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At the beginning of the year, I wrote a list of milestones I was looking forward to the most. Number one was launching Cashing Out, and number two was eliminating our monthly childcare payment.
To be clear, we LOVE our son’s school. His teachers have had a profound impact on his development and paying for childcare has been one of the most important things we’ve ever done with our money. We have always felt like it was worth it, but it’s no secret that the cost of childcare is a massive stressor among parents and we’re no different.
We’ve managed our stress levels a myriad of ways. When he was born, we leaned on family and paid our moms to watch him in our home. Julien’s mom would come over three days a week, my mom would come the other two. At that point, we had a Dependent Care FSA that would take a set amount out of paychecks pre-tax to help offset any expenses. This arrangement lasted about 18 months but after Julien quit to work on the business full-time, we realized that our home couldn’t be his office and our son’s classroom at the same time and decided to enroll him in daycare full-time paying $1400 a month.
For the last 3 years, as our household has transitioned from being dual-income to single-income to now fully self-employed, we have experimented with several ways to keep childcare costs manageable. But as of August 1st, we have a kindergartener and, in many ways, we just got a $1400 a month raise…or so I thought!
I was soooo looking forward to putting $0 in the childcare portion of our monthly budget, but after I tweeted asking how others have celebrated this milestone, several folks reminded me that my work isn’t done and that kids don’t just stop costing money at age 5 (who’da thunk!?)
Many of them shared that they rerouted the money for random school expenses that come up throughout the year, afterschool care, and summer camp. And after speaking to several parents, we decided this would be the right move for us as well.
What we’re doing with our new daycare “raise”
We’ve paid off a lot of debt over the years and we know that if you don’t have a plan once you lose a big expense, you become vulnerable to lifestyle inflation and a myriad of other slippery slopes. One of the worst feelings in the world is to get a raise and still not be able to feel it so our plan is to follow a loose 70/30 framework where we allocate 70% of the surplus funds to investments and set aside the remaining 30% in cash for future expenses using Spruce.
Every month, we’ll evaluate whether we are investing in our taxable brokerages or Solo 401k since each of them has tax implications, but what I’m super excited about is the way Spruce takes the stress out of saving, especially in cases like ours, where the expenses are somewhat unknown.
Spruce is a mobile banking platform built by H&R Block that allows you to set saving goals and get automatic cash back at select retailers1 when using the Spruce debit card. And while Spruce may have some of the same features as your bank, it’s actually not a bank0. There are no monthly fees2, no sign-up fees, or fees for minimum balances and you get access to thousands of fee-free ATMs3. To me, it’s a great example of Financial Technology (FinTech) because your spending and savings accounts are backed by technology that gives you budgeting tools, automatic saving options, and financial insights.
Managing future childcare expenses
We’re going to link our primary checking account to our Spruce account and transfer $400 a month for ongoing expenses like after school care and school supplies. The Spruce platform includes a spending account, as well as a saving account to help with budget planning.
If you’ve heard of “Sinking Funds”, this strategy may sound familiar. The idea of saving a small amount of money over a longer period of time is great for one-time/ad hoc expenses that don’t fit in your normal monthly budget, like replacing school uniforms or yet another pair of shoes (is my kid the only one who is ROUGH on shoes?!)
The spending account is a mobile banking platform. Your balance is reduced every time you swipe, pay a bill or write a check. But within the savings account, you can create different saving goals and set up automatic transfers from your spending account that you can adjust at any time. For example, if I wanted to save $600 for camp next summer, Spruce has a chart that shows how much I’ll need to put away each month to knock it out by my deadline.
But perhaps the thing I like most about Spruce are the cash-back rewards. When you use your Spruce debit card at select retailers (and there are over 10,000 of them!), you automatically get cash-back rewards deposited in your “Spruce Extra Savings” account. Those extra dollars can add up fast and accelerate meeting your savings goals. And it’s worth repeating that you don’t even have to opt-in! You also don’t need to upload a receipt, enter in a coupon code, nothing! It just…happens!
ALL of us could use one less thing to think about, and with Spruce, if you have a digital wallet on your phone, you can just add the card and use it as you go about your normal routines at grocery stores, restaurants, and other stores, while the cash-back money piles up in your savings account.
Bottom Line
At the end of the day, I know there’s a lot I still don’t know about how much things cost as children grow up and develop interests outside of my own. But I’m grateful that I have two secret weapons: products like Spruce continue to create innovative and flexible ways to manage my money, and a community of folks who don’t mind sharing their wisdom along the way.
Have your childcare expenses changed over the years? How did your spending habits change once your kids graduated from daycare?
Disclaimers:
0 Spruce is a financial technology platform built by H&R Block, which is not a bank. SpruceSM Spending and Savings Accounts are established at, and the Spruce debit card is issued by, MetaBank®, N.A., Member FDIC, pursuant to license by Mastercard®. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated
1 Spruce Rewards are powered by Dosh. Cash back offers and amounts may vary by user, merchant location and offer period. Check the Spruce app for offer availability. Cash back earned by qualifying purchases will be deposited in your Spruce Savings Account. See Spruce Rewards powered by Dosh Terms for details.
2 Other fees apply for certain uses of your Spruce debit card and Accounts. See www.SpruceMoney.com/fees/ for details.
3 There is no fee to withdraw money at Allpoint® ATMs. There is a $3 fee at other ATMs, plus any additional fee charged by the ATM operate
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