Is Daycare Cheaper than a Nanny?

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I wanted to hire a nanny. I wanted my baby to be the focus of an individual who would love him just as I would.

What parent wouldn’t want the same thing? The issue with hiring a nanny is the cost. Most of us simply can’t afford a full-time nanny.

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Nanny vs. Daycare: Which is Cheaper?

Childcare in the United States is a growing financial concern. The cost can be overwhelming for families with multiple children and an income that doesn’t place them in the top one percent.

Luckily, there are many different options that can help to lower this high price.

The Cost of Daycare

Daycare costs are not set in stone throughout the United States. Private daycares, church-based daycares, and corporate daycares all have different rates that they set themselves. In most instances, these rates are based on the cost-of-living in the area.

We can look at the average cost of daycare from state-to-state, but even that doesn’t provide an exact breakdown of what a family can expect to pay.

For instance, where I live in Missouri, the cost of living is among the lowest in the country. However, I live in a county with a much higher median income than most of the state, which means our average cost for daycare is roughly double that of a county only a few miles away.

The best way to get a precise figure of daycare costs in your region is to call several daycare providers and ask. Compare those numbers to a tool that shows you the average daycare cost in your state, and you will have a solid basis for how much you are expected to spend.

Were you hoping for a more exact dollar amount? The average cost for daycare in the country is $1,230 per month.

Keep in mind that daycare cost is much higher in higher-income/higher-cost of living states like California ($1,412) and much lower in low-income/lower-cost of living states like Alabama ($500).

Related: This is How I Found My Daycare

Hiring a Nanny

The cost of a nanny is almost always going to be more than daycare. The reason for this is that you’re hiring one person to care for your child or children. They don’t have multiple families paying smaller costs. They depend on you and solely on you.

The upside to hiring a nanny is that your kids will always have the individualized care they need. They don’t have to wait their turn for the caregiver’s attention. They don’t have to share space with anyone other than siblings.

Nannies provide direct care in the same way a parent would. They develop strong bonds and become a part of the family. That type of care is worth a higher price for those who can afford it.

The average cost of a nanny varies per state. In some areas, nannies earn minimum wage. In others, they ask for as much as $25 per hour.

As of 2021, the average cost in the country is $15 per hour. The cost of hiring a nanny will go up if you have multiple children or if your child has special needs.

Hourly wages are not the only expense that families need to consider. You will have to pay a nanny tax. The rate changes from year to year, but it could be as much as 15.3% of the nanny’s salary. In addition, you might need to pay for additional insurance.

Other than the cost, is there a downside to hiring a nanny?

Some would say yes. Children who don’t have to share space with others may have difficulty building relationships outside of their own families. They might not be familiar with being patient or having to make room in their lives for others.

They may also suffer from a lack of diversity. Being exposed to children from different backgrounds is a positive thing that having a nanny might not provide in those early developmental years.

A Nanny or a Babysitter — What’s the Difference?

The next question you might have is how to know the difference between a nanny and a babysitter. This is a matter of semantics, but there are some general agreements about the differences between these two types of caregivers.

A nanny is a caregiver who only cares for your children. They are a regular employee with a set schedule and pay rate. Nannies can be full- or part-time. In most cases, they provide the care in your home.

A babysitter is a caregiver who provides care on an irregular or short-term basis. They often come to your home to watch children, but they may ask that you drop-off and pick-up your children from their home.

They may have multiple children in their care at one time, especially if they only provide services for a couple of hours per day. A babysitter is not thought of as an employee.

The cost of a babysitter is roughly the same as the cost of a nanny. The difference is that a babysitter offers occasional care while a nanny is on a regular schedule.

Families who hire babysitters may still need to pay a nanny tax if they spend more than $1,000 per year on childcare. This is not the case if your babysitter is under the age of 18.

Child Care Alternatives

Childcare isn’t as simple as daycare, nanny, or babysitter. Many families find alternatives that work well for their lives and their budgets. Here are some other childcare options.

1. Grandparents and Other Relatives

In the United States, 38% of grandparents function as babysitters for their grandchildren. This is a cost-effective and healthy alternative. If your kid has grandparents who are no longer working and are in relatively good health, this is a great option.

2. Childcare Cooperative

Another option is to use a childcare co-op. These facilities don’t charge for their services in a traditional manner. Instead, they expect parents to give their time as caregivers on a rotating schedule. In other words, each family takes turns watching the kids.

3. Community and Church Sponsored Childcare Centers

There are also community-sponsored daycares and church-run childcare centers that provide lower-cost alternatives. If you’re religious (or don’t mind your kids being taught religion), a church-run daycare can be a great child care option.

It might be cheaper than regular daycare, and even if it’s not, there’s a chance you might be able to receive some assistance on paying the bill.

4. Au Pair

Hiring an au pair is a unique one that I throw out there, even though I know it’s not going to be right for many families. An au pair is a person (most likely a young adult between 18-30 years of age) who moves abroad to live with a host family in a country in the form of cultural exchange.

The family hosting the au pair gives them a stipend and an opportunity to learn a new culture and language, and in return, they watch your kids for you. Costs are more comparable to hiring a nanny than to daycare.

5. Stay-at-Home Parent

My family found yet another option. Our original plan was to hire a nanny while I continued to work full-time, but what we found was that we would actually save money by me staying home with our infant.

I continued to work part-time from home while being a full-time mom. After three years, we started using a nursery school two days per week while I increased my hours.

Now, my children are older, and I still work from home. Our solution may not work for every family, but it has been an excellent one for us.

Pro-Tip
It’s not uncommon for some families to decide that one of them should stay home just because childcare costs are so expensive. This conversation usually comes up after having more than one kid.

Related: How Do Single Moms Afford Day Care?

The Choice Depends on Your Budget and Needs

A nanny is an excellent choice for childcare if your family can afford it. However, there are many positive reasons to choose a daycare facility or another alternative.

What has your family chosen for childcare? Do you have tips for budgeting? Tell us about it in the comments!

Have You Read Any of These Articles?

• Should I Tip My Nanny or Daycare?
• Is Picking a Daycare with Cameras a Good Idea?
• Can a Daycare Pick-up Your Child From School?
• Are Daycares Open on the Weekends?

Frequently Asked Questions