The True Cost of Nanny Care: 2023 Update

Hi everyone! Laura from Nanny Parent Connection back with my next video.

The top two questions I am asked most frequently are:

How much does nanny care truly cost?

What hourly rate can I expect to pay my nanny?

The short answer to these two questions is that it depends on a number of factors.

In today’s video, let’s walk through how much a nanny truly costs from start to finish. I cover all of the costs that you will need to keep in mind from how much it costs to search for a nanny all the way through how much to spend on nanny appreciation.

The numbers I discuss in this video are current as of early summer 2023. If you’d like more information on nanny pay rates and other compensation, check out the most recent results of our Pay Rate Survey by clicking here.

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A transcript of the video can be found below: 

Hi everyone, Laura from Nanny Parent Connection here.

Two of the questions I get asked most frequently include: How much does nanny care truly cost? And, what hourly rate can I expect to pay my nanny?

The short answer to these questions is that the all-in cost of nanny care depends on a lot of things.

The hourly rate also is dependent on factors such as experience, exact job duties, and the number of children being cared for.

That being said, let me walk you through the process of figuring out budgeting for nanny care for a year, and I’ll also touch on what hourly rates you can expect to pay for nanny care.

For purposes of my calculations, I’m going to be paying my theoretical nanny $28.00 per hour, and my nanny is going to be working a 40 hour work week.

Finding Your Nanny

There are a lot of free resources out there for your nanny search.

You could turn to some free Facebook groups or Craigslist if looking for a nanny on your own.

Nanny Parent Connection also offers several tools that may be helpful, such as our managed Facebook community, our Member Search tool, and other resources such as our Last Minute Care Service and personal support from our expert Search Team.

There are other websites out there that tend to be larger, such as Care.com, UrbanSitter, and Sittercity, but it seems like these options can really be hit or miss.

I know they definitely don’t offer the level of personalized search help that Nanny Parent Connection does, but for some parents, they are a good option.

You will also want to be aware of how many providers are actively offering services on these websites.

It’s really hard to find the actual data on this, but from what we have been able to learn, they don’t have a lot of active nannies and sitters offering care on their sites.

Nanny Parent Connection also offers a Concierge Nanny Search Service, if you would like to hand off your nanny search to the professionals, where we handle all aspects of your nanny search for you.

To recap options for your nanny search, you can do a Facebook, Craigslist, or other social media search for free.

You can join Nanny Parent Connection for as low as $8.99 per month.

You can join sites such Sittercity, UrbanSitter, or Care for $10.00 or more per month, or you can consider Nanny Parent Connection’s Concierge Service, which is a flat fee of $2,999.

I should also mention there are many other nanny agencies out there.

You will likely pay anywhere from $4,000 to $10,000 or more for one of those agency nanny search services.

Oftentimes, they charge a percentage of the nanny’s annual salary on top of their search fee in order to find that great nanny you’re looking for.

Dpending on what service you go with, you should plan to budget anywhere from $0 up to $10,000 for finding your nanny.

The Background Check

I strongly urge parents not to skip this really important step in finding and properly vetting your nanny.

Background checks are an essential tool for ensuring that your child (and family) is in safe hands.

Most parents have never run a background check and they’re not sure how to do so.

But the most important thing I want you to remember is that you don’t need to pay $200.00 to $300.00 for a quality background check.

As a parent, I felt very strongly it was important to offer this service at a fair and reasonable cost to families.

So at Nanny Parent Connection, we designed our own background check service about five years ago which has grown to become one of the most popular childcare focused background check solutions in the United States.

Not only are our background checks affordable, but they are very extensive, and our customer service can’t be beat if you have any questions about the process or the background screening report.

Plan to budget $23.00 to $89.00 for your background check with Nanny Parent Connection, you can pay more if you want to, but I’m guessing you don’t.

Nanny’s Pay Rate

A few things that are important to understand include the fact that nannies must be hourly employees per the IRS definitions.

They are not and cannot be salaried employees. They also cannot be 1099 independent contractor-style employees.

All of the normal labor standard laws apply to nanny care.

That means if your nanny is working more than 40 hours per week, any hours over 40 in a week must be paid at one and a half times the nanny’s regular hourly rate.

And speaking of hourly rate, what’s a fair rate?

Well, this can vary widely depending on the number of children being cared for, the years of experience of the nanny, location and the specific job duties you’re asking your nanny to do.

Nanny Parent Connection regularly runs annual pay rate surveys, so that you can get some insight into the current going rates for the area.

Please make sure to check out our most recent pay rate survey result by clicking here.

For purposes of budgeting in this video, I will use the hourly rate of $28.00 per hour, and I will assume a 40-hour work week.

$28.00 per hour for 40 hours/week of nanny care is $1,120 per week, and when you multiply that by 50 work weeks per year, you get $56,000.

Now, you might have noticed I said only a 50-week per year pay rate is going to work out to be $56,000.

I’m actually going to address the two weeks of paid time off in our next section, which is compensation package.

Nanny’s Compensation Package

And yes, you heard that right, nannies expect a compensation package.

For the nanny industry, a standard compensation package includes; two weeks of paid time off, accrued paid sick time (and the standard in Washington is one hour per 40 hours worked), paid holidays, guaranteed hours, and mileage reimbursement.

Some nannies are even receiving a healthcare stipend in the amount of $200.00 to $350.00 per month.

However, it’s less common for that healthcare stipend to be included. So, for purposes of budgeting, I’m going to leave that line item out.

For the nanny compensation package, plan to budget $2,240.00 for your two weeks of paid time off and $1,400.00 to cover those six days of paid sick time.

And just to note, paid holidays are typically wrapped into the work week and fall under guaranteed hours.

However, if there is a holiday that is occurring on a weekend but is observed on a Monday, that might not fall under guaranteed hours depending on how you have your nanny contract set up.

Nanny Contract

The purpose of the nanny contract is to lay out all the agreements between all parties so that everybody has a clear understanding of the job duties, expectations, and when pay happens.

Nanny Parent Connection has a fully customizable nanny contract available for purchase on our website for $59.99. This contract was built by and is updated by our attorney on a regular basis. Click here to check that out.

Or, if you need a nanny share contract, that is available for $99.99 on our website.

It’s worth mentioning that you could also put together your own contract for zero cost but be careful. Nanny contracts are legal documents and you need to ensure that you include all applicable federal, state, and local laws.

And if you go with Nanny Parent Connection’s Concierge Service, the contract is provided for you.

Fr your nanny contract, plan to budget anywhere from $0.00 to $99.99.

Payroll Taxes

A good rule of thumb for employer payroll taxes when working with a nanny is that you can factor in 10 percent on top of the nanny’s gross pay for those payroll taxes.

This works out to be roughly, of course, about $100.00 for every $1,000.00 in the nanny’s gross wages.

For payroll taxes, plan to budget about $5,284.00 for those taxes in my theoretical example.

Payroll Service

If you have the time and the know-how, you certainly can run payroll for your nanny at no cost to you. It’s just going to take that investment of time.

If you’re interested in going this route, we do have a handy Payroll Calculator on our website.

Please go ahead and check that out if this is for you. If you’re too busy, don’t have the know-how, or you would just like to hand off to a payroll company, Nanny Parent Connection has a solution for that as well.

If you decide to use our Payroll Service, there is zero cost to join and get set up. You get your first month free, the monthly cost for the service is only $59.00, and there is a $100.00 flat fee for tax preparation for both you and your nanny to get those tax documents all squared away at the end of the year.

So, for payroll, plan to budget $0.00 on the low end to $749.00 per year on the high end.

Wow, that’s a lot of stuff. That must be it, right?

Well, if you’re really a budgeter, you may want to also factor in these additional line items.

Backup Child Care

What happens when your nanny is sick and you still need care? Or what happens when your nanny is taking advantage of their paid time off and you still need care?

Maybe you’re the kind of person who can take time off work easily and cover these times, otherwise, make sure you have a plan for backup care.

Nanny Parent Connection has some great backup care options with our Verified Provider Service and Last Minute Care Service.

Make sure to check those out if you need those resources.

It’s worth noting that many nannies who provide backup care might charge a higher rate than their normal rate for these truly last-minute scenarios.

But at a minimum, using our $28.00/hr rate we’ve set forth for purposes of this budgeting video, plan to budget $2,240.00 for backup nanny care wages, and plan an additional $1,400.00 for those six days of sick time should your nanny use all of those days.

Workers’ Compensation Insurance

Most families incorrectly assume that if their nanny gets an injury or is in an accident on the job, that their homeowners insurance, their umbrella policy, or their auto policy will cover them.

However, because this person is an employee in your home and not just a guest, there is a different set of rules that would apply.

Families working with a nanny should ideally have a workers’ compensation policy in place in the event of an accident.

Having a policy like this in place will help the nanny cover any medical expenses they may have and can help recover some of the lost wages if the nanny is unable to perform their nanny duties and work.

The cost of a workers’ compensation insurance policy is about $1.50 for every $100.00 of the nanny’s gross pay.

Using the $28.00/hour and 40 hours per week model, you should budget about $874.00 for workers’ compensation insurance for your nanny annually.

Nanny Appreciation

Of course, you appreciate your nanny daily, but did you know that there’s actually a whole week dedicated to nanny appreciation in September of each year?

Well, now you know, and you don’t want to be caught off guard. You want to be prepared so that you can appreciate your nanny properly.

In addition to appreciating your nanny during Nanny Appreciation Week, you should also consider showing a little extra love during the holidays or on your nanny’s birthday.

For that reason, I recommend planning anywhere from about $200.00 all the way up to one to two weeks’ worth of wages for your nanny, which some nannies say is a pretty standard holiday bonus that they receive.

Annual Raise

I won’t figure the annual raise into the actual line item budget, but I just want to make sure that this is on your radar.

If you plan to work with your nanny for more than a year, it’s very customary to do an annual review at the end of that period where you can discuss what’s working, what’s not working, plans for everybody for the upcoming year, including any schedule changes, job duty changes, or changes in the number of children being cared for in your home.

A typical pay raise for doing the same job might be $1.00 to $2.00/hour or more.

And, I recommend checking with the cost of living increases to make sure that your pay rate is staying up with inflation.

If you’ll be adding an additional child or additional job duties, consider at least a $2.00 to $4.00/hour pay rate bump, or potentially more depending on those exact job duties.

Alright, I’m guessing that there may have been a line item or two that weren’t initially on your radar when you were budgeting for nanny care.

Now let’s add everything together and see where the totals land.

For finding your nanny, on the low end will be $0.00, and on the high end, it will be $10,000 plus.

For the background check, the low will be $23.00, and on the high end, you’ll pay $89.00.

For the nanny’s gross pay, you’ll pay around $56,000.00 at $28 per hour, assuming a 40 hour work week.

And of course, if the pay rate is higher, you will be paying $56,000.00 plus for your nanny’s gross pay.

For the nanny’s compensation package, including two weeks paid time off, you would pay $2,240.00 on the low end, and $2,240.00 plus on the higher end, depending on the exact hourly rate.

And remember that sick days and paid holidays are usually covered under guaranteed hours in the regular work week.

For the nanny contract, you’ll be paying $0.00 if you create that on your own, and on the high end, you’ll be paying $60.00.

For nanny payroll, if you do things yourself, that will cost you $0.00, and on the high end, if you go through our payroll service provider we have partnered with, you will be paying $749.00.

For workers’ compensation insurance, you’ll be paying $874.00 and If your hourly rate is higher than $28.00/hour or your nanny is working more than 40 hours in a work week, you will be paying $874.00 plus.

For backup childcare, on the low end, you’ll be paying $0.00 if you get a family member or a friend to cover that for you, or on the high end, you’ll be paying $3,640.00.

And the breakdown on that is two weeks of paid time off at $2,240.00 and six paid sick days at $1,400.00.

And then our last line item for nanny appreciation.

On the low end, we have $200.00, and on the high end, we have $2,240.00 plus.

Childcare, especially nanny care, is expensive. My hope is that this video helps you figure out what exactly you should budget for when working with a nanny for a year.

Alright, everyone, that’s it for today.

I hope you found this video helpful. If you like this video, please click the like button, subscribe, or ring the bell icon so that you can be notified when more of these videos come out in the future.

Thank you everyone, bye!