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How Much Does it Cost to Employ a Nanny?

May 14, 2014

costnannyIf you have found yourself struggling to balance work, household responsibilities and social obligations while caring for your children, you are not alone. Many families need extra help – which is where a nanny can come in handy.

The cost of daycare centers combined with the risks of finding a good environmental fit for all of your children weighs heavily on the minds of many parents. If you’re considering hiring a nanny, it’s important to evaluate all of the cost factors involved to ensure you are prepared to provide your children with the best care a nanny can provide.

Evaluating the Costs

There are many variables to consider when determining if your family can afford a nanny. Do you want a part-time nanny, a full-time nanny or a live-in nanny to care for your children?

According to the 2013 Nanny Salary and Benefits Survey issued by the International Nanny Association, 70% of nannies work full-time with 90% living outside their employer’s home.

You will need to determine the demands of an overall compensation package. For example, do you plan to provide room and board for the nanny? Will you set up an hourly pay rate or a weekly, salaried rate?

According to the INS 2013 survey, the average hourly rate for a nanny is $17.44 with a median rate of $16 an hour. Overtime rates are typically run time and half on an hourly basis. Although rates vary based on location and the cost of living in your area, as an employer you should be prepared to cover any expenses related to your child’s care, such as transportation.

As your employee, the nanny’s contract should also stipulate costs associated with additional benefits, such as holiday pay, paid vacation, paid sick days and health insurance, if agreed upon.

The INS survey found that 66% of nannies get paid holidays, 64% receive two or more weeks of paid vacation, 47% receive paid sick days and 13% of nannies receive full health insurance premium contributions.

It may be cost effective to consult with a nanny agency or an accountant to also determine if you should withhold federal and state taxes, pay employment tax and use a payroll service to issue payments to the nanny.

Factors Affecting Nanny Pay

There are many other factors that may influence how much a nanny should be paid. When considering the costs, keep in mind that nannies with credentials, degrees in child-related fields and experience often earn more per hour.

The International Nanny Association suggests families consider the following when evaluating a nanny’s compensation package:

  • Nanny Role
  • Nanny Experience
  • Live-in or Live-out
  • Education, Degree in child-related field
  • Schools and Certifications
  • Professional activities
  • Pay structure
  • Family type, number of children and age of the children
  • Tenure with current employer

If a nanny has a specialization, such as newborn care, the salary or hourly rate is often higher. Experience also plays a vital role in determining a nanny’s pay. According to the INS 2013 survey, nannies with less than one year of experience average $14.35 an hour versus nannies with 15 to 20 years of experience who average $19.03 an hour.

Education levels also influence the salary of a nanny. According to the International Nanny Association, nannies with a high school education averaged $16.94 in 2013 versus nannies with an advanced degree, who averaged $20.24 an hour. Nannies who have participated in credentialing workshops and educational programs earned an average of $19.05 per hour versus $16.66 for nannies without credentials.

In addition, when hiring a nanny, it’s important for parents to consider long-term benefits that are due to a nanny, such as yearly bonuses, salary increases and the use of a vehicle while caring for the children.

Although it is not possible to pinpoint every cost associated with childcare, it is important for parents to plan for the compensation package versus just the hourly rate. Working with a nanny agency, an attorney or an accountant to solidify a legally binding contract will help make the process much more clear and smooth for all parties involved.


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Au Pair says:

maybe an Au pair is good alternative :)