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Can I Afford a Nanny?
Updated on
March 7, 2023

Can I Afford a Nanny?

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Considering a nanny for your family? Start here to find out what it really costs.Can I Afford a Nanny?

So you’re sifting through all the various options for childcare and one thought suddenly floats across your mind: Wait a minute, can I afford a nanny?

A nanny is certainly one of the more convenient childcare options, plus it’s the one that can be the most flexible and personalized for your family. But for some, it may seem totally inconceivable cost-wise, so we’re breaking it down for you.

In a survey of more than 2,000 Babylist families, about 17% had worked with a nanny, and 5% went with a nanny share. Deciding between a nanny or nanny share depends on the type of nanny you hire and your family’s realistic needs for caregiving.

According to information Care.com gathered from their large database of job postings, the average hourly rate for a nanny is $17.53 per hour. However, rates for a nanny vary greatly depending on the following factors:

  • Education level
  • Geographic location
  • Years of experience
  • Certifications, such as CPR and first aid training
  • Specialties (for example, a newborn specialist or lactation consultant)
  • How many children the nanny would be caring for at once, including multiples and/or children with special needs or disabilities
  • How many “extras” (like travel), will be included in the nanny’s responsibilities

If you live in areas with a higher cost of living, you may expect to pay a little more. For example, parents in New York City pay an average of $22.79, according to Park Slope Parents’ annual survey. Meanwhile, parents in San Diego pay $17.80 on average. It all depends, and there are some additional costs to consider as well, including:

  • Transportation
  • Health insurance and payroll taxes (if you are paying your nanny on the books)
  • Vacation and paid time off
  • Transportation
  • Holiday bonus and gifts
  • Potential overtime costs
  • An annual raise

Don’t be shy about asking friends or parents in local parenting groups on Facebook what they’re paying to get a better idea of a fair rate for your area. It can all add up quickly but don’t be intimidated. We’ll break down the different costs and cover everything included in payroll so you’ll have a better idea of what to expect.

How much does a nanny cost?

Nannies’ salaries are covered under the Fair Labor Standards Act, which means that they must be paid at least the federal minimum wage (which at $7.25 per hour is far below the typical hourly rate for caregivers) and may also be paid overtime for any hours worked over 40. It’s also important to note that each state has its own minimum wage requirement.

A full-time live-in nanny’s salary may be slightly lower than a full-time live-out nanny’s (with all else being equal in terms of job duties and schedule) since you, the employer, are also providing them room and board. This generally nets out to a lower hourly rate since most live-in nannies work more hours per day.

Most part-time nannies get paid the same hourly rates as full-time nannies depending on their years of experience, education and certifications. Part-time is considered 35 hours or less per week. If you’re paying them more than $1,900 in a year, you’ll have to deal with the nanny tax. More on that below. Some families pay their nanny in cash, in which case they don’t need to worry about taxes.

Thinking of doing a nanny share? Typically, the hourly rate for this type of nanny is higher than one for a full-time nanny for just one family, since they will be caring for more than one child. However, since both families split the cost of a nanny share, the individual cost per family is lower. Keep in mind: both families are responsible for the taxes associated with hiring the nanny.

What if you have more than one child? According to Park Slope Parents, families hiring a nanny to watch siblings typically pay $1-3 more per hour than what they’d pay for them to watch an only child. But as with many factors in a nanny’s pay and employment, this varies depending where you live.

What else is included in my nanny’s payroll?

The bottom line doesn’t just end with the nanny’s hourly rate or yearly salary. Here are the other costs associated with your nanny’s payroll:

Taxes. You may have heard of the “Nanny Tax.” Since your nanny is a household employee you’ll need to deduct taxes from their salary. Generally, you’ll have to withhold Medicare, Social Security and federal and state income taxes. You will also need to pay the employer’s matching portion of Social Security and Medicare, along with federal and state unemployment insurance taxes. Tax requirements vary depending on which state you live in, so check out Care.com’s handy state tax requirements page.

Full or partial health insurance. This varies depending on the type of insurance and how much, but the average cost can be anywhere from $200-300 per month, depending on where you live.

Paid holidays. Most nannies receive about six paid holidays—they’re usually New Year’s Day, Memorial Day, 4th of July, Labor Day, Thanksgiving, Christmas and some federal holidays.

Paid Vacation. Most families offer their nanny two weeks paid vacation, and will try to schedule this during a time that may coincide with other school vacations (like the weeks between Christmas and New Year’s or a week during summer).

Paid Sick Days. This is a less common benefit than paid vacation and holidays, but about 67% of employers offer this benefit according to the International Nanny Association.

Holiday Bonus or Tip. Approximately one week’s salary, plus a thoughtful gift from the kids.

Transportation reimbursement or supplement. This varies depending on where you live. If you live in New York City, it’s come to provide your nanny with an unlimited monthly metrocard to ease their commute to work. If your nanny drives (your car or their own personal car) to run errands or bring the kids to school, it’s typical to reimburse gas and tolls.

Annual Raise. Don’t forget about giving your nanny a yearly raise. According to Seattle Nanny Network, a typical raise can range anywhere from 3-10% and should factor in both cost-of-living increases and merit.

When you’ve finally found a nanny that clicks with your family, all of these details should be written up and included in a basic contract for future reference.


Briana Engelbrecht

Assistant Editor

Briana Engelbrecht is Babylist’s Assistant Editor, where she brings her passion for early childhood development and the perinatal period, plus experience as a mom of two to Babylist articles and guides. A former preschool teacher, she loves children’s picture books, cats, plants and making things.

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