Childcare centers were given funds during the pandemic to help them stay open but those funds are now expiring which could affect tens of thousands of centers. David Peters, CPA and founder of The David Peters Financial Group, joined Cheddar News to explain the changes that are coming and how to save on child care.

<div class="block">Childcare centers were given funds during the pandemic to help them stay open but those funds are now expiring which could affect tens of thousands of centers. David Peters, CPA and founder of The David Peters Financial Group, joined Cheddar News to explain the changes that are coming and how to save on child care.</div>

Stretching Your Dollar

Stretching Your Dollar: What to Expect From Childcare Center Changes

Well, during the pandemic, childcare centers were given funds to help them stay open and benefit families. But those funds are expiring at the end of this month and it could force nearly 70,000 child care programs to close according to the Century Foundation. So to give us more insight into how parents can navigate this, David Peters, the founder of the David Peters Financial Group is joining me now, David, what exactly is expiring? Well, so during the pandemic, uh the government was giving child care centers uh some additional funding in order to help them keep their doors open and that funding is going away. And so, uh what we're worried about is uh we are worried about the fact that uh without that additional funding, those centers are gonna have to somehow make up for that cash flow. And so while uh you know, it's possible that they could look to maybe cut costs somewhere, the most likely response is going to be that they're just going to raise rates and that could certainly make things a whole lot tighter for American working families. Ok. So higher prices certainly is one adverse effect. Other ways, David and maybe more specific ways that this could affect families. Well, I think that it makes it just, uh, tougher for families to work. I mean, I think that, uh, you know, it makes it so that, uh, now they have to worry about, uh, what they are going to do, uh, with their Children, uh, in order to allow them to work, it also may force families to make some, uh, decisions around, uh, possibly, you know, one parent uh maybe staying home in order to take care of the Children. In order to avoid that cost, some families might decide that, you know, hey, that reduced cost might be worth actually, uh one of the parents not working. Another option of course is, is maybe trying to find a new job that is paying a little bit higher. But I think especially right now, that might be, that might be a tough thing to do. So how should families navigate these changes and the potential closures of some of these key locations? Well, there's no real easy answers, but I do think that there probably are some options. One is, is that you could look for child care uh maybe within your neighborhood, uh maybe friends, family, uh things like that, that may be an option. It may also be an option like I said to possibly have a, in a, in a situation where it's a, a two earner household, maybe having one of uh the parents stay home uh with the Children. Uh Maybe what you could do is you could also maybe share the cost uh around uh uh people that are in the neighborhood because a lot of families are probably going to be going through the same thing where they're gonna be struggling with how exactly to manage this additional cost. And so maybe one thing uh that may be possible is to maybe rotate the, the child care responsibility among the families that are dealing with this. Are there any tax incentives that parents can look into? So one of the the major tax incentives that is out there is uh the dependent care credit. Um The thing to remember though is is that with the dependent care credit, uh it is uh generally gonna be available if uh you are having some, either a center or a child care provider, uh care for your child while you are are working. Um The one thing that won't qualify, that may be an option for families and an option that they may want to weigh is maybe if you have an older child and a younger child, uh you can't take the child tax credit for paying your older, uh I'm sorry, the dependent care credit, you can't take that uh if we're just paying the older child to take care of the younger one. So it would have to be to a center or to a child care provider that's out there. In order to take advantage of that credit. But that is something that can mitigate some of the cost. How would you budget for a change like this? If you are a family, David, I think that uh if you are looking at this as an additional cost that you need to take on, I think that we need to take a hard look at our budget. Look at things like how uh we are getting to work. Uh try to look for lower transportation uh cost opportunities. Uh Maybe that's taking public transportation, maybe it's car pooling. I also think that uh working remotely may be a possibility. Uh perhaps uh looking for a situation where you are able to uh to work uh remotely so that you can take care of your child at the same time. Um I also think too that employers may have an opportunity here as well because you have a lot of parents that are working and they want to work. And so, you know, if an employer can offer child care opportunities that that may be something to look into as well. Anything else David that parents should know ahead of the end of the month expiration? I think that the big thing that I have been telling clients and I think a lot of financial advisors are talking to their clients about is to look at ultimately after tax cash flow. I mean, uh you know, child care can be very expensive. And so uh it's worth looking at, uh not only, you know, where can we cut costs in other parts of our budget, but also looking at that of, you know, perhaps, uh you know, trying to share the cost among other families that are in the same situation or even, you know, again, having one of the parents stay home to take care of the child. I think that those are options that we need to look at. But whatever we do, we need to look at what's going to ultimately result in the best after tax cash flow for the family. All right, David Peters. David, thank you so much.