Meet the DIPS parents: Double Income, Public School. They've got it better than the POLKs, or Parents of Little Kids.
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- Parents are divided economically among one key line: if their kids are old enough for public school.
- Childcare costs can be an obstacle to families' financial goals, like home ownership.
- But DIPS (Double Income, Public School) parents are out of the woods on those crushing day care payments.
Earlier this week, my colleague Alcynna Lloyd wrote, "Sorry, parents: The American Dream is only for DINKS." Which, well, depressing.
Lloyd describes how the cost of childcare means buying a home is out of reach for lots of families — especially considering today's high interest rates and high home prices. That means the homeownership dream is something only DINKS (Double Income, No Kids) can afford.
Zillow found that in 31 of the largest 50 US metropolitan areas with available childcare-cost data, families looking to buy a home could expect to spend more than 60% of their income on mortgage and childcare costs.
Some areas were even costlier: It found that parents in Los Angeles and San Diego would need to dedicate as much as 121% and 113% of their income. (In those areas, the cost of buying a typical home and childcare is so big relative to the median income that Zillow's calculation resulted in figures over 100%.)
Put another way: In areas with high real estate prices, like California, a mortgage plus day care is more than the median family income.
Yikes. Grim.
I'd like to suggest one glass-half-full way of looking at this, however.
Yes, the housing crisis is real. And yes, the childcare system is fundamentally broken in the US, both for its high costs and its low pay for workers.
But the double whammy of housing plus childcare costs doesn't hit all parents — just parents of very young kids. Something magical typically happens when kids turn 5: They go to free public kindergarten, and those debilitating childcare costs start to melt away.
(A few obvious caveats: Not all kids go to public school, but most do. Some children require special services or therapies that may continue to be costly. School usually ends around 3 p.m., and there are costs for after-school care. However, after-school programs or an afternoon babysitter are typically a fraction of the cost of full-time day care.)
Dividing parents into DINKs vs. POLKS
So it's not just "Parents" vs "DINKs" in how we're thinking about who can afford home ownership. "Parents" can be divided into two separate groups: those who are still paying for day care vs. those with kids old enough to be in free public school.
That's why I'm proposing a new acronym to go along with DINKs, DINKWADS (DINKS With A Dog), and HENRYs (High Income, Not Rich Yet).
I propose we call them: DIPS, or Double Income, Public School.
Yes, of course, older kids and teens can be a financial drain, too. They have costly activities, their clothes cost more than Cat & Jack, they need braces, and Stanley cups, and SAT prep classes. They eat a lot more (parents of teenage boys will confirm, sometimes a lot more) than babies. And don't forget summer camp costs, which are easily more than a mortgage payment.
But parents still hobbled by childcare costs are a different group from the DIPS. Let's call them … POLKs, or Parents of Little Kids.
Nationwide, the average cost of childcare in 2022 was around $10,000 a year per child, according to the advocacy group Child Care Aware of America. But it can be much higher in certain areas, like the Northeast. For example, Massachusetts has the highest average childcare costs, where day care for an infant is $24,472. This is 16% of the median income for a married couple. Iowa is much cheaper — $11,129 for infants, which is only 10% of the median income.
(For the purposes of this article, we're talking about two-parent families, but it's important to consider that, in general, childcare costs are even more burdensome for single parents. In Massachusetts, the infant day care cost is 65% of the median income of a single person.)
And unlike with college expenses that parents might be paying for their kids, there are no 529s, no student loans you can repay later. It's just pure white-knuckling it through those early years. For some families, the math doesn't make sense to keep both parents working. (A Pew report found that 1-in-5 stay-at-home parents are dads.) Some families take on credit card debt; some families postpone other financial goals like home ownership.
It gets better — I promise
The bad news for the POLKs is that life sucks right now. But you'll get through the diapers, the crayon on the walls, the crippling berry budget. All parents look forward to watching their children grow and become little people with ideas, dreams, and interests of their own.
But the most exciting part of all is that one day, they'll go off somewhere for six hours a day and learn a bunch of stuff for free.
I've noticed with some of my friends with older kids that there's a noticeable shift in their lives once their kids are in school.
One friend bought a small vacation cabin upstate, and another started taking family vacations. I'm stuck in between — one kid in public school and a younger one still in day care. My husband and I often dream of all the things we'll do with the extra cash we'll have once she's in school.
Recently, a contributor to Business Insider wrote about the burdens of preschool costs, which left her $8,000 in credit card debt (even after getting grandparents' help to cover the tuition). "I cried the day my son was accepted into a public school pre-K program," she wrote.
Nothing more beautiful than the moment a POLK becomes a DIPS.
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