,200 to $1,600 a month before deductions.
And agencies charge fees to find you the right nanny for your particular needs.
For instance, Execu-nannies Inc., a North York agency, charges a placement fee of $2,695 plus HST to find you an experienced live-in nanny (minus driver’s license) and $1,695 for a full-time live-out nanny. They estimate the salary works out to $500 to $600 net per week in either scenario. A live-in nanny wouldn’t work for downtown condo dwellers of course since living space is limited, said Morgan. “Taking on a nanny is a massive, massive issue of trust,” says Rick Robertson, MBA program director for the Ivey School of Business at the University of Western Ontario.
Sometimes it is not a financial decision but a lifestyle decision
“What you want is a highly trusted person who loves your kids, and you don’t know what you’re getting by paying $10 to $12 an hour,” he says. Robertson says the child care question often comes down to what works best for the lower income spouse. The person earning less in a dual income household can claim up to $7,000 per child born in 2006 or later. It’s $4,000 per year for an older child, according to the Canada Revenue Agency. “There’s no easy answer for parents. You have far more flexibility of course if you have two people in their working careers. “But you’re talking about your kids, so it’s just as much an emotional decision as it is an economic one for parents, says Robertson. Wendy Burgos, a downtown Toronto office worker, began sending her only child Juan to the Kids and Company daycare facility in Woodbridge this summer on a friend’s glowing recommendation. She said she loves it because of all the interaction with other children his age and the fact that she can watch him whenever she wants on a webcam from her desk. On top of that she gets a daily report updating her on everything right down to his bowel movements (there’s no camera in the washrooms). “He gets to try a wonderful variety of foods that he is not usually exposed to at home,” she said of the multicultural food offerings at the daycare. “For what you get, it’s really not expensive. You just have to budget for it,” she says, noting she pays $40 a day to drop him off at 7 a.m. and pick him up at 5 p.m. Victoria Sopik, Kids and Company’s co-founder, says she has done referrals to nanny agencies for clients with growing families since daycare gets pricier with multiple children. “A case can be made for either option, depending on how many children you have,” said the mother of eight grown kids. She notes that most parents have much smaller families these days.
“For the average working parent, it’s a hard decision” financially, she says.
“Your children and your mortgage are your biggest expenses in life.”
Another thing to consider is that daycare programs can offer lots of things a typical nanny cannot. For instance, Kids and Company even has a “Mini Masters” program for kids aged 2-and-a-half to 5 to express their artistic side while learning about famous painters like Matisse and Monet.
Unfortunately not all daycares are built the same. “The quality and price of daycare out there is quite varied and we have certainly heard the horror stories about some of them,” says Robertson, though he gives points generally for the structured learning environment.
And many people aren’t fortunate enough to have granny as the nanny, or another trusted relative, he adds.
“It’s got to be one of the toughest decisions a parent ever makes,” said Carlos Gavilanes.
“And the last person we would want to make that decision is an accountant,” he added.