Quick Comparison
| Factor | Daycare | Nanny |
|---|---|---|
| Cost (1 child) | $1,000-$2,500/month | $2,500-$4,500/month |
| Cost (2+ children) | $1,800-$4,500/month | $2,800-$5,000/month |
| Schedule Flexibility | Fixed hours | Highly flexible |
| Socialization | Built-in with peers | Requires arranging |
| Sick Child Care | Child stays home | Usually available |
| Backup When Closed | You arrange | Nanny may be sick too |
Daycare: Pros and Cons
Advantages
- • Generally lower cost per child
- • Built-in socialization with peers
- • Structured learning curriculum
- • Licensed and regulated
- • Never calls in sick (facility stays open)
- • Prepares children for school settings
- • Multiple caregivers means varied perspectives
Disadvantages
- • Fixed hours (usually 7am-6pm)
- • Closed on holidays
- • Sick children must stay home
- • Less individual attention
- • More exposure to illnesses
- • No help with household tasks
- • Waitlists can be months long
Nanny: Pros and Cons
Advantages
- • 1-on-1 attention for your child
- • Flexible hours (including evenings)
- • Care continues when child is sick
- • Care in your own home
- • Can help with light household tasks
- • Personalized to your parenting style
- • More cost-effective with multiple children
Disadvantages
- • Higher cost for one child
- • You're an employer (taxes, benefits)
- • Need backup when nanny is sick/vacation
- • Less built-in socialization
- • Hiring and management responsibility
- • Quality varies widely
- • Less oversight/accountability
Cost Breakdown
Daycare Costs
You pay a flat monthly or weekly rate. Additional fees may apply for registration, late pickup, and activities. Costs increase per child, though sibling discounts (5-15%) are common.
Example: $1,500/month for one child, $2,700/month for two (with 10% sibling discount)
Nanny Costs
Nannies charge hourly ($18-$35/hour depending on location and experience). You also pay employer taxes (7.65% FICA), and should provide benefits like paid time off and health insurance.
Example: $25/hour × 45 hours/week × 4.33 weeks = $4,871/month + $373 taxes = $5,244 total
The Multiple Children Equation
With two or more children, nanny costs become more competitive. The nanny rate stays similar (maybe a $2-5/hour increase), while daycare doubles. At three children, a nanny is often significantly cheaper than daycare.
Questions to Ask Yourself
What's your schedule like?
Non-traditional hours, frequent travel, or unpredictable schedules favor a nanny. Standard 9-5 schedules work well with daycare.
How do you feel about sick care?
Will you or a partner be able to stay home when your child is sick? If not, a nanny provides continuity; daycare requires backup.
How important is socialization?
Daycare provides built-in peer interaction. With a nanny, you'll need to arrange playdates, classes, and park outings for social development.
What feels right for your child?
Some children thrive in group settings; others do better with one-on-one care. Consider your child's temperament and needs.
Alternative: Nanny Share
A nanny share splits a nanny between two families, offering a middle ground:
- Cost similar to daycare ($1,500-2,500/month per family)
- Built-in playmate for your child
- More individual attention than daycare
- Flexibility in hours and location
The challenge: finding a compatible family with similar schedules, parenting styles, and values.
Being a Nanny Employer: What's Involved
If you hire a nanny, you become an employer with legal responsibilities. Many families underestimate this aspect:
Legal Obligations as an Employer
- • Payroll Taxes: Withhold and pay Social Security/Medicare (7.65% each), federal/state unemployment taxes
- • Workers' Comp: Required in most states—protects you if nanny is injured on the job
- • Employment Agreement: Define hours, duties, pay, time off, termination terms in writing
- • Tax Forms: Provide W-2 annually, file Schedule H with your taxes
- • Labor Laws: Comply with minimum wage, overtime (if applicable), break requirements
Tip: Many families use nanny payroll services ($40-60/month) to handle these complexities.
Finding and Hiring a Quality Nanny
The hiring process for a nanny is more intensive than enrolling in daycare. Here's what it typically involves:
1. Define Your Needs
Hours, duties, required experience, must-haves vs nice-to-haves, salary range
2. Source Candidates
Care.com, UrbanSitter, local nanny agencies, word-of-mouth referrals, parent groups
3. Screen Applications
Review experience, check for gaps, look for longevity with previous families
4. Phone Interviews
15-30 minute calls to assess communication, availability, basic fit
5. In-Person Interviews
Meet candidates, watch them interact with your child, discuss scenarios
6. Reference Checks
Speak with 2-3 previous employers, ask specific questions about reliability, skills, concerns
7. Background Check
Criminal, driving record, sex offender registry—use a professional service
8. Trial Period
1-2 week paid trial before committing long-term
What to Include in a Nanny Contract
- • Start date and work schedule
- • Hourly rate or salary
- • Payment schedule and method
- • Overtime policy
- • Paid time off (vacation, sick, holidays)
- • Health insurance (if provided)
- • Job duties and responsibilities
- • Household rules (screen time, discipline, food)
- • Transportation and mileage
- • Confidentiality expectations
- • Termination terms and severance
- • Trial period details
- • Review and raise schedule
- • Emergency procedures
Hybrid Solutions
Many families combine approaches to get the benefits of each:
Part-Time Daycare + Part-Time Nanny
Daycare 3 days for socialization; nanny 2 days for flexibility. Gives you backup options and the best of both worlds.
Daycare + After-Hours Babysitter
Daycare during standard hours; regular babysitter for evenings or when daycare is closed. More affordable than a full-time nanny.
Nanny Now, Daycare Later
Many families hire a nanny for infancy (0-18 months) when individual attention matters most, then transition to daycare for toddlerhood when socialization becomes more important.
Au Pair
A cultural exchange caregiver who lives with you. Costs $18,000-25,000/year total but provides up to 45 hours/week of care. Best for families with extra space and interest in cultural exchange.
Age Considerations
The right choice often changes as your child grows:
| Age | Considerations | Often Works Best |
|---|---|---|
| 0-12 months | Individual attention critical, feeding/sleep on demand, immune system vulnerable | Nanny or small home daycare |
| 12-24 months | Beginning socialization interest, mobility, separation anxiety peak | Either works; consider child temperament |
| 2-3 years | Peer play becomes important, potty training, language explosion | Daycare benefits increase |
| 3-5 years | Kindergarten preparation, structured learning, friendship skills | Daycare or preschool often preferred |
Frequently Asked Questions
Is a nanny or daycare better for infant development?
Research shows both can support healthy development. Infants need consistent, responsive caregiving and secure attachment—this can happen with a nanny or in a high-quality infant room at a daycare with good ratios. What matters most is the quality of interactions, not the setting. A devoted nanny provides one-on-one attention; a quality daycare provides developmental programming and socialization. Neither is inherently "better" developmentally.
How do I handle backup care when my nanny is sick?
This is one of the biggest nanny challenges. Options include: asking another nanny in a share arrangement to help, having a backup babysitter relationship, using employer backup care programs (many large companies offer this), drop-in daycare centers, or family/friends. Budget for 5-10 missed nanny days per year. Some families include backup care responsibilities in the nanny contract (providing referrals to other families).
Can I pay a nanny "under the table" to save money?
Legally, no—if you pay a nanny more than $2,600/year (2024 threshold), you must pay payroll taxes and provide a W-2. Paying cash has consequences: you can't use a Dependent Care FSA (costing you $1,400+ in tax savings), your nanny doesn't get Social Security credits, and you're liable if the IRS audits. It also leaves you unprotected if the nanny files for unemployment or workers' comp. The risks outweigh the perceived savings.
How much should I pay a nanny?
Rates vary dramatically by location and experience. In major metros: $25-40/hour. In smaller cities: $18-28/hour. Factors that increase rate: infant care, multiple children, additional duties, special needs experience, live-out vs live-in, early/late hours. Research your local market through Care.com, local nanny agencies, or parent groups. Paying below market leads to high turnover; paying above attracts top candidates.
What if my nanny and I have different parenting philosophies?
Discuss expectations thoroughly before hiring. Cover discipline, screen time, food/nutrition, sleep, schedules, and educational activities. Put key expectations in your contract. Regular check-ins help address issues early. Some philosophical differences are manageable; core conflicts (e.g., spanking, unlimited screens) are deal-breakers. Your nanny should follow your approach during work hours, even if they'd do differently with their own children.
Is a nanny camera legal and appropriate?
Nanny cameras are legal in most states for video (not audio) in common areas without consent. However, best practice is to disclose cameras to your nanny—it builds trust and is ethically cleaner. Many nannies appreciate cameras as they provide protection against false accusations. Never place cameras in bathrooms or private areas. If you feel you need hidden cameras, that may signal a trust issue worth addressing directly.
How do I provide socialization with a nanny?
Make socialization part of the job description. Have your nanny join playgroups (many nanny networks exist), attend library story time, visit parks and children's museums, arrange regular playdates, or enroll in classes (music, swimming, gym). Some areas have organized nanny share groups where nannies bring their charges together for structured activities. A good nanny proactively creates social opportunities.
What benefits should I offer a nanny?
Standard benefits include: 5-10 paid vacation days, 3-5 paid sick days, federal holidays off with pay. Beyond that, consider: health insurance stipend ($200-500/month is common), annual raise (3-5%), yearly bonus (1-2 weeks pay), mileage reimbursement, and professional development. Better benefits attract better candidates and reduce turnover—which costs you more than the benefits do.
How do nanny shares work with taxes?
In a nanny share, both families are employers of the same nanny. Each family pays their share of wages and taxes separately. The nanny receives two W-2s. If one family pays more hours, they may have different tax obligations. Use a payroll service familiar with nanny shares to avoid errors. Clearly document the arrangement in writing, including how you'll handle schedule changes, sick days, and holidays.
When should I transition from nanny to daycare (or vice versa)?
Common transition points: at 18-24 months when socialization interest increases, at 3 when preschool curriculum matters, when you have another baby (a nanny with two is often cheaper than two in daycare), or when life circumstances change (job, budget, move). Give any transition 4-6 weeks of adjustment time. Some families do a gradual transition with part-time overlap. Watch your child for signs of thriving or struggling.
The Bottom Line
Choose daycare if: You have one child, work standard hours, want built-in structure and socialization, prefer lower costs with oversight, and can handle occasional sick-day scrambles.
Choose a nanny if: You have multiple children, need flexible hours, want care in your home, have a child who needs individual attention, can afford the higher cost, and are willing to be an employer.
Consider a nanny share if: You want middle-ground pricing, your schedule aligns with another family's, and you can find a compatible partner family.
Neither choice is universally better. The right answer depends on your child's temperament, your family's schedule, your budget, and what will make your life work. Many families use one approach for infancy and switch as needs change. Trust your instincts about what your child needs now.