Should High Income Earners use Child Care?

High-income earners are motivated.  We want it all. We want the career, the house, the vacations, and the perfect children.  Well, part of this blog is to work together to maximize all of these things, but not at the expense of our happiness and sanity.  Some of you may be getting ready to face the challenge of balancing your career and childcare. Some of you may have already developed a plan. This article is aimed at soon to be parents. These parents have already achieved a high position in their jobs and salaries. They want the best option for their entire family regarding care for their children.


A little Background

My wife and I had our first child 15 years ago.  I was in medical school and she was working in the microbiology lab at a major hospital.   After having the baby, the day came for her to go back to work.  We dropped him off at the local university sponsored day care facility.  We didn’t do much research into what makes a good daycare, but the one we could afford had a decent reputation. More research probably would have upset us because we couldn’t afford the high-end daycare anyway. I was a student and she had a starting level lab position.

We arrive at the facility and tried to hand over our brand new 12 week old and he cried and cried and cried and cried so much that he started vomiting.  It was heartbreaking. My wife left in tears. I wasn’t much better.  We finished our days at work and school and picked him up. The daycare workers said he did okay the rest of the day but we had a really difficult time the entire day.

My son attended his last day of daycare that day.

In my last two years of school, the university allowed two months off. Most people take them off to interview for residency and have a killer vacation the fourth year, but I went to my program director that day and asked if I could take a month off early. She permitted me to do so. My wife gave her two weeks notice. We decided to live off what little savings we owned and some student loans. She found a lower paying, but flexible weekend and evening job, allowing me to be home when she was working and vice versa.

I’m not saying that this is the right thing to do for everyone. We did a little research into our decision but looking back 15 years later we are still very happy with the decision.  We borrowed more than I would have liked (I would have liked $0!) and we lived on much less in order to pay off those loans quickly after going into private practice.  I also have a wonderful mother-in-law that frequently made the three-hour drive to care for her grandson when my wife and I had conflicting schedules. If we had done more planning and looked into jobs that were more flexible, or started a home based business or put off having children until more financially stable, we would have been in a better place. Also, our stress level would have been a lot less.

The purpose of this article is to help you with the research we should have done. If you are already a high income earner, you have more choices than we did. Here are the questions I would ask.


What is the Definition of “Day Care?”

Should High Income Earners Use Child careThere are so many options. There are non-relative individual based childcare centers, family in home childcare,
nannies, relative based childcare and Au-Pairs. You could mix and match these categories as well. Diving into the topic of what is the best childcare option is like trying to drink from a fire hydrant. There is no way for any study to do a comprehensive inquiry into the effects of each type of childcare on aspects of childhood development, cost, and parental satisfaction and achievement. The aspects highlighted in this article are non-relative center based childcare versus parental childcare.


How Does it Affect the Child?

Is daycare beneficial or detrimental to our kids? Like most questions in life, the answer depends. Looking purely from the child development perspective, several studies show improved cognitive development in children attending daycare compared to those with stay at home mothers. Other studies imply that behavioral problems could be enhanced in children attending center-based individual care due to increased impulsiveness and aggression.

If you further divide the children by age, those that had only maternal/parental care in the first year of life tend to do better with language and cognitive skills than those that go to non-parental center based care the first year. For the kids that went to daycare in years two and three of life, they had better language and cognitive skills. From most of the articles I read there seemed to be an advantage to parent based care the first year of life but it is about as clear as mud.

The other question I have about the behavioral problems is what perspective are we looking at when we use the term “behavioral problems”. If the study is saying that center-based care children have a harder time sitting still in a classroom for 8 hours a day and listening to a teacher, is that something we should expect of our children in the first place? I wish they would clarify the “behavioral problems”. This goes back to my thoughts regarding a lot of the aspects of the structure of public education in our country, but that is for another discussion in another article.

A non-parent relative regularly cares for 42% of children in the U.S. Thirty-three percent are cared for by a non-relative and amazingly 39% don’t have a consistent childcare arrangement. For children that have a consistent daycare arrangement, they tend to have more pro-social characteristics than those with less consistent care arrangements. The inconsistent care children also tend to have more negative social characteristics. This seems pretty intuitive to me. The inability to find a stable situation for your child would promote fear and anxiety in her.  Also, it seems that the child would be more likely to “act out” to seek attention regardless if it is negative or positive attention. This last statement is only my opinion but from my experience this is true.

The issue that kept coming out in the articles was that a good family trumps any kind of daycare. An engaged and caring Mom and Dad during these developmental times conquer negative effects of any mediocre childcare arrangement. If you are sending your child to a non-relative based care center, then you still have the majority of control in how she turns out later in life.


What Happens to the Parents?

When I type this question into my web browser there are no studies about this! Does no one care about the parents? Attention psychologists reading this, here is an opportunity for a grant!

My only comment on this is it probably affects you negatively if you have to do the opposite of what is important to you. If you value career and improved economic standing but are unable to find a suitable childcare arrangement, frustration and depression occur because you have to stay home when you could be advancing your career and making the big bucks. I’m sure the opposite is also true.

Will Delaying Employment Compromise Your Career?

In today’s society, women are increasingly equal to men when it comes to finishing training and achieving degrees and awards in education. Most professional schools have about a 50/50 split between male and female students. By contrast, women are much less represented in their professions later on in life, w. As of 2013, only 16% of partners in law firms are women even though they have equal representation in law school. It is about the same percentage in corporate officer positions. Some of that I would wager is still due to the glass ceiling effect of male chauvinism and inequality. The other side of it is women are choosing to leave the professional world in order to seek other causes that are nobler in their views. They are seeking maternity.

How does that affect their ability to earn income? A Washington University study found that women delaying childbirth until after their 30s were more likely to earn a better income compared to their peers who had a child in their 20s. Women who delay their first child until after age 31 earn more over their entire careers than women who never had children. Women who had their first child before 28 consistently earned less regardless of education compared to women with no children. This study was very interesting and I encourage you to read it. I think the conclusion can be drawn that if income and career advancement are important to you, delaying child rearing is advantageous. Here are the changes in maternal age at first child over the last 25 years.

Maternal Age at Birth of First Child


What Defines Good Childcare?

Through several articles the consistent criteria for good daycare centers are:

  1. Caregivers Qualifications
  • The caregivers should have some childcare education. The directors of the centers should have a degree in early childhood education.
  1. Child Development
  • These are the educational and development programs the center employs.
  1. Group Size and Ratios
  • Smaller groups tend to do better than larger because the child has more individual attention from the caregiver/teacher.
  1. Health and Nutrition
  • If the center had food service you should check where they get their supplies. Check the requirements if they require you to provide your own meals.
  1. Safety
  • Looking at the overall facility and the location are key. Also, review the facility’s emergency plans and medical administration plans.
  1. Parent/Caregiver Relations
  • The center should be eager to share the care of your children with you. That a red flag if they are secretive or dismissive of your involvement.
  1. Partnership
  • Look into the partnerships each childcare center employs. State agencies, local organizations, the curriculum and community activities they use will give you an idea of what they can offer.


What is the Financial Cost?

I’ve plugged in the numbers from a few scenarios into a tax calculator. When it comes to a dual high income earning household the devil is in the details. Here are several screen shots from a tax calculator. I used them to compare differences in incomes. A dual income household with one parent barely covering the child care cost with his/her salary is the worst scenario.  The total income and tax balance due are in bold blue in each table.


One Parent Earns $250K
The Other $100K


One Parent Earns $350K
The Other $50K


One Parent makes $350K, the other stays home


Both Parents Earn $250K










One Parent Working at $250K, The other Stays Home with the Kids


The average cost of childcare is around $11000 dollars per child per year. I put in the number as three children in the tax calculator just to make the child care cost more significant to a higher income earner.  If you are interested, I used the calculator from TaxAct. For two high income earning parents with child care cost of $33K, the government gives you a whopping $1200 tax credit. Thanks, Uncle Sam! I guess it is better than nothing.

If you can maximize the deductions of the lower wage earner, then it is possible to keep a larger portion of the income. For instance, if you can pay for all the health insurance for the family through the lower wage earner, that would save taxes. Also maximizing a 401K or other retirement plan would save in taxes.  The bottom line is you should maximize deductions from the lesser wage earner if both of you are going to work.

As stated before the cost of having a child before the age of 31 could decrease earning potential on average. Of course, every situation is different.  Job-related expenses include a wardrobe, transportation, increased food costs, and other necessary work related experiences.



This is a difficult decision for any family choosing between time with your children and time pursuing a career. Don’t forget the financial aspects.  It appears that child care has both beneficial and detrimental effects on the child cognitively and socially. Ultimately the family dynamics have the most importance in the success or failure of a child.  I hope that I’ve given you some topics to think about and that you will make a more informed decision than my wife and I made in our early marriage.  Do you have any other concerns about non-parent child care? What are your reasons for choosing daycare or staying at home?

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Tom is a doctor, husband and father of five with a passion for parenting and finance. When he isn't skateboarding, riding BMX, or jumping on the trampoline with his kids, he is reading and writing about personal finance. He helps high income parents educate and mentor their kids to become financially, emotionally, and intellectually self sufficient.

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