The Pros and Cons of Hiring a Nannies vs. Daycare

Often the decision between hiring a nanny or sending your child to daycare is a financial one, and how much childcare costs largely depends on what part of the country you live in. Since Charlie has had both a full-time nanny and is now attending full-time daycare, I thought I'd share my experiences with childcare costs to give you a general sense.  Keep in mind that I live in New York where the cost of childcare is probably higher than many parts of the country.

The Cost of a Nanny

- Salary & Benefits: The average pay for a nanny is about $15/hour in our neighborhood.  They typically get paid 52 weeks a year, including holidays, vacation, sick/personal days, and any days you may travel.  Most nannies work between 40-50 hours/week, which comes out to $2400 - $3000/month at a $15/hour rate.  Please note that many nannies are paid off the books or do not have green cards in our neighborhood.  In interviewing such potential candidates, I've found that they sometimes make slightly less per hour.

- Raises & Bonuses: Raises are often given on the yearly anniversary of employment (typically an extra $1/hr), and when another baby joins the family. Christmas bonuses, Christmas gifts and birthday gifts are also often given.

- Overtime: Overtime is time and a half.  If your nanny stays after 9pm, employers usually send them home in a taxi since most people do not drive in New York.

- Vacation: The average vacation  duration seemed to be 2 weeks, which was often taken over the Christmas break.

- Taxes, Accounting Fees, Unemployment Insurance, Worker's Comp: Because we paid on the books, we paid for quarterly taxes, worker's comp/disability insurance ($400/year). Many people in our area also opt to use a local accountant, who charges $400/year to do nanny taxes.

- Classes/Activities: We enrolled Charlie in a number of music and gym classes starting from when he was 6 months old. Classes and memberships to indoor gyms can be pricey, but there isn't much to do when it snows 6 months out of the year.

- Extracurricular Activities: Once Charlie was walking, he started doing a lot of extra curricular activities instead of attending classes.  The children's museum, the zoo, the aquarium, sing-a-longs, the occasional taxi and pocket money for snacks and beverages also add up.

The Cost of Daycare

- Tuition: The full time daycares in our area (8:00am - 6:00pm) range from $1500 - $2200/month or $16,500 - $24,200/year.

- Summer vacation: Some daycares close for summer vacation. Ours closes for an entire month (during which you do not pay tuition) so you have to find backup childcare.

- Backup childcare: Daycares close for every holiday and children in daycare also get sick more often, so you may also have to pay for backup childcare.

With all the extra expenses like taxes, insurance, and extracurricular activities, a nanny can cost significantly more than daycare. Life was much easier with a nanny because we didn't have to do drop offs or pickups, and our nanny helped prepare Charlie's food, did his laundry, and the dishes. But the benefits of daycare at this age are also numerous including socialization with same-aged children and authority figures other than adults.

How much does childcare cost in your neck of the woods?