What is the single most expensive thing you will buy in the next five years, and why is no one helping you plan for it?

For a lot of Bay Area tech families, the honest answer is not the house and it is not the cars. It is raising the kids. Full-time care for one young child here can run north of thirty thousand dollars a year, and that is before anyone says the words private school. Two kids in care at the same time can quietly cost more than a second mortgage, paid out of your take-home, with money that has already been taxed at the highest rates your household reaches.

What makes this strange is how little it gets discussed in real numbers. People will compare RSU refreshes and mortgage rates all day, then go silent on the line item that actually dictates how much they can save in their highest-earning decade. So let’s talk about it directly.

This is the piece on the real cost of family life in the Bay Area, and the tools that actually move the needle against it: the dependent care FSA and how high earners should think about its new, larger limit, 529 strategy for California families who earn too much for the easy breaks, and how all of this fits into the cash flow of a dual-income tech household.

What family life here actually costs

Start with the numbers most planning conversations skip. Full-time infant and toddler care in the Bay Area, whether a daycare spot or a nanny, commonly lands in the range of thirty to fifty thousand dollars a year per child. A nanny for two can run higher. None of that is deductible in any meaningful way, and all of it comes out of after-tax income.

Then comes school. Private K-12 tuition across San Francisco and the Peninsula frequently runs from the high thirties into the sixties per child, per year, and it tends to rise faster than inflation. A family with two children in private school can be writing six figures in tuition checks annually, every dollar of it post-tax.

This is the part of the budget that we walked through in the breakdown of where a $500,000 Bay Area income actually goes. Childcare and education are often the reason a household that looks rich on paper feels like it is treading water. The income is real. So is the spend. The goal is not to feel guilty about either, it is to route as many of these dollars as possible through the few structures that give you a tax break or a head start.

The dependent care FSA, and the catch for high earners

The most direct tool is the dependent care FSA. You set aside pre-tax money from your paycheck and use it for qualifying care, which means you never pay federal income tax, and in many cases not California tax, on those dollars. For a top-bracket household, that discount is real money on spending you were going to do anyway.

Here is the news worth acting on. For 2026, the dependent care FSA limit rose from five thousand dollars to seventy-five hundred dollars per household, the first real increase since the 1980s. More room in the one account that shelters childcare directly is a genuine win, and it is the first thing a tech family with young kids should set up at open enrollment.

There is a catch that hits exactly this audience, though. Dependent care FSAs are subject to nondiscrimination testing, which is designed to stop a plan from favoring highly compensated employees. At a company full of high earners, that testing can force the plan to refund part of what high earners elected, so you may not get to keep the full amount you signed up for. It is still worth maxing, because some shelter beats none. Just do not build your whole plan around a number the plan may later claw back, and ask your benefits team how their testing has shaken out in prior years.

529s when you earn too much for the easy breaks

For education savings, the 529 is the workhorse. Money grows tax-free, and withdrawals for qualified education are tax-free at the federal level. That is the whole engine, and for a high-income California family it is most of the value.

Be clear-eyed about the state side. California has historically offered no state tax deduction for 529 contributions, and the deduction the state has introduced carries income limits that a typical dual-tech household sits well above. So you should not expect a California write-off for funding these accounts. You fund them for the tax-free growth, not a deduction.

What high earners can use is scale and timing. The 529 superfunding rule lets you front-load up to five years of the annual gift tax exclusion per child in one shot, which for a couple is one hundred ninety thousand dollars per child without touching your lifetime exemption. Done early, that gives decades of tax-free compounding. The accounts are also more flexible than they used to be. They can now cover a meaningful amount of K-12 tuition each year, and unused balances can be rolled into the beneficiary’s Roth IRA up to a lifetime cap, subject to rules on account age and earned income. An overfunded 529 is no longer the trap it once was, which is a theme we have hit before in the work on sheltering more in a Roth.

Where childcare meets cash flow

The mistake I see most is treating childcare as a fixed cost to be endured rather than a variable to be planned around. It is the largest swing factor in a young tech family’s budget, and it deserves the same attention you give equity.

Map it against your income, including the lumpy parts. RSU vests and bonuses are exactly the cash that can fund a superfunded 529 or a year of tuition without wrecking your monthly budget, but only if you have decided that in advance rather than letting the shares land and dissolve into spending. The same withholding gap that makes two tech incomes so expensive at tax time is the gap that leaves families short exactly when the tuition deposit is due.

There is also a sequencing question unique to these years. Childcare is brutal and finite. It often ends right as private school begins, so the expense does not disappear, it changes shape. Model the whole arc, from infant care through the school years, as one long expense curve rather than a series of surprises. When you can see the curve, you can decide which years to lean on cash flow, which to lean on savings you set aside earlier, and how aggressively to fund the 529 before the tuition years arrive.

The bottom line

Raising kids in the Bay Area is one of the largest financial undertakings of your life, and it is hiding in plain sight inside a budget everyone treats as untouchable. Use the dependent care FSA for what it shelters, fund 529s for tax-free growth rather than a deduction you will not get, and plan the whole childcare-to-tuition arc against your real income instead of meeting it one surprise at a time. The cost is not going away. Whether it derails your savings is the part you actually control.