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How Much does a Nanny Cost to Hire?

You have figured out that hiring a nanny is the best child care option for your family. You may be wondering, “What’s the average cost of a nanny?” and “Can I afford a nanny?” It is essential to know how much money you’ll have to set aside for the nanny so that you can plan your budget accordingly.

There are various factors that impact the overall cost  For starters, how much to pay a nanny depends on where you live, how much experience she has, and what is she hired to do.  Here’s what you should be aware of:

Geographical Area

The place where you live is perhaps the most significant factor in this matter. Wages vary from one neighborhood to the next. Residents of high-income areas pay more for child care services than those living in lower-priced areas.

Let’s not forget about competition. Basic economics applies here as well – it’s all about the supply and demand. If there aren’t enough experienced nannies working in your area, you can expect to pay more.

East Coast states like Connecticut, New Jersey, and Maryland are the most affordable places when it comes to nanny cost, according to surveys. Southern states Arkansas and Mississippi are on the bottom of the list. But as mentioned, the wages can vary substantially even within zip codes.

Let’s take Houston for an example. The average downtown nanny caring for a single child makes approximately $5,000 more per year ($100 more per week) than a nanny which has the same responsibilities but works in the adjacent Museum district neighborhood.

Commuting also plays a significant role, in addition to the cost of living. Nannies take into account the cost of living when setting their wages. Mileage and time and transit make quite a difference, especially if it’s part-time work.

Tasks and Duties

Aside from your living area, the work you are asking your child care provider to perform will most likely affect how much you will pay them. When asking around in your area, “how much does a full time nanny cost?” don’t forget to mention how many kids you have that need to be taken care of.  More kids equals more work.

The specific duties of a child care provider vary from one family to another, according to LA parent coach Stella Reid. Their purpose is to make a family’s life easier. Organizing, planning schedules, grocery shopping, party organization –  it’s a lot to handle.

So, before asking, “how much do nannies cost?” consider the following tasks and duties that might affect her rates:

  • Ages of children
  • Number of children
  • Event planning
  • Managing other household employees
  • Errands like going to the pharmacy or grocery shopping
  • Household tasks, such as dog-walking, cleaning, cooking, doing the laundry
  • Driving to and from activities – you will have to pay mileage reimbursement unless you provide your household vehicle

How much each task will cost depends on the agreement between the child care provider and your family. If you’d like her to carry out any of those tasks, make sure to discuss it during routine pay assessment. All of the duties and tasks should be written down in the worker’s agreement or contract.

The founder of the Motherhood Center in Houston, Gabriela Gerhard, has a rule of thumb for those who are not sure what would be the appropriate compensation for such tasks. For each common household task, such as doing the laundry for the whole family or cooking meals, add a dollar to the hourly rate.

Experience and Background

You ought to be prepared to pay more if you are looking for someone with a background in a specific area or a lot of experience and training. Nannies with a bachelor’s or master’s degree usually have a higher earning potential, especially if they majored in early childhood education. Child care providers with experience and specialized training in specific niches, such as caring for children with special needs or multiples, make considerably more.

Extra Costs Not Included in Standard Pay Rates

The spending doesn’t stop at wages. The rate is just one part of the equation. When you are determining your budget for child care provider services, there are other factors you need to consider.

Background checks, nanny taxes, and a substitute for when your nanny is on vacation or sick leave also have to be paid for.  So, let’s get to it:

Taxes

The IRS mandates that nannies are employees and not independent contractors, whether they are working full-time or not. This means the family has to cover the costs of taxes that are typically paid by all other kinds of employers, in addition to withholding federal and state taxes for their employee.

You will have to start paying taxes when your nanny starts earning more than $2,000 in a year. The amounts vary by state.  Even if you hire your child care provider through an intermediary, such as a website or service, you’ll still have to pay those taxes.

Payroll Services

It’s not uncommon for a family to hire an accountant or use a payroll service to manage all of these expenses.  If that’s the way you want to go, it will cost you extra.

Intermediaries

If you use a specialized service or referral agency to find a nanny for your family, they will charge you for vetting the candidate. They might even charge you for recommending the most suitable nannies for your family.

Periodic background checks: Vetting shouldn’t be a one-time thing, at least until you get to the point of absolute trust, which could take plenty of years if it ever happens. You may consider your nanny to be a part of your family, but it doesn’t mean you should be lax.

Performing annual or routine background checks is a common practice. It’s is also an added cost. The fees get higher for more in-depth background checks.

Additional Certifications

Ideally, you’d want your child care provider to be up-to-date on first aid techniques and CPR. Such certifications are renewed each year and the employer is expected to pay for them.

Raises, Bonuses, and Overtime

Being a nanny is an honest job, and your employee might expect to receive overtime pay (time and a half), bonuses, and routine raises. According to the U.S Department of Labor, nannies are entitled to overtime pay if they work more than forty hours a week.

How big a raise you should give is between your family and your nanny. However, the standard is 5% to 7% merit increase, along with a 2% to 3% cost of living raise.

Supplemental Care

Some nannies expect to get vacation days and paid sick leave. While your nanny is away, you’ll have to find a replacement if you can’t step in yourself. If that’s the case, you’ll need to pay for short-term child care, such as drop-in child care or an emergency babysitter. If you can rely on a family member in such circumstances, it might alleviate your costs.

Conclusion

The question: “how much does a nanny cost?” cannot be answered without many “depends.” It all differs from one family to the next. Before looking for a nanny, you should take your time to figure out what your family needs.

After that, look into the taxes for your state and the cost of nannies in your area. Once you are done with that, you can start budgeting from there, having in mind all the information you have learned about today.

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