How to make money from home by starting a daycare

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Quite a few parents choose to stay home because their entire salary would go to daycare if they went back to work full time after the birth of their child. If you are one of the stay-at-home parents who loves kids and wants to make money from home while taking care of your own kid, have you thought about starting your own home daycare? I have. I did some research and interviewed a mother of two who did exactly that. Unfortunately, she burned out and closed her daycare even though it was popular among the parents. I believe this is what will happen to me as well; so after giving it some serious consideration, I decided not to pursue it. Still, I thought it would be interesting to share the interview I had with the mother, in the hopes that it will be beneficial to other stay-at-home parents who are interested to earn income while they stay at home with their children.

Q. What is an at-home daycare? How does it work?

A. Although each state most likely has their own definition, at-home daycare is typically your home, opened up to a limited number of children (unrelated to you) of various ages. A home daycare program will typically offer structured learning in a safe environment. Most of my daycare children started as infants and grew to be toddlers under my care. I prepared a program for each day for that age group. I also reported (via handwritten notes) to the parents each evening on the events of the day.

Q. Why would parents use an at-home daycare when they could go to a big center?

A. Loving, affordable, safe and convenient childcare is always in demand. Many households have two-parent careers and need someone to handle the children. Some of these parents will prefer daycare in a home as opposed to a commercial setting, believing that it is a more kid-friendly solution. Others may find it is cheaper, more flexible or more suitably located than a commercial center.

Q. How much can you earn with a daycare at home?

A. Each state will have its own limits on the number of children that you can enroll in your home daycare program. To find your state’s requirements, just do an Internet search on “Child care license” plus the state abbreviation. Ours has an upper limit of eight; but with that many children, you might need an assistant!

What you should charge differs by the age of the child, the location of your home and the hours you will be open. You might have different rates for day vs. evening. You may need to charge more for infants and toddlers because your state may allow fewer children of that age to be cared for by one adult.

Some daycare homes require the parent to pay whether or not the child is in attendance (say perhaps a parent takes the child out for a week for a family vacation). The daycare home is reserving that spot and so would like to be compensated. I did not charge when children were absent.

In my small town, I charged $90 a week and enrolled six children. As my ongoing expenses were low — basically being lunch, snack, diaper wipes and an occasional piece of equipment — my profit margin was high. Based on my personal experience, depending on the cost of living in your area, I estimate you can make anywhere from $400 to $1500 a week. Of course, your mileage may vary.

Q. How do you go about starting a daycare home?

1. First, review what your area’s legal requirements are.

  • You may find, for instance, that your home is not currently well suited to childcare and would require expensive maintenance or upgrades, such as, outdoor fencing or new electrical wiring. States who license want assurances that providers with a license meet certain standards regarding health, lack of criminal records, and so on. And be aware that all adults in the home may be subject to meeting those requirements, not just the provider.
  • You may also find that you don’t need a license. Some states allow providers to care for a few non-related children without one. In our state, that number is four. Still, for marketing purposes, you may want the reassurance factor that being a licensed home provides prospective parents.
  • You will also need verification from other members of the household that they are willing to share the home with additional children. Your parents may not meet the exact drop-off and pick-up schedule agreed upon, causing you to still be caring for their children when it is time for other household activities to begin. For my daycare license, I also had to get permission from each adjoining neighbor.

2. Look at start-up and operational costs.

  • What training might you need?
  • What emergency measures (including hiring others to come in and watch the children if you have to be away) will involve cost?
  • How do you plan to market your services? I advertised through the church bulletin and on signs posted in the neighborhood as well as ads in the paper. So my cost of marketing was negligible, but I can easily see this expense getting out of control if you have a lot of competition and are starting new.
  • What equipment and supplies will you have to buy? I did purchase added equipment — a play kitchen, additional toys and other items. Some of these came from garage sales, others had to be new.
  • Is your home adequately child-proofed? What needs to be done to make it child-safe? How much will that cost?

3. Consider the risks involved.

  • You should also consider the risk that you are incurring in being responsible for other people’s children. What could possibly go wrong? Children may fight with each other, fall and break a bone, run into something and get a concussion, wrongly accuse you or another adult in the house of something, and so on.
  • How are you covered financially and planning-wise to handle the risks? An umbrella liability policy should be considered at a minimum. In addition, you might consider incorporating your daycare home into an LLC or S-Corp as additional personal protection if the unthinkable should happen.

Q. If you had an opportunity to re-do the whole thing, what would you do differently?

  • Purchase an umbrella liability policy and incorporate my business
  • Hire an assistant to help out part of each day and be on call to take over if there was an emergency. For $540 a week, my time was utterly and absolutely devoted to caring for, feeding and educating those six children, plus my own two, for a span of around 11 hours a day, five days a week. With eight children, it was nearly impossible to leave the home. So I had to use non-care time for the gathering of supplies, planning and preparation.
  • Charged more! It was a feasible way for me to earn the money I needed back then — and one of the few available to me — but it was THE most exhausting job I have ever done. It was an exhausting, lucrative,  emotionally satisfying way to earn money while still being home to care for my own two children; but I burned out in three years. If I have to do it again, I will most certainly charge more. I will compete based on my quality, not on the basis of price!

If you are a stay-at-home parent, what options have you considered that would allow you to work from home?

One Response to “How to make money from home by starting a daycare”

  1. Anonymous

    Hi, I recently graduated with my bachelors in psychology. I have always wanted to work with kids and I’m thinking of establishing a daycare. This daycare would be a in-home. I wanted to know what the start up cost for a in-home daycare in Queens,New York would be around? I will kindly be looking forward to estimated answer. Thank you very much

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