Monday, May 9, 2016

Our Nanny Costs

We've had our nanny for almost three months now and she's wonderful. We found her through Care.com, a website for hiring caregivers of all sorts. We pay her well and provide a lot of standard benefits that more traditional jobs have. It's a huge expense, but childcare is definitely an area where I feel justified not cutting corners.

Care.com was very easy to use to find a nanny - first I poked around at the people who were advertising themselves as nannies to get a sense of what the expected pay rate was and what types of jobs people were looking for. Peanut and I both work full time, so we need more than full time coverage, and we quickly realized that that wasn't something most people wanted to do. We also discovered that a lot of potential nannies wanted to care for kids from their homes or bring their own kids along, which I just wasn't comfortable with. One of the big benefits of having a nanny is not having to get the kids up and out the door every morning, and I didn't like the idea of having someone else's child in my home all the time.

Still, there were lots of great candidates on Care.com, so I signed up for a three month membership, which cost $63.20. A paid membership allows users to message nannies who have posted that they are looking for jobs, and also to post a job for people to apply to. I did both, and I got a TON of applications. Many people got weeded out early on - they were looking to be paid under the table, or were only available part-time, or it otherwise wasn't a good match. We interviewed four women, and made two offers. The first accepted and then had a family emergency which caused her to have to resign before she started, and the second we hired and has been with us since.

She works 50 hours a week (8am-6pm M-F) and gets paid a regular hourly rate for 40 hours + 10 hours of time and a half. She also gets five days paid sick time and 10 paid vacation days. And she gets off any holidays that we are off work, and still gets paid if Grandma comes and picks up the kids for the afternoon or something like that. This is intentional - if I'm going to book her time, then I need to pay to make sure she is available when I need her.

In terms of benefits, we don't pay a health insurance benefit (in large part because she has health insurance already, which is great for us financially - it's expensive!). We provide a car for her to use while she's working (so we don't have to transfer car seats in and out of her car), and we provide a credit card for her to use for gas and expenses for the kids. Paying for cell phone service was another common benefit we saw, but we opted out of that - we don't call or text her that often, and she already has a phone. We also withhold her income taxes and send them to the IRS, and we also pay into unemployment benefits for her. This and social security were two of the big reasons we didn't want to pay someone under the table (in addition to it being illegal) - unemployment and social security are important safety net benefits, and I expect my employers to provide them. Therefore, I will provide them for my employee.

All of the paperwork and calculations are kind of a pain, so we chose to pay for a payroll service that Care.com owns (Peanut corrected me: we use the service provided by Intuit, maker of TurboTax*). It manages withdrawing the money from our account and depositing it into hers every week, generates a pay stub, calculates withholding, spits out all the paperwork for her taxes every quarter, and will provide the tax paperwork for both us and her next year. It costs $22 a month.

Oh, right, and the question you are probably wondering most - what do we pay her? We offered $15 an hour, and she countered with $16 an hour. I was both proud of her for negotiating and kind of devastated at how much more it seemed to increase our expenses. In the end, I realized it was only about $2,000 a year - and I really was proud of her for negotiating! We settled on $15.50 an hour, which is only for those first 40 hours - after that, she gets ten hours at $23.25 per hour. All told, she's grossing about $43,000 a year (more than I made at my last job!). With taxes and the service fees, we're actually paying out just under $47,000.

It's a lot of money.

It's more expensive than the most expensive fancy daycare that we looked at. To us right now,though, the benefits of having a nanny (not having to get the kids out the door in the morning, not having them around lots of other kids and getting sick, them getting to go out to parks and storytime and develop a close bond with a single long-term caregiver) are so worth that cost. It feels right to me to pay someone a living wage to do a job that's really hard. And, astonishingly...even after paying her, I am STILL making more than I was at my last job. So it's not like we're missing the money; we're still coming out ahead.


I love this division of labor - payroll and taxes and all of that is his responsibility and while I have access to all the information through Dropbox and our finances spreadsheet, I know that he's taking care of it so I haven't bothered to memorize all of the details. Participating partner FTW!

3 comments:

  1. Oh wow, that's a great arrangement! For 40 hours per week, we were looking at paying $60K or more per year, and that's before any of the fringe benefits we'd have liked to offer if we did hire someone full time. Unfortunately we simply couldn't find someone who seemed competent to be worth hiring at all so we had to go with the fancy daycare :/

    Something that a friend pointed out, which we practice, is that women typically mentally subtract the cost of childcare out of just their wages but we should be subtracting them out of both our wages if both parents are working. PiC and I budget the same way in that we take a percentage of both our salaries to evenly cover expenses and save the same percentage as well. I like that better than just taking it out of my wages and then calculating whether it's worth it since we both benefit.

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  2. That's a very good point, about mentally calculating the cost of the nanny's wages from BOTH parents' salaries instead of just the woman's. And typically, in terms of accounting and all that, we do. For the purposes of this post, and for simple holy sh!t moments generally, though, subtracting it from my salary alone is just mind-boggling to me. Six months ago I made zero and today I am making enough to pay someone else more money than I made at my last professional job and even after paying her, *I'M* still making more than I was at my last professional job! It's kind of staggering.

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  3. We've been fortunate to have flexible jobs where one of us can work from home about half the week. That meant we could hire part-time college students when our children were babies. We switched to daycare at about 9 months for both of them.

    This year we're paying $17,000 for daycare for our 3 year old, and next year that will be down to $8400 because we're moving back to someplace where the most expensive daycare in town is only $700/mo. If our kids ages weren't so far apart (there's a 5 year gap) it might make more financial sense to hire a nanny for two kids. Instead we make use of educational after school programs at the school for our eldest (robotics, theater, Spanish, etc.)

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