Comprehensive Guide
Learn more in our Personal Finance Guide.
How it works
Comparing daycare versus nanny cost is an exercise in three different pricing models rather than three hourly rates: a childcare center charges flat weekly tuition regardless of hours used, a nanny bills every covered hour and legally belongs on payroll, and a relative typically accepts a modest stipend instead of a market wage. This calculator prices all three models over your real coverage year. Daycare multiplies the weekly tuition by the weeks you need care; centers charge whether you attend five days or two, which is why part-time families often overpay. The nanny line applies the hourly rate to each covered hour, then adds a payroll load of employer-side taxes and contributions that usually runs 10 to 15 percent on top of wages and is the most commonly forgotten line in family budgets. Relative care converts a monthly stipend into an annual figure. With defaults of a $350 weekly center rate, a $20-per-hour nanny for 40 hours and a $400 monthly grandparent stipend, center care lands near $18,200 a year, the nanny near $46,600, and relative care near $4,800 — a spread wide enough that the cheapest option changes what a second income is worth at all. Price the options honestly first, then weigh flexibility, sick-day policies and one-on-one attention against the dollars.Formula
Daycare = weekly rate × weeks | Nanny = hourly × hours × weeks × (1 + payroll load%) | Relative = monthly stipend × 12
Tips
- Include the payroll load on nanny wages — taxes and contributions add 10–15% and are legally owed.
- Centers charge by enrollment, not attendance, so a part-time schedule rarely saves half.
- Ask centers about sibling discounts and nannies about sharing with a second family.
- Relative care still deserves a written agreement: hours, backup plan and what happens if health fails.
- Re-run the numbers yearly — infant rates drop as kids age into preschool pricing tiers.
Frequently asked questions
How much does a nanny cost per year?
At $20 an hour for a 40-hour week, wages alone run about $41,600 a year; adding a typical 12% payroll load brings the true figure to roughly $46,600. Rates vary sharply by region — major metros commonly pay $25 to $35 an hour, pushing a full-time nanny well past $60,000 annually.
Is daycare cheaper than a nanny?
For one child, almost always yes — a full-time center place averages $200 to $400 a week versus $800 or more for equivalent nanny hours. The gap narrows sharply with two or three children, since one nanny covers all of them for little more than the single-child price while daycare charges per child.
What is a fair stipend for grandparents providing childcare?
Families who pay typically offer $100 to $500 a month depending on hours and local norms, plus covered costs such as transportation and meals. The amount matters less than the structure: agreed hours, planned breaks, and a named backup caregiver for days grandparents are unavailable or unwell.
Do I have to pay taxes when hiring a nanny?
In the US, paying a household employee $2,700 or more in a year triggers employer obligations: Social Security and Medicare contributions, federal and state unemployment insurance, and withholding where applicable. Budget roughly 10 to 15 percent above gross wages — the calculator's payroll-load field exists precisely for this.
How much does daycare cost per year on average?
US center-based infant care averages roughly $9,000 to $24,000 a year depending on state, with coastal metros exceeding $25,000. At these defaults — $350 a week for 52 weeks — the annual bill is $18,200, which is why childcare often equals or exceeds a mortgage payment for working parents.