Thrifty Thinking: What to Pay a Nanny - and How to Save Money along the Way

You've decided to go the nanny-route. While it's a huge relief to know that someone will come to your house, give one-on-one attention to your child, and allow you more flexibility, you now have to find someone fabulous for the money you can afford.
Sure, a nanny is more expensive than daycare for one child. But it's often less expensive than daycare if you have more than one child. And there are huge benefits to the less stringent hours.
Here are the cost factors to consider - and take advantage of.
1. Learn your going rate. First things first, what is the going rate for a nanny or sitter in your neighborhood? At Care.com we see the national average ranges from $8.26 to $15.19 an hour, with the average caregiver paid about $11.73 hourly. Prices go up or down depending on things like how many kids you have, the cost of living in your area and the nanny's experience. Look online for nanny pay calculators that can tell you what the going rate is in your zip code. Then use those figures to create an annual budget.
2. Consider a nanny share. To cut down on weekly expenses, sharing a nanny with another family is a great way to get nanny-type attention at half the cost. You will need to create a contract with the other couple to go over things like: Whose house? Sick kid policy? How will you determine vacations?) There are also things you'll have to buy duplicates of, such as a second highchair to keep at the host's house and a double stroller.
3. Make a post-tax offer. The best part of paying taxes is that you can get the child care tax credit, which means $6,000 back in your pocket. You're also being legal. But when you tell someone she'll make $12 an hour, you'll want to be clear this is post-tax. Work with your accountant to figure out the before tax pay and after tax pay, or search online for a nanny tax calculator. Explain one huge benefit of paying taxes means if you ever have a care-change, she could go on unemployment.
4. Set up a nanny contract. This might be the best thing to do to kick-off a good nanny-family relationship. It should spell out your nanny's duties, hours, social media acceptable activities, pay rate, etc. Go over how you'll handle overtime, vacation days, sick days and which holidays she has off. Also explain house rules. The more you can put in writing at the beginning of the relationship, the smoother your relationship will be. You can find sample nanny contracts online that will give you a good starting point.
5. Pay for holidays, sick time and vacation. The biggest pain point for nannies? They didn't know holidays were unpaid. Now, as a family, you aren't legally obligated to pay for time off. However, it does create a happy nanny. And I always say that a happy nanny is a happy family!
6. Create a good rapport. Keep in mind that when you're hiring a nanny, you're hiring someone who has been a mom-like figure for a lot longer than you have. You will have your rules and routines, but you can also learn great deal from her. Build a relationship in which she feels respected and cared for. Know her birthday. Learn about her interests. Yes, this is a business relationship. But it's also a new family member.
7. Reimburse gas mileage. If she's driving your kids around, reimburse the 2014 IRS-recommended 56 cents per mile.
8. Give a weekly stipend. Just like when you're home with the kids, your nanny is bound to want to get out of the house and do things. Get annual passes to museums and provide a weekly allowance for things like ice cream outings or indoor playground admission fees.
9. Enroll in classes. Of course your nanny will be charged with creating free fun. But enrolling your kids in a music class or craft activity gives her a break in the day and allows her to meet other nannies with kids in your child's age range. Play dates can follow. Look into local baby stores who host classes and community centers for schedules.
What other tips do you have for managing finances with a nanny in the family?


Katie Bugbee is the senior managing editor and resident parenting expert of Care.com. A busy working mother of two, she's an expert on many parenting dilemmas, from appeasing picky eaters to finding the perfect babysitter.