Nanny or daycare? How to decide what’s right for your family

Adorable babies playing side by side at daycare.

There are so many decisions to make and steps to take as new parents. After you decide on home birth versus hospital and breast versus bottle, you’ll be updating your insurance policies and setting up a new budget that accounts for college savings.

It’s a lot, and the common thread is that we all want to provide our children with the best that we can manage. That includes the very best care possible. Sometimes, jobs or other obligations keep us from being there to personally handle Mom and Dad duties. We might call on family members or friends to help out but they can’t always pitch in. So what do you do? You turn to the pros.

Hiring a nanny or au pair is one option; daycare is another. Childcare isn’t always an easy choice. The best option needs to fit your budget, obviously. Besides that, you want to feel good about who you’re trusting with your children’s mental, emotional and physical well-being.

Nannies, au pairs and daycares all have pros and cons. Here’s what to consider as you compare them.

1. Define your expectations for care

No one knows better than you what kind of care your child needs. Before you start shopping around for a nanny or daycare, get clear on what you expect them to deliver.

For instance, you might want your kiddo to have one-on-one attention or be in familiar surroundings. Those are things a nanny or live-in au pair could offer.

Megan Thornburgh, director of community outreach & communications for the Happy Bambino, a Madison, Wisconsin-based parenting resource center, says in-home care has other advantages as well.

“Children can sleep in instead of getting up early, they have all their own toys and the comforts of home,” she says, and “parents have more control over what’s fed to their children. Since there’s one individual taking care of children, there’s a smaller adult to child ratio.”

Having one dedicated caregiver could make it easier for your child to bond with that person. When your child has a close connection with his caregiver it can make the times when you’re apart less stressful for everyone.

Forming those bonds may not be as easy in a daycare where lots of other children need attention, too. The upside of daycare, however, is that your littles get to play with other kids regularly. And many daycares now offer classes, field trips, and other special activities to foster early learning.

Depending on who you hire, a nanny or au pair can also help educate. For example, photographer Kino Alyse did a stint as a live-in au pair for an Italian family. She looked after the children and the house but says her most important duties centered around teaching her young charges English.

2. Consider your comfort level for in-home care

Your child’s comfort comes first but as the parent, you also need to be mentally and emotionally okay with the care situation you choose. There’s a big difference between having a nanny or au pair in your home on a regular basis and taking your child somewhere else for care.

Alyse says there can be problems when you and your nanny or au pair don’t mesh, either on a professional or a personal level. Besides caring for your kids “they also live their own lives and have their own goals, which might interfere with your expectations,” she says.

Privacy is also an issue. You want to maintain your privacy in your home obviously, but your au pair or nanny needs her privacy as well. In Alyse’s case, there was a clear rule: if she was in her room with the door closed she wasn’t to be disturbed. The advantage of setting that boundary early on was that “it evolved into a more relaxed rule as we got closer.”

That doesn’t mean there weren’t clashes from time to time over a messy room or dirty dishes. Alyse said she learned just how important good communication was during her time as an au pair, and the need to be understanding and patient. As the parent (and your nanny or au pair’s employer) you should be able to exercise those same qualities yourself.

Here’s something else to think about. Au pairs are regulated by the U.S. State Department and have to meet minimum requirements to qualify. There are no legal requirements to be a nanny. It’s up to you to screen a prospective nanny’s background, education and credentials to make sure they’re credible.

Easy + Simple + Inexpensive

“The easiest, simplest process for receiving term life insurance. And the premiums were the lowest quote.” —Michael

Learn more
Average rating as of March 2018: 9.4/10
Read more at TrustPilot

3. Flexibility and scheduling matter

One of the biggest challenges with childcare is making sure it fits your schedule. A nanny can offer maximum flexibility, says Elizabeth Malson, president of Amslee Institute, a licensed online technical school for professional nannies.

“Nannies are often viewed as a luxury but there are several situations when hiring a nanny may be the only option,” Malson says. If you’re a single mother who travels two days a month for work, for instance, a live-in nanny could trump the other choices. “Daycare centers do not offer 24-hour care and an au pair is only able to work 45 hours, which is exceeded during a two-day trip when adding travel time,” Malson says.

You don’t have to be a single parent to benefit from a nanny either. Malson says families that work second or third shift may also have to rely on nannies as a workaround for the limited hours offered by daycares or an au pair.

But relying on a nanny can lead to scheduling conflicts if they get sick. Malson recommends having backup care on standby for those situations.

Thornburgh says an advantage of daycare centers is that there’s more than one person on staff, “so if one teacher is sick or gone, there are others to pick up the slack. You won’t have to worry about not having care on a day you’re paying for care.”

Life insurance that's actually simple.

Estimate your rate

4. Run the numbers on cost

According to Care.com, one in three families spends 20% or more of their income on childcare each year. Yikes. You don’t want to skimp on care but you don’t want to deliver a huge blow to your budget either. And there can be a big gap between what you pay a nanny or au pair versus a daycare.

With an au pair, you’re required to pay a minimum stipend of $195.75 per week. You also have to contribute up to $500 to help your au pair complete required training. But that’s not all you might pay.

If you’re going through an au pair program to find care, the program can charge a registration fee to get started. Then, you might pay another fee when you are matched with an au pair. Finally, you’ll pay a program fee, which covers things like your au pair’s travel expenses to your home and a background check. Malson says that you could easily pay $8,000 to $20,000 for the program fees alone.

Then you have to cover your au pair’s room and board during the time she (or he) stays with you. Same goes if you’re hiring a live-in nanny. But a nanny can add new financial wrinkles, as she (or he) might require pay that is much higher than the standard au pair stipend, depending on what the nanny does for you. The national average hourly rate for a nanny was $19.14 in 2017, according to the International Nanny Association. Assuming a 40-hour work week, that’s $765.60.

You’ll pay even more for a nanny if you’re offering health care benefits, paid vacation time, paid sick time or reimbursements for mileage. And you’ll have to pay taxes. Nannies are considered employees by the IRS — not independent contractors — which means you’re responsible for withholding Social Security and Medicare taxes from their pay. As the employer, you’re also on the hook for paying the other half of Social Security and Medicare taxes, along with unemployment insurance and worker’s compensation insurance. (If all of this sounds like a paperwork nightmare, for a modest fee, a payroll service can handle the withholdings and payments on your behalf.)

Those are things you might not want to deal with if you’ve already got a full plate. By comparison, it could be a lot simpler to just write a check to your daycare each week. And depending on where you live, it might be cheaper. The Economic Policy Institute pegs the average yearly cost of daycare at $4,000 at the low end and $22,600 at the high end.

It’s not just easier life insurance, it’s an easier life.

Learn about the perks that come with being a Haven Term policyholder.

Explore Haven Life Plus

Au pair vs nanny vs daycare

This is a great time to assess your budget and goals. If you haven’t done so yet, and especially if you’ve just become a parent for the first time, talk to a tax pro about how your tax liability might change now that you’ve got a little dependent. The child and dependent care tax credit was designed to relieve part of the financial burden from some parents who pay for care.

Ask friends and family what they’ve done in the past and how it worked out for them. Ask yourself what type of care you’re most comfortable with and whether it’s realistic for your budget.

At the end of the day, you want to feel good emotionally about the care you choose but also make sure it’s worth the financial investment. You don’t want to feel like you’re forking over all your income for a nanny or daycare without at least getting the value you want out of it. Look at all the angles. As with most things in life, a little bit of legwork upfront can help you make the best decision for your family.

Remember, too, that your childcare decision is not very likely to be set in stone. You can always change your mind.

Warning...

Peace of mind might be closer than you think.

Learn more

Rebecca Lake is a freelance writer specializing in personal finance and small business. She lives on the North Carolina coast with her two children.

Haven Term is a Term Life Insurance Policy (ICC15DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Not all riders are available in all states. Our Agency license number in California is 0K71922 and in Arkansas, 100139527.

Get the latest news

Apply now