It’s Laura back with my next video…which should be SUPER helpful for families starting to think about nanny care or for those considering switching from a temporary/short term nanny to a full time nanny.
Too often, families only focus on the hourly wage when thinking about a budget for a nanny. In this video, I breakdown every expense that is associated with hiring and employing a nanny in an easy to read spreadsheet.
Click on the video below where I will walk you through:
- The costs to search for a nanny
- All details of what nannies expect in a “compensation package”
- What to consider for a nanny appreciation budget
Scroll down and click on the video to check it out!
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A transcript of the video is below:
Hey everyone, it’s Laura from Nanny Parent Connection here.
Today I’m going to talk to you about how much nanny childcare truly costs.This is probably one of the top questions I get from parents. Whether it is a new parent, whether it’s a parent who worked with a nanny before, and maybe they just haven’t been aware of all the ins and outs. Today I’m going to cover all of the things that you should be aware of that will help with budgeting, to get a better sense of the all-inclusive and total cost of nanny care.
The short answer is, it’s way more than just the hourly rate. That’s only the beginning, I’m going to walk you through each step and talk to you a little bit about some numbers. I’ll give you some ideas of some industry standards for these things, and you can use this to help your family budget for your nanny costs. I’ll walk you through, there are about 10 things I’m going to cover.
#1: The first thing that you’re going to need to do is to find your nanny
Now there are a lot of free options when it comes to finding your nanny. You can use some of the free Facebook community groups, you can use Craigslist, you might even be able to use Next Door, you might just be able to do some networking with friends, family, or neighbors. Those are some good free options. If you decide to go the route of working with a nanny agency, you’re going to spend between $4,000 anywhere up to $10,000 to find a nanny. For purposes of budgeting to find your nanny, you can go anywhere from the low end of free to the high end, which is going to be $10,000 for your high-end nanny agency search.
There are some good middle ground resources. Nanny Parent Connection offers some great options if you’re located here in the Seattle area. Definitely check out the Concierge Service that we offer. We have a fantastic search that we offer nationwide, and it’s competitive out there as far as our pricing versus some of the traditional nanny agencies. Check out that link if you’d like more information, I’d be happy to connect with you.
#2: The second thing that you’re going to need to consider is a background check
Once you’ve found your nanny, you’re going to begin the vetting process. You’re going to want to run a background check. One thing that I felt strongly about as a parent was how does that actually all go down? Is it fairly straightforward? I just had a lot of questions and it felt kind of scary to run a background check, I just wasn’t sure about how that all works.
When I started the Nanny Parent Connection, I decided, let’s bring a simple, straightforward, and affordable background check to everybody. Let’s make it an easy process to understand and not charge hundreds of dollars for it! For the background check, we offer a great option starting at $49.99 and people can pay up to $300.00 plus for a care.com Background Check and it’s worth noting that they’re pretty comparable. Do your research, see what exactly everybody is offering. Don’t skip the background check. It’s a really important step to make sure that your kids are in good hands while they’re being cared for. But, do your homework because you want to make sure you get the best and maybe you’re willing to pay for it. It’s our kid’s safety, right!
But, you don’t need to pay top dollar to get a really complete and comprehensive background check. So, do your research, check out the options. We’re going to enter that into our spreadsheet over here $49.99 on the low end and let’s say $300.00 on the high end.
As I mentioned earlier, working with a nanny is so much more than just the hourly rate, but we need to take a moment to discuss the hourly rate because it is going to be a big factor in how much a nanny is going to cost your family for the year. You might be wondering, what’s a fair hourly rate?
Well, that again can vary depending on where you’re located in the country. Hourly rates are higher in urban areas and lower in more rural areas. Also, supply and demand and standard economics are in play a little bit there. It’s also going to depend on how many children are being cared for, is the job part-time or is it full-time, etc. Sometimes part-time positions command higher wages because they’re a little bit harder to fill now, what are the exact job duties? If you’re adding in any household duties (meal prep for the parents, general housekeeping, etc), that might cost several dollars an hour more. Also, you want to take into account your nanny’s experience. If you have somebody with several years of experience, they may be on the lower end of the wage range versus a nanny with ten or more years of experience, she’s probably going to be on your high end of the wage range. For purposes of this calculation in my budget, I’ve decided I’m going to be paying my nanny $25 per hour and she’s going to be working a 40 hour workweek. I’m gonna plan on her taking two weeks of vacation, so that means I’m paying her that for 50 weeks out of the year. This works out to be $1,000 per week. Multiple that by 50, that’s going to be $50,000 per year. We’ll just say that’s on our low end, that can change depending on your specific rate and budget, will just say $50,000 plus on the high end.
#3: Next I’m going to talk about the nanny’s compensation package
The compensation package, It’s not just the hourly rate, the industry standards for nannies are two weeks of paid time off, mileage reimbursement for any miles driven in their car, guaranteed hours, paid holidays, and it can include things like a professional development stipend for your more experienced nannies, it can also include maybe a health care stipend for more experienced nannies. Adding in some of these benefits is a great way to attract more nannies to the job.
I often get asked what is the norm for a health care stipend. I’ve seen this range anywhere from $150.00 up to $350.00 and I would say probably a range of $200 to $250 is what I see as being offered as the most standard. Not every nanny is your career nanny, you have nannies who are summertime nannies, nannies who are maybe working as a nanny through school until they finish school and get into their career. Not every nanny is going to be looking for this full comprehensive compensation package. But, at the minimum, I always recommend offering guaranteed hours and some paid time off. All of these items need to be outlined in the contract. Make sure you have that contract so everybody has a clear understanding of exactly what the compensation package offers. Plan to budget at least $2,000 to cover that two weeks of paid vacation and that can go up from there. When we’re filling out our spreadsheet will go ahead and enter in $2,000.
#4: The next thing that you’re going to want to consider is the nanny contract
I alluded to that a little bit when I was speaking about the compensation package. I said you need to make sure to outline all of that information in your contract. Always have a contract, even if you think you don’t need it, even if it’s for a month, a temporary nanny needs to have a contract. The reason is, it just really helps to make sure everybody knows upfront what the expectations are. It lays out the expectations and responsibilities of all parties very clearly if there is some problem afterward, you can refer back to the contract and be like look, we all agreed to this “it’s with the job duties”, so always have a contract. Nanny Parent Connection offers a fantastic contract that can be used anywhere, we offer that for $59.99. I’m going to go ahead and add in $59.99 for the contract into our spreadsheet.
#5: The next item you’re going to want is to make sure you budget for is payroll taxes
You’re going to want to plan on 10% of whatever the nanny’s gross wages are. In our spreadsheet, we said $50,000 was the wage the nanny was going to be earning, and so we would budget out $5,000 for this (10%). Of course, if your nanny is making more money, the budget for that is going to go up. Just make sure it’s reflective of 10% of the nanny’s gross wage. Let’s go ahead and add that to our spreadsheet.
#6: Next, you’re going to want to figure out the cost of a payroll company
So unless you’re a whiz with math or numbers, or you just like crunching numbers, whatever the case, if you have the time to dedicate toward it, great, go for it, you’ll save some money. For the rest of us, myself included, check out a payroll company. They’re a great way to make sure that everything is done correctly, your nanny is getting paid on time, you don’t have extra hoops to jump through and extra numbers to crunch around tax time, you just get the forms delivered to you and everything just happens automatically, so you don’t need to worry about anything. With the payroll company that Nanny Parent Connection has partnered with, they have waived the setup fee. It’s $75.00 per month and there’s a $100.00 annual fee at the end of the year for the tax document preparation. $1,000.00 per year on the low end and probably can go up from there since not every company probably waves that initiation fee. If you’re interested in checking out the payroll company we have partnered with, click this link. Our payroll team works in all 50 states across the United States. They’re a fantastic resource and they can take all of the guesswork, all of the headaches out of figuring out nanny payrolls.
#7: Next, is backup childcare
If your nanny is taking two weeks of vacation, you may need another nanny for two weeks to fill in and provide some backup care. It’s great if you can kind of coordinate vacations and you end up not needing backup care, but you at least need 10 days of backup care if you do need some vacation coverage while your nanny is away, and then if there are any sick days where your nanny is out, you may need more coverage on top of just that vacation time that she’s away.
At least plan for those ten vacation days, that’s going to figure out to be about $2,000 if you’re staying within that $25 per hour rate, and then it can go up from there depending on if your nanny gets sick. Plan for that, make sure that that’s on your radar, make that a line item in your budget when you’re planning for your nanny costs. Make sure that you’re considering where you’re going to find that backup care too. Nanny Parent Connection has some options If you are located in the Seattle area for last-minute backup childcare.
Just have that on your radar and have a plan.
I’m going to go ahead and enter into our spreadsheet $2,000 for backup childcare, it can go up from there if you’re not just covering those two weeks your nanny has vacation time.
#8: The next thing that you’re going to want to have a line-item budget for is nanny appreciation
There’s a whole week dedicated to it. Usually, it’s the third week of September but for 2021, it’s September 19th through 25th, so have it on your radar, your nanny will be so impressed.
Parents ask me for typical gift ideas for Nanny Appreciation week. Some things that I’ve heard are: cash never go wrong with that, gift cards, lots of nannies look for different gift cards, if you know their favorite store or maybe a coffee gift card would be great, flowers, drawings, or artwork made by the kids, maybe a massage and other things that you might want to plan for If you’re a budgeter. You might want to plan for your nanny’s birthday, you might want to plan for a holiday bonus, any recognition is going to be appreciated. Make sure that you plan to appreciate your nanny. I would budget anywhere from $200.00 to probably $1,100.00, so we’ll go ahead and add that into our spreadsheet.
That’s it for the spreadsheet, there’s one additional item I’m not going to add to the spreadsheet, but I want to cover it just so that you’re aware you have this on your radar.
#9: The last thing you want to factor into how much nanny childcare truly costs is that annual raise
This one is something that not all parents think of and if you just have a year-long contract with your nanny, you probably don’t need to have this one on your radar. But if you want your nanny to hang around with your family for a while, definitely be thinking about this.
An annual review is a great time to sit down with your nanny in a casual sitting. It doesn’t have to be anything formal, but just to check in on how are things going, is there anything we can do to make things easier? More fluid at different transition times? What’s working well, what’s not? If there’s going to be a new baby arriving in the family that would be a good time to talk about it with the nanny would require for any wage increases, that can be anywhere from $2 to $4 per hour and up, depending on the nanny’s experience levels and skill-sets. If there’s going to be a new cat or dog in the house, If the nanny is going to be participating and it’s going to change the nanny’s job duties at all, that needs to be addressed, compensated for properly, and probably added into the contract. An annual review is a great time to address those things to think about anything that might change the job duties, bumping up pay appropriately, and also considering a cost of living raise. For 2021, I think that was right around 1.3% I about choked when I saw the 2022 estimation, It was over 5%! We all know everything is getting more expensive. So keep that in mind, It’s really expensive out there, and the cost of living wage increases is a great thing to consider for your nanny.
I’m guessing I talked about a few things that you haven’t considered in how much nanny childcare truly costs, so let’s review our spreadsheet.
Finding a nanny that ranges anywhere from $0.00 up to $10,000.00
The background check can be $49.99 up to $300.00 or more
The nanny’s gross pay can be around $50,000.00 or $50,000.00+ depending on the wage. We used the example of $25.00 per hour.
The compensation package may be around $2,000.00 on the low end $2,000.00+ on the high end.
The nanny contract we offer costs $59.99. I will enter $59.99+ on the high end.
For payroll taxes, plan to spend $5,000.00 on the low end to $5,000.00+ on the high end.
For nanny payroll, plan to spend around $1,000.00 on the low end, $1,000.00+ on the high end.
For backup childcare, you’re going to want to plan to budget $2,000.00 on the low end to $2,000.00+ on the high end.
For nanny appreciation, plan to budget $200.00 on the low end to $1,100.00 on the high end.
For the totals on the low end, for how much working with a nanny truly costs, we have about $60,000, the exact figure is $60,309.00.
On the high end, you have $71,459.00 or more.
As you can see, it can add up. Consider all of those things when you’re trying to figure out your budget for nanny care. Make sure that you are planning for all the appropriate things when you’re working out on how much nanny care for your family will cost.
As you can see, it’s a lot more than just the hourly rate. I hope this video was helpful for the families who are entering the nanny market so you can have kind of a clearer picture of everything that goes into the all-in cost to work with a nanny for a year.
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