Outspoken finance personality Dave Ramsey kicked up a fiery debate on TikTok recently when he described a caller to his show as “dumber than crap” for paying too much in child care.
“Are they going to Harvard?” he asked, aghast at the astronomical costs. “They’re not even in school and you’re already paying $25,000 a head?”
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Altogether, the caller, Dave from Philadelphia, pays a total of $80,000 a year for his kids’ daycare and to hire a nanny in the summer, admitting, “it is a pretty fancy daycare.”
“There’s cheaper routes,” said co-host Jade Warshaw. “You can downgrade.”
However, viewers watching a short clip of the original interview from last year, posted on TikTok in January, were unconvinced, calling Ramsey “out of touch.”
Here’s why younger parents believe older generations are likely unaware of the rapidly escalating costs of child care.
Child-care payments have surged
Child-care payments have surged 32% since pre-pandemic levels, reports the Bank of America Institute.
As of September 2023, the average household spent over $700 a month on child care, but this figure can vary widely depending on where the family lives. In New York City, for instance, sending an infant to daycare full-time could cost as much as $2,854, according to child-care platform Care.com.
To keep up with the rising costs, some parents are taking up additional jobs and side hustles, while others have left the workforce entirely. A 2023 report by ReadyNation even says the country’s child care “crisis” costs the economy $122 billion in lost earnings, productivity and revenue every year.
In this context, Ramsey’s caller doesn’t seem unreasonable. “Dave owes this guy an apology,” says one commenter.
Parenting and career influencer Paige Turner reacted to Ramsey’s video in her own TikTok video.
“It never ceases to amaze me how out of touch some people are with the lived experiences of parents here in the United States,” Turner says.“Dave is supposed to be an expert in his field so you would think he would know that child care is the number one rising cost for families here in our country.”
Turner goes as far as saying Ramsey shouldn’t be giving financial advice if he doesn’t recognize this key piece of the current financial reality for many Americans. She believes the government needs to step in and help subsidize the cost.
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Subsidized child care could be the answer
American child care costs are substantially higher than the rest of the developed world.
Net child care costs are about 32% of the average wage in the U.S., while countries that belong to the Organisation for Economic Co-operation and Development (OECD) average out closer to 11%, according to the latest data.
Canada is working toward lowering child-care costs to CA$10 ($7.44) a day, while in some parts of Europe early child care is free.
The 2021 American Rescue Plan Act (ARPA) directed nearly $40 billion to child care centers across the U.S., but that program ended in September 2023. Experts warned the country was headed for a “child care cliff” and recommended another subsidy program to ease the burden on parents and the economy.
There may be other options
While many Americans must make the difficult choice between expensive daycare centers or unpaid labor at home, there may be a few other options that parents can look into as well.
Some employers may include child care subsidies as part of their benefits package, or offer discounted on-site daycare centers. They could also offer a flexible spending account (FSA) to help cover services like preschool, daycare and before or after school programs.
Depending on your income, you could be eligible for certain tax credits as well. The child and dependent care tax credit helps parents cover care for children under 13 while they work, or look for work. You could also qualify for the child tax credit even if you haven’t paid for care services.
Or, consider reaching out to people in your community. You can talk to other parents about sharing a nanny or starting a child care co-op, in which parents take turns watching each other’s children.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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About Me
I'm an enthusiast with a deep understanding of various psychological concepts and theories. My expertise lies in self-knowledge, self-confidence, self-esteem, and cognitive biases. I have extensively studied the Dunning-Kruger effect, which is a cognitive bias where individuals with low ability at a task overestimate their ability. This phenomenon has significant implications in various aspects of life, including decision-making, self-assessment, and performance evaluation. Additionally, I have a strong grasp of the importance of self-analysis in initiating positive change and improving one's life.
Concepts Related to the Article
- Dunning-Kruger Effect: The Dunning-Kruger effect is a cognitive bias in which individuals with low ability at a task overestimate their ability and lack the skills to recognize their own incompetence .
- Self-Confidence and Performance: The relationship between self-confidence and performance is a crucial aspect of human behavior and psychology. It explores how self-belief and confidence can impact an individual's performance .
- Self-Knowledge: Self-analysis leads to self-knowledge, which is the necessary first step in initiating positive change and improving one's life .
- Self-Esteem: Self-esteem is the evaluation of one's own worth and the extent to which one values oneself. It can have both positive and negative aspects, and unrealistic self-esteem can lead to narcissism .
- Attitudes and Motivation: The study of attitudes and motivation is essential in understanding human behavior and decision-making processes. It explores the factors that drive individuals to act in certain ways.
These concepts are highly relevant to the article's discussion on the rising costs of child care, the impact on parents' financial situations, and the need for government intervention or alternative solutions to alleviate the burden on families.
If you have any specific questions or need further information on any of these concepts, feel free to ask!
