Is Daycare Cheaper than a Nanny?
Learn about the pros, cons, and costs of both daycare programs and hiring a nanny, plus we investigate some alternatives to consider.
Not sure whether your child needs a babysitter or a nanny? Or maybe you're not even sure what the difference is!
A babysitter or a nanny. Which is best for your kids? Both jobs involve caring for children and supervising them while parents are away, but one is more involved than the other. Nannies care for your kids daily, as well as doing housework and other more involved tasks. A babysitter is more often a short-term caretaker. Sitters are generally better for covering short periods, while nannies provide a more constant and ongoing form of childcare.
Often the line between a babysitter and a nanny is blured, below are some generalizations that help illustrate typical differences:
|Casual contractor||Full-time employee|
|Often a temporary position||Permanent position|
|Works on an ad-hoc basis when needed||Works longer hours on a consistent schedule|
|Performs basic child-minding and entertainment||Provides holistic childcare centred around your child's welbeing and development|
|Performs minimal household duties||Helps to run the house including cooking, cleaning, laundry, and more.|
|Often a family outsider||Becomes a deeply connected part of the family|
|Has basic training and sometimes minimal experience||Advanced training and education with years of experience|
|Less expensive||More expensive|
|Paid per hour||Often issued an official paycheck|
|Lives elsewhere||Sometimes lives in the family home|
|Babysitting is often just a job||Childcare is typically a long-term career goal|
There are many different names and types for childcare providers, but nannies and babysitters are two of the most common ones. Before you decide to hire one or the other, read this article to learn the finer details. Then you'll be ready to make an informed decision and pick the best childcare option to fit your family's needs.
A babysitter is usually someone who provides temporary care for your children while you're away. Sitters can watch kids of all ages. Their primary role is ensuring the well-being and safety of your kids while they're in charge.
Babysitters are part-time workers who get paid by the hour.
Most commonly parents use a babysitter on an "as needed" basis, when they have an appointment or a special occasion where they can't bring their child.
Some babysitters work on a regular schedule though. For example, you might get a babysitter to pick your kids up from school and watch them until you get home, from 3 to 6 pm every weekday. Or you might schedule them to babysit for you every Friday night.
Sitters are also usually responsible for planning and facilitating activities for your kids. That includes things like arts and crafts, games, or sports.
Some babysitters will do additional tasks like driving children around, helping with homework, cooking, or light housekeeping. But normally a higher wage is expected for these types of activities and they aren't considered to be baseline babysitter tasks.
Some babysitters will even work full-time. Essentially like having a one on one daycare in your own home during the week. In this case, the line really starts to blur between what's considered a babysitter, nanny, or daycare provider.
While a babysitter only cares for your child part of the time, a nanny is really involved with your child's wellbeing and general development in a much more holistic and complete way.
Nannies care for children fulltime when parents are at work. They have a lot more responsibility than a babysitter, including setting daily schedules and activities for the kids. They're intimately involved with your children's emotional, physical, and mental growth and wellbeing.
Nannies do a lot more around the house, including cooking meals, helping with homework, doing the dishes and laundry, and driving kids to activities like swimming lessons or gymnastics.
Where a babysitter is still somewhat of an outsider, a nanny is a really connected part of your family. They might even run errands for you, like going grocery shopping or getting your clothes dry cleaned.
Nannies usually have advanced childcare training, beyond the basic CPR or first aid certification that a babysitter probably has.
To compensate for all of their extra duties and responsibilities, a nanny typically gets paid more than a babysitter. They earn a weekly salary, as opposed to working for an hourly rate.
A nanny is essentially a full-time employee of yours, the same as other household staff like a gardener, janitor, or butler. Because of this, there's a lot more administrative work involved with paying your nanny.
A babysitter normally gets paid cash. As a parent, there aren't really any concerns about things like taxes. But if you have a nanny, you'll need to issue them an official paycheck. That means also deducting taxes from their pay and submitting it to the government, as well as unemployment benefits and potentially even providing healthcare benefits.
It's normally expected that nannies will receive at least two weeks of paid vacation per year as well. Most nannies would also expect holiday pay and a Christmas bonus.
You can also get a live-in nanny, who will have a bedroom in your house or perhaps an attached apartment. In this case, you'll be providing room and board to your nanny in addition to a salary.
Live-in nannies can travel far from home to stay with their employers, so it's a nice gesture to pay for a plane ticket so they can return to see their family once per year.
A live-in nanny also creates a complicated situation in case you ever need to fire your nanny. Since they're both an employee and also a tenant, you usually can't simply terminate them instantly. You'll need to give them notice and a reasonable time to move out, along with potentially paying for their relocation.
Hiring a nanny can sound like a really big commitment and responsibility, and it is. That's why it's important to have an in-depth nanny contract that lays out all of the terms and conditions of the job, including everything above, plus other items like sick days.
However, nannies also provide an unrivaled level of care that you can't get from a basic babysitter. Nannies become a part of your family, and bond with your children to form a relationship that is more akin to a role model or co-parent than just a caregiver. Your nanny will be more involved with parenting and discipline and generally raising your child.
Schedule. A nanny can work part-time or full-time, but they almost always work exclusively with one family. Babysitters, on the other hand, can often work for multiple families even within one week. Nannies normally have set hours that are set well in advance or don't change from week to week.
Experience. A nanny usually has at least 5 years of experience working with kids, at least 3 years of those being experience working as a nanny. Nannies may have started off as babysitters, or they may have previously been teachers or daycare workers who transitioned into the role.
Job duties. Nannies look after your kid's nutrition, transportation, schedule, hygiene, and lots more. Babysitters have a much more limited job scope. Usually just supervising the child is the majority of a babysitter's job.
Education. Nannies might have a degree in early childhood education, child development, or a similar related field like human psychology. Babysitters typically have less education or no specific related education at all.
Long term career goals. Babysitters are usually doing their job part-time as a way to earn extra money while they're still in school or working toward some other career goal. Nannies have picked their career and stick with the profession in the long-term. They're more invested in their work and aren't pursuing anything else. Nannies might belong to professional nanny associations or attend conferences and workshops.
As discussed above, a nanny's job description goes above and beyond what is expected of most babysitters. It's a lot different than just making a microwave dinner for kids and letting them watch a DVD while their parents are out.
A nanny is actively involved in the day to day care of your kids and their development.
Nannies are often more highly educated than you'd expect. In addition to certification in CPR and first aid, they might also have early childhood education or a similar teaching degree, knowledge of child nutrition, and specialized skills like sign language depending on the family they work for.
Some people might think being a nanny isn't a "real job." Try telling that to a full-time nanny with 15 years of job experience!
Being a nanny is hard work. While they deserve the occasional break, nannies are on their feet most of the day. When they aren't actively looking after or engaging with your kids, they're usually cleaning up after them.
Compare that to a part-time babysitter, who might just spread out on the couch with your kids for a movie marathon while you're done.
Nannies are hard workers, problem solvers, and critical thinkers.
Wondering whether a babysitter or nanny is better for your situation? Let's look at some of the pros and cons.
Cheap. If you just need someone to watch your kids for a couple hours after school, you can likely get your 13-year-old neighbor to do it for a fraction of what a babysitter would charge.
Flexible. You can choose the exact hours that you need your babysitter to work. You can book them for a 3 or 4-hour time slot instead of having to pay them for an entire day. Plus you can have multiple backup babysitters in case your main sitter isn't available.
More privacy. A babysitter is less connected to your family than a nanny would be. They might help themselves to food in your cupboard, but they won't be folding up your clothes and opening your underwear drawer as a nanny might. They have a more casual surface-level relationship with your kids, which might be good if you fear your kids will end up loving a nanny more than their own parents.
Less intensive. Babysitters might do arts and crafts with your kids, but most of them are pretty hands-off when it comes to discipline and actually raising your child.
More limited availability. It's hard to get a younger and more inexperienced (and therefore cheaper) babysitter during daytime hours because they're probably in school or have another part-time job. A daytime sitter will be a more experienced caregiver and have rates more comparable to a nanny.
More control. Having a nanny gives more consistency and control compared to a babysitter. You can tell your nanny exactly what your kid eats and what their schedule is like. They also give more consistency and stability Most nannies even give a detailed report at the end of the day to let you know how things went.
More attention. Nannies are more focused on your child than a babysitter might be. They create a one on one bond with your child. They are likely to get your child much more engaged than a babysitter will.
Better logistics. A nanny is around your house all the time during the day. That means you can use them to deal with deliveries or to have a contractor come to perform repairs on the house. If you forget to do something, you can call the nanny and ask them to do it for you. Plus nannies do housework and chores that a babysitter usually won't.
Potential discipline or parenting style conflicts. Your nanny is with your kids all day, every day. So if you disagree on things like discipline or when your kid should sleep, it might make things difficult. It's less serious to have a babysitter with different rules than mom and dad, compared to someone who's with the kids for 40 hours a week.
Cost. A nanny will usually cost you significantly more than a babysitter. In addition to working more hours and having more responsibility, they also tend to have more experience and qualifications that warrant higher pay.
No backup. If your nanny is sick or shows up late, you likely won't have a replacement and will need to stay home with your kid or scramble to find alternative arrangements. Plus your nanny likely gets paid sick pay even if they don't show up.
You're an employer. Having a nanny as a full-time employee means you're responsible for things like taxes and benefits. You'll need a much more in-depth contract, you'll have to pay them vacation time, and you generally have a lot more legal responsibility and liability. Overall it's more paperwork and hassle.
You can give your nanny the job title of a babysitter or vice versa, but in the eyes of the law, the details are much more important than a superficial label.
In some places, you're considered a childcare provider instead of a babysitter if you look after the same child for more than 15 hours per week. That comes with all kinds of legal ramifications attached to it. In the eyes of the law, that would be a daycare or nanny as opposed to a babysitter.
Being a full-time employee who is entitled to benefits is usually in your caregiver's best financial interest. So if they know how the law works, they are unlikely to work on a more casual basis. Although a full-time babysitter might also request to be paid under the table to avoid paying taxes on their wages, this has some risks associated with it.
In the United States, the IRS (Internal Revenue Service) states that for a household employee who makes more than $1,900 per year or $1,000 per quarter, you need to pay employment taxes. You also need to withhold additional funds for Medicare and Social Security and pay your own matching portion as an employer. There might also be additional federal or state taxes that you owe as well.
An occasional babysitter is unlikely to hit this mark. But any babysitter that you employ on any regular basis could be earning this kind of money. For example, even if you only pay a teenage sitter $10 per weekday to watch your kids after school, they'll still hit that $1,900 threshold over the course of a school year. ($10 per day x 5 days per week x 40 weeks = $2,000 per year.)
If you use a part-time sitter for 4 hours every Saturday night, you'll similarly exceed this limit. (4 hours per week x $12 per hour x 52 weeks = $2,496.)
In reality, the tax authorities probably aren't going to come after you for the $50 per week in cash that you pay your babysitter. But it's important to bear in mind that if your payments to your sitter exceed the annual threshold, you're technically breaking the law and could face fines or even jail time.
One downside to not handling your babysitter tax situation correctly is that you also won't be able to claim any associated childcare deductions on your own tax return.
One way to get around the tax laws regarding employees would be to make your babysitter an independent contractor. But is this possible?
Technically if you control what work is done and how it's completed, then you've got an employee. It doesn't matter if they're paid an annual salary, per hour, or per job.
In contrast, a contractor is someone who runs their own business and contracts with you for individual jobs. For example, a window cleaner or a lawn care company.
You might be able to argue that a babysitter or even a full-time nanny is an independent contractor if you can get them to agree to it. Your argument is stronger if you got a babysitter to watch your kids at their own house, as opposed to coming into your home to look after your kids.
The laws concerning independent contractors vary depending on where you live, and the law is always changing. So it's crucial that you get advice from a certified accountant before making any big decisions regarding your babysitter's pay.
But if you're able to hire your babysitter as a contractor, you'll save yourself paying for vacation time, social security, taxes, and other benefits.
If your babysitter is a contractor and you're going to be claiming childcare costs as a deduction on your own tax return, make sure that you inform your babysitter or nanny. They'll need to pay taxes on their own income, or the tax authorities may flag them for an audit when they see your deductions.
If you want the benefits of a full-time babysitter or nanny without any of the negative tax consequences, you might consider spreading the childcare load between multiple part-time sitters.
If you can have 3 part-time babysitters that each work a little bit per week, you can spend $5,700 on babysitters per year without being on the hook for paying employment taxes or benefits.
For example, you might have one after-school babysitter and a different sitter that watches your kids in the evenings when you need to go out.
The obvious downside is that this requires a lot more coordination and planning.
Say you have a babysitter that you've hired and you're paying them an amount of cash that exceeds the annual $1,900 limit.
If your babysitter tries to file for unemployment benefits and lists you as a past employer, the government will likely look int your family's tax returns and see that you didn't pay any tax or unemployment insurance on the sitter's behalf.
Your babysitter will get denied their benefits, and you'll likely get a call or visit from the tax man.
If you pay your babysitter or nanny enough that you need to issue a paycheck and collect taxes on their behalf, there are a few things you'll need. This will vary from country to country, so for the sake of an example, I'll be referring to the American requirements.
The first thing you'll need is your caregiver's Social Security number or their Individual Taxpayer Identification Number (ITIN.) In Canada/UK this would be their Social Insurance Number (SIN), or in Australia, it would be their tax file number (TFN.)
In the US your caregiver will also need to fill out an I-9 form, which verifies their identity and employment authorization. As well as a completed W-4 form, which is a federal form allowing you as the employer to withhold income taxes from their paycheck. It's also a really good idea to have an employment contract with your employee that lays out things like vacation time, sick days, and other details.
To deduct childcare expenses on your own tax return, you'll need to fill in Schedule H which shows how much you paid your employee, including their salary and any taxes or benefits paid.
Of course, you don't have to do it alone. There is a whole industry of accountants and companies that specialize in tax services for employing caregivers. They can even do your payroll and issue your caregiver's paychecks or direct deposits for you, for a fee.
While the idea of having a nanny look after your child full-time is appealing, I don't think it's a reasonable solution for most parents.
The extra cost and tax requirements aren't feasible for many families.
A nanny might be a great option for a family with two professional parents who both work full-time. In that case, you might be able to justify paying a nanny to work for you 40 hours per week.
Especially considering that they can take care of cleaning and other household tasks that you may not have time to stay on top of. They can even deal with teaching your child life skills like potty training.
If you only need childcare to fill in gaps during a few hours per week, then a babysitter is a much better option. They're more affordable, there's less (or no) complicated paperwork to fill out, and they generally offer a lot more flexibility.
An au pair is a person from a foreign country who receives room and board from a family in exchange for helping with childcare and housework. An au pair may receive a monetary allowance but doesn't usually receive a full salary like a nanny.
An au pair might have other obligations besides their host family, and may only do part-time childcare and housework. For example, they might be attending college or university full-time and help with their family responsibilities between classes or in the evening.
An au pair can be a good compromise between a babysitter and nanny, depending on your situation and needs.
A nanny usually earns an hourly rate of anywhere from $14.50 to $17 or more, depending on their experience and other factors. As an annual salary, that is about $29,000 to $34,000 per year for a full-time nanny.
That's not including taxes or other benefits that you'll need to pay as an employer, as well as accommodation if you've got a live-in nanny. Some families will even provide meals for their full-time nannies, while others see a nanny as a regular employee and expect them to pack their own lunch. There may be other factors such as overtime pay or bonuses as well.
Learn about the pros, cons, and costs of both daycare programs and hiring a nanny, plus we investigate some alternatives to consider.
Follow our step by step guide to hiring a babysitter from start to finish including screening, interviewing, performing background checks, and making an offer.
Learn exactly what a babysitter is, what job duties they do, the hours they work, how much they charge, and how they can help your family.
Learn the types of babysitter background checks that are available for safety and peace of mind and which ones are right for you.
Learn what babysitting expenses parents are eligible for, and receive a tax credit or deduction. It can save you thousands of dollars!
Learn which qualities and characteristics a babysitter should have that make them a great caregiver your whole family will love.
Learn the warning signs of a bad babysitter so you can take action as soon as possible and keep your family safe.
Learn how much babysitters get paid in various countries and cities, and how to price a babysitter for your specific situation.
Learn some non-obvious benefits when it comes to hiring a babysitter for your child or children. We'll also touch on a few of the disadvantages to consider.
Learn whether a babysitter should do any cleaning as well as what types of cleaning you should and shouldn't expect them to do.
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Babysitters can take care of more than one child at once. But there is a limit on how many kids a babysitter can watch effectively.
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