September 23, 2013, 5:00 am

Home Daycare – No Pain, No Gain

by: The Financial Blogger    Category: Project $1500
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home daycare

Exactly 20 days ago, my wife started a daycare at home. For most mothers who would like to stay at home a little longer with their kids, opening a home daycare seems logical. While you can stick around with your toddler, you are also bringing a few bucks home. No more rushing to the daycare; YOU are the daycare!

 

Well…it’s not that easy. While there are several steps you must follow before you open your daycare, there are several things to consider when you truly start as well. We took it on together as we realized we needed a little bit more of income if we wanted to reach financial freedom before the “normal age of retirement”. My wife also felt that our toddler started to run in around the house and get bored when she had to do household chores.

 

After 20 days living this new life, I’m ready to tell you what life looks like we have a daycare at home.

 

How It Works

 

You know by now that I’m fairly organized in all aspects of my life. This is why we looked at the “process” of having a daycare at home and see how we can maximize our time and not burn out. Opening this side business meant more work for my wife and more work for me too. Since she was at home, I used to not be so implicated in the household chores. It was somewhat part of “her job” to keep the house clean.

 

This is why I find myself participating more than I was before… and this is also why we ended-up hiring a cleaning lady! Hahaha! NO, seriously, cleaning the house over the weekend meant that we couldn’t spend quality family time and this was non-negotiable for us. It’s important that our children can do their activities and that we keep up with a social life.

 

The daycare is opened starting at 7am. This means I take care of my kids from 7 am to 7:30 (the time the two oldest go to school and the toddler goes “into the daycare”). Prior to 7 am, this time is mine. It’s why I wake up at 5 am, eat breakfast alone, do my workout, wake up the kids, take my shower and then it’s 7 am and time to make breakfast for the family.

 

The daycare is opened until 5 pm but my wife is lucky and most of her kids leave before that. My two oldest stay at school until 4:15 pm and then walk home. Homework is done when I come home around 5 pm.

 

My wife didn’t want to offer just a place where kids can play safely and eat during the day. She is providing a very high quality daycare including weekly themes, homemade, healthy food with several different play areas inside and outside the house. This requires more hours for planning and designing activities where kids will not only have fun but will learn and grow.

 

Funny enough, simple things get complicated: how do you prepare lunch when you need to head the kitchen while you have 5 kids in the daycare? Or where will they will sleep for their afternoon nap? How to you go outside thinking they have to use the stairs when you have 3 kids around 18 months of age? These are all questions you have to find answers for before you open your daycare at home.

 

The Revenues

 

Gross revenues are quite easy to calculate: $25 per kid per day, 5 days per week. She has 5 kids (plus our toddler) so it adds up to $125 per day or $625 per week. My wife takes 5 weeks vacations that are not charged to the parents so the total annual income is roughly $29,375. It doesnt look so bad when you think that she stays home, huh? Well… again… it’s a little bit more complicated than this. There is more on this later, but let’s go to the expenses first to see the net income.

 

The Expenses

 

I was happily surprised to discover that the daycare expenses weren’t as high as expected. We had to disburse a lump sum payment to open it (furniture, painting, materials, etc). After that, it becomes more affordable. So far, we show an increase of our grocery bill of roughly $50 to $75 per week. It’s hard to determine what is used by us or the daycare but this is probably within the ball range. Then, we decided to have a cleaning lady once a week to spare us the burnout. She charges $75/week.

 

Besides that, there will not be many additional expenses considering we have three kids and already have tons of toys ;-). So far, I can see a monthly expense of $600 at most. This is why I forecast to net $1,900 with the daycare.

The Hours Worked

 

When you think about it, the daycare is opened from 7am to 5pm. This makes 10 hours where my wife must remain accessible to kids. While there are breaks (the kids nap is roughly 1h30), there are no real and official break during the 10 hours. If one child doesn’t want to sleep one day (trust me, it happens often), the 1h30 pause just disappears! So working 50 hours per week to earn $625 makes an hourly wage of $12.50. But it’s more than 50 hours because you have to count time for planning, cooking, cleaning that is not within the 50 hours. So it’s more like 60 hours of work or $10.42/hours… and I didn’t count expenses and taxes. Gulp!  If I take the net income ($1,900), it comes down to $7.92 per hour minus taxes.

 

Taxes won’t be much so we can almost consider the $1,900 to be net income. Still, its not the Klondike when you look at all the hours worked.

 

What Truly Sucks…

 

As you can see, life with a home daycare is far from being perfect. What truly sucks with this job is the incredibly repetitive routine you have to follow:

#1 Wake up at the same hour

#2 Prepare everything before the children arrive

#3 Welcome the kids – free play

#4 Activity #1

#5 Eat some fruit

#6 Go outside

#7 Activity #2

#8 Prepare lunch – free play

#9 Eat lunch

#10 Nap time

#11 Activity #3 – free play

#12 Kids leave

#13 You Clean up / prepare supper

#14 Our kids’ homework

#15 Eat

#16 Wash the dishes, prepare things for the next morning

#17 free time… HAHAHA!

 

I’m well aware that this routine looks like a lot like any other job (just change the word Activity by client or another task and the word “outside and nap time” by taking a coffee ;-) ). The thing is that you can’t really skip it as we were able to before. We can’t skip the dishes as the children will be around the next morning so it can’t be done later. Same thing with everything else. This is also why my wife takes 5 weeks off!

 

Why It’s Still An Awesome Choice

 

Having a daycare at home is definitely a lot of work, but it brings a whole package of great things too:

 

#1 No transportation costs to get to work

#2 We eat healthier than ever

#3 5 weeks vacation

#4 Easy to find clients (it took my wife less than a week!)

#5 Stable income over time

 

And the most important: My toddler can stay at home with his mommy AND play with friends all day. Honestly, he just loves it! When we compare the other alternatives (finding a job elsewhere), we wouldn’t enjoy any of these advantages. When you consider the daycare cost, transportation and obviously more clothes, working outside the house wasn’t a good idea for her.

 

We will not buy a new BMW with this money but we will surely pay our debts pretty fast. Considering this additional income, I don’t need my year-end bonus to close my budget in the black. We will now be able to use the extra monthly cash flow to pay our debts along with my year-end bonus. So if I’m lucky, I will take less than three years to pay all my consumer debts other than my mortgage. If I only have my mortgage by the age of 35 to pay off, life will be great!

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Comments

I think a home daycare is great, especially if you want to stay home with your own child as well. Sounds like a great bonus :)

It’s a great bonus, but still there is a price to pay. I thought it was a little bit smoother than that ;-0

Hey Mike, looks like you guys are off to a good start. From a purely financial perspective here is my first thought – if you found clients so quickly maybe you could raise the rates by 20% or so?

Also, I’m not sure from a space perspective, but have you thought about getting a college student or someone with a weird schedule willing to work for minimum wage that would could work from maybe 9-3? This would give help during the peak hours, be fairly cheap, and could allow you to double the number of kids?

Hey Kyle!

This is something we could probably do when we open new spots. For now, contracts have been signed for the year so we have to keep the $25/day/kid.

The problem is that we can’t get proper insurance. It gets way too expensive once you go over 6 children and you are not qualified as a “Gov’t sponsored daycare”. When you are private, insurance companies don’t like it too much. I can appreciate their concern; more kids mean more chances of having an accident!

Sounds like your wife really like working with small children/babies. I’m a teacher, so I know how tiring it must be by the end of the day working with such little ones. Very admirable of you both to open a daycare!

Very interesting. My wife and I thought about this idea for a while. She has a Masters in Early Elementary and is certified to teach up to 2nd grade. Not many public school teaching jobs, but plenty of low paying no benefit preschool/day care jobs. She was paid about $13 an hour…year round day care, no benefits, nothing. After we had our son, we thought about opening our own day care when he got older (he’s almost 3 months). The problem is we live in a 1 br apartment in NYC. If we had a house, that would be perfect…plus, daycare is much more expensive so we could charge more. Another opportunity arose for my wife while she was on “maternity leave” though she was leaving the daycare job anyway since it didn’t make sense financially if we had to pay for daycare for our own child. We will revisit this idea in the future as my wife loves teaching and the little ones.

Great breakdown. Daycare is expensive when you are on the paying side but when you break it down to this level of detail it is clear why it needs to be. $25/child/day does seem to be cheaper than what we will be paying here by a large margin. Hopefully you can grow the numbers by raising rates next year.

Great Idea. My sister also run a daycare at her home. She likes doing it as she can earn extra money and stay with her kid. But some time when I visit her, I find her home quite messy.

Great detailed summary. For my area, I think one could get by with charging a bit more per child per week. Seems like a decent trade-off if you have more than one kid and make less than ~$55K!

Here in the UK the average price of daycare is £45 – in dollar terms that’s about $72 a day !!
My wife and I won’t pay those rates, so she only works one afternoon and one evening a week.
Many people go to work and 75% of their salary goes on daycare
I just cant see the point.

How can daycare be so expensive in the UK and so cheap in the USA ?

What was The Wife doing before? Is the 30K an increase or decrease? worth the increased stress? etc

On Long Island here…by us it is $10/hour per kid here…so we are looking at $80 per kid. Would really change your numbers

by: The Financial Blogger | October 7th, 2013 (7:29 pm)

Hey Evan,

She was working in a daycare before staying at home so it basically the same income.

$10hr/kid… wow! that’s crazy! but we can’t ask that much in a small city (we live in a city under 100k people). In Montreal, it can go up to $50/day for private daycare.

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