How To Create a Daycare Center Budget
How To Create a Daycare Center Budget
Daycare center budget
Creating a daycare center budget is essential for running a successful and sustainable child care business. A well-structured budget helps you track income, control expenses, plan for growth, and prepare for unexpected costs.
Below, you’ll find a comprehensive guide to help create and manage your budget, including a blank template and a sample budget for a daycare center.
What is a daycare center budget?
A daycare budget helps you track your center’s income and expenses, just like a household budget tracks bills and spending. List all your costs—such as rent, utilities, supplies, advertising, and salaries—to see where your money goes and make smarter financial decisions.
Maintaining a clear budget is essential for reaching your financial goals and keeping your daycare running smoothly. Review your budget often to prioritize spending, find ways to save, and ensure you have funds to invest back into your center.
Daycare budget example
Every daycare center will differ based on size, location, and amenities. The following budget example starts with costs for a small, home-based daycare and extends to cover medium-sized center with 50 children and several staff members. It assumes you're open from Monday to Friday and closed on all national holidays.
| Category | Monthly amount | Annual amount |
|---|---|---|
| Income | ||
| Tuition & fees | $3,000 – $30,000 | $24,000 – $360,000 |
| Grants / subsidies | $0 – $2,000 | $0 – $24,000 |
| Fundraising / donations | $0 – $1,000 | $0 – $12,000 |
| Expenses | ||
| Staff salaries / benefits | $0 – $15,000 | $0 – $180,000 |
| Rent / mortgage | $800 – $4,000 | $9,600 – $48,000 |
| Utilities | $200 – $800 | $2,400 – $9,600 |
| Supplies | $100 – $1,200 | $1,200 – $14,400 |
| Food | $200 – $2,000 | $2,400 – $24,000 |
| Insurance | $100 – $1,000 | $1,200 – $12,000 |
| Maintenance | $50 – $500 | $600 – $6,000 |
| Marketing | $0 – $800 | $0 – $9,600 |
| Technology | $20 – $300 | $240 – $3,600 |
| Licensing / fees | $20 – $300 | $240 – $3,600 |
| Contingency fund | $100 – $1,500 | $1,200 – $18,000 |
| Totals | ||
| Total income | $3,000 – $33,000 | $36,000 – $396,000 |
| Total expenses | $1,600 – $28,400 | $19,200 – $340,800 |
| Net income | $1,400 – $4,600 | $16,800 – $55,200 |
Steps for creating a daycare center budget
1. Identify revenue streams
Calculate projected income by multiplying enrollment numbers by your monthly rates. Factor in any additional service fees for extended hours, diapers and wipes, transportation, or enrichment programs. Aim for a profit margin of 10% to 20% annually.
You'll also need to include any government funding, private daycare grants, or community fundraising you receive. These sources can help offset operational costs and support special initiatives. There are several government grant programs to apply for, including:
2. List expenses
The average cost to run a daycare is $1,600 to $11,400 per month for in-home daycares or $17,700 to $28,400 per month for center-based daycares. Total costs mostly depend on the number of children enrolled and how many employees you have, if any.
If your child care center is for-profit, the IRS allows you to deduct necessary operating expenses from your business taxes. These include fixed costs like rent and variable costs like meals, which change with enrollment.
Staff salaries and benefits: Allocate funds for wages, health insurance, training, and paid leave. This usually makes up the largest portion of your budget. Most daycare teachers make $30,000 to $52,000 per year, depending on their experience level and qualifications. Center directors make $40,000 to $65,000 per year.
Facility costs: Budget for rent or mortgage, utilities, insurance, internet, and regular maintenance. Set aside a reserve for unexpected repairs.
Classroom supplies: Plan for toys, books, art materials, and cleaning supplies. Regularly refresh inventory to maintain a safe, engaging environment.
Food and nutrition: Estimate costs for healthy meals and snacks. Meeting nutritional standards can also open access to grants.
Licensing and fees: Include costs for maintaining regulatory compliance, such as licensing, inspections, and professional development.
Equipment and upgrades: Budget for long-term investments like facility improvements, new furniture, or technology upgrades. Calculate depreciation for these assets and spread the cost over their useful life.
Marketing: Invest in advertising, website maintenance, and child care management software to streamline operations and attract new families.
Set up a profile on TrustedCare.com so more parents can find you while searching for daycare centers in their area.
3. Plan for contingencies
Since no one knows when disaster may strike, build a financial cushion into your budget. Set aside 10% to 20% of your total monthly expenses as a contingency fund to cover emergencies like equipment breakdowns or staffing gaps.
4. Calculate net income
After completing steps 1 through 3, subtract your total expenses from your total income to determine net income. This figure shows if your daycare is operating at a profit or loss.
The average daycare center generates $36,000 in profit annually, with some earning over $60,000. Those with lower profits tend to rely on tuition alone and don't use alternative revenue streams. To make your daycare more profitable, take advantage of programs, grants, and partnerships.
5. Monitor and adjust
Track your actual income and expenses against your budget each month. Use budget tracking software or spreadsheets to update figures and spot trends. Adjust your budget whenever you see enrollment changes, costs rise, or new opportunities arise.
Daycare budget template
Use this helpful template to create your daycare center budget:
| Category | Monthly amount | Annual amount | Notes |
|---|---|---|---|
| Income | |||
| Tuition & fees | $ | $ | Main revenue source |
| Grants / subsidies | $ | $ | Government or private support |
| Fundraising / donations | $ | $ | Community contributions |
| Expenses | |||
| Staff salaries / benefits | $ | $ | Largest expense |
| Rent / mortgage | $ | $ | Facility costs |
| Utilities | $ | $ | Electricity, water, internet |
| Supplies | $ | $ | Toys, books, cleaning |
| Food | $ | $ | Meals, snacks |
| Insurance | $ | $ | Liability, property, etc. |
| Maintenance | $ | $ | Upkeep, landscaping, repairs |
| Marketing | $ | $ | Advertising to attract new families |
| Technology | $ | $ | Software, hardware |
| Licensing / fees | $ | $ | Regulatory compliance |
| Contingency fund | $ | $ | Emergency savings |
| Totals | |||
| Total income | $ | $ | Add up all income streams |
| Total expenses | $ | $ | Add up all expenditures |
| Net income | $ | $ | Income minus expenses |
Tips for balancing your child care center budget
Balancing a daycare budget can be challenging, but smart strategies help you stay on track and support your center’s success. The following practical tips can help you manage your daycare budget more effectively:
Review your budget regularly to spot unnecessary spending and prioritize essential purchases.
Track all income and expenses accurately using software or spreadsheets for better visibility.
Forecast income conservatively and overestimate expenses to avoid shortfalls.
Analyze your revenue streams and look for ways to increase enrollment or add services.
Compare costs for supplies and services to find savings without sacrificing quality.
Plan for long-term investments and set aside funds for future upgrades or emergencies.
Monitor cash flow closely and maintain a contingency fund for unexpected expenses.
Categorize expenses to identify areas where you can cut costs or reallocate funds.
Seek community resources, grants, or fundraising opportunities to supplement your income.
Additional resources
Creating a budget is just one step in the process of starting a daycare business. Check out our guides on how to start a daycare and writing a daycare business plan.
These organizations and resources can also provide ongoing support, training, and guidance for anyone launching and growing a daycare business:
The National Association for the Education of Young Children (NAEYC) provides accreditation, professional development, and resources on best practices for early childhood programs.
Child Care Aware of America offers guidance and resources for starting and operating quality child care centers.
Local child care resource and referral agencies can provide market data and help connect providers with families in your area.
State licensing agencies advise on regulations and requirements for legal child care operation.
Daycare budget FAQs
Why do I need a child care budget?
A child care budget plan gives you a clear roadmap for opening and operating your center. With a budget, you can anticipate expenses, secure financing, and ensure you have enough capital to cover costs as you grow enrollment. It lets you allocate funds wisely, prioritize essential items, and set realistic profit goals.
A solid budget also helps you determine how many children you need to enroll, what to charge for tuition, and how to adjust spending if revenue is low. By tracking income and expenses, you can keep your center financially healthy from day one.
How do you claim daycare expenses on your taxes?
Work with a business accountant or tax professional to claim daycare expenses correctly on your taxes. You can deduct salaries, benefits, and operating costs as business expenses. If you run your daycare from home, you may also deduct a portion of your housing costs related to the business.
Sole proprietors use Schedule C for deductions, while corporations deduct expenses before paying corporate tax on profits. Deductible items and rules vary by state, so review your state’s guidelines and the IRS list of allowable deductions to maximize your benefits.
How can I get donations for my daycare facility?
Daycare owners can raise funds by setting up a crowdfunding campaign on platforms like GoFundMe to collect donations. Organize community fundraisers, such as bake sales or restaurant partnership nights, to raise additional funds for your center.
How can I cut my monthly expenses?
Reduce monthly costs by buying supplies in bulk from local wholesalers and checking your inventory before reordering. This prevents overstocking and saves money. You can also apply for the Child and Adult Care Food Program to help cover food expenses.
How do I make sure tuition is paid on time?
Set clear payment policies and communicate them to families. Use late fees and send reminders before and after due dates to encourage timely payments. Follow up with phone calls if needed and keep detailed records of all payments and outstanding balances.
If you accept subsidy payments, use management tools to track agency payments and invoices. This helps you stay organized and ensures you receive all funds owed to your center.
Using our proprietary cost database, in-depth research, and collaboration with industry experts, we deliver accurate, up-to-date pricing and insights you can trust, every time.