Daycare Vs. Home Nanny: Which Childcare Option Is More Cost Effective?

Motherhood is a full-time job in its own right, it's a difficult gig that some parents can't or don't want to be doing on their own. And many do not expect a woman to do all that solo — especially while having a job. In modern society, many parents find themselves swinging between childcare and hanging on to the security blanket of a professional income. According to the 2021 data from the U.S. Bureau of Labor Statistics, working mothers make up a significant part of the labor force, with 71.2% of families with children under the age of 18 having a working mother.

That can be a real struggle. The exhaustion from tending to the needs of their children can negatively affect their work performances and cause them to miss out on many career opportunities. The average mother's earning capacity decreases by 4% for each kid she has, per a survey by the national think tank Third Way. The only way for working moms to keep their ducks in a row so they can go out into the corporate world with peace of mind is to have someone else keep their kids neat and well-fed. Unless there's a caregiver at home or corporate childcare at work, the only options available are enrolling the kids in daycare or hiring a nanny. Both carry different prices and have their unique pros and cons. Knowing what to expect from each option helps mothers make a decision that is best for the family.

Both daycare centers and nannies cater to preschool-aged children under the age of 6, but they differ in a number of ways. Maressa Brown, senior editor at Care.com, tells PopSugar: "Daycares require children out of the home to receive care in a private provider's home or in a daycare center." To operate a state-inspected daycare center, the owner must obtain certain certifications as per the state's requirements, such as a bachelor's degree in child development or social work, family childcare home license, food handler certification, business insurance, and first aid and CPR accreditation, among others. In such a facility, the child-to-caregiver ratio can be high, but the kids are frequently separated into age-specific groups with age-appropriate activities so they can enjoy themselves while picking up new skills. 

Meanwhile, nannies are also childcare professionals holding certain childcare safety certifications and other documentation as required by the state they work in. Live-out nannies usually come to your home to care for your children's needs, from cooking for them to helping them with homework. Those with irregular working hours can benefit from the help of live-in nannies or au pairs, who live under the same roof with you and assist with other household tasks such as doing laundry, cleaning the house, and holding down the fort in addition to taking care of the kids, per Great British Nannies. This smaller-scale and more customized childcare service offers more flexibility and reliability than a traditional daycare center.

Obviously, having a nanny to help with all the nitty-gritty of physically and emotionally caring for a child is every working parent's dream. But for those who are stressed out about money, having a nanny is not the best idea. The cost of undivided attention for your kids is significantly higher than sending them to daycare, where one caregiver is typically responsible for supervising four to 16 children at a time. The average cost of employing a nanny, according to BabyCenter, is $2,450 a month, as opposed to the average cost of $850 per month for a daycare facility. The average hourly rate for nannies in the U.S. is $20, while that for babysitters is $18.50, according to the most recent Sittercity data. However, hourly prices might differ greatly based on your place of residence, cost of living, and state minimum wage legislation.

So technically speaking, daycare is less expensive than a one-on-one nanny service. However, if you have more than one child, having a nanny might be more cost-effective. BabyCenter advocates splitting the costs of nanny services by having a private nanny care for the children of two or more families at the same time — either in one residence or back and forth between each. This enables parents to split the expense of a private nanny, making it a more budget-friendly option.

One great aspect of daycare is that it offers a social environment where kids can make new friends their age and learn new skills under supervision, according to WonderBaby. For instance, daycare group activities such as singing and dancing, doing jigsaws, sand playing, and role-playing helps kids learn about teamwork, socialization, and situational awareness. These are skills that children may not always be exposed to at home.

Another boon found in daycare is that most daycare centers have multiple childcare professionals, so parents don't have to worry about one caregiver calling in sick — as is the case with a nanny service. Also, a study that was published in the Archives of Pediatrics and Adolescent Medicine suggests that letting your kids spend time in a daycare setting may strengthen their immunity. Although kids that spend time in a large-group daycare setting are more likely to contract minor respiratory and ear infections than babies raised at home, after they start primary school, they experience fewer of these illnesses, suggesting that some immunity building is taking place.

It's hard for daycare kids to form a bond with their caregiver or get the attention they need when there are other kids who expect the same thing. If the daycare center has a high turnover rate, things can be extra confusing for children. When kids struggle to form intimacy in the earlier years of their lives, they might grow up feeling emotionally abandoned and having trust issues. The NICHD study discovered that children who attend daycare may have greater behavioral issues — such as disobedience and aggression — than children who enjoy more customized care.

Besides, a daycare center operates in structured hours, so the sometimes necessary flexibility is not there. If you need some private retail therapy time during weekends, you might have to call a babysitter. Besides, you have to be ready for the fact that daycare is the perfect environment for the spread of viruses. There are about a dozen toddlers playing, eating, and napping together in the same space, so illnesses are easily spread through direct or indirect contact. If your child is ill, the school will ask you to keep him or her at home, and you will have to play the caregiver until your child is well. It's also worth pointing out that childcare programs may be rather pricey, while being far less expensive than a nanny, per BabySparks. 

The primary benefit of hiring a nanny is that your children will receive unwavering attention while being cared for in their own home, where they still enjoy the familiarity of their day-to-day routines and personal belongings. According to BabyCentre, this enables your child to acclimatize to your absence at their own pace and spares you the laborious work of soothing and settling your frantic little one into a foreign environment like daycare. Being taken care of by a nanny also gives your children a chance to form a healthy attachment with a person other than their immediate family.

Flexibility is another perk that comes with having a nanny. Under most circumstances, an employment contract for daily nannies specifies the number of hours they will work each week. However, they can still clock in more hours, such as on the weekends or in the evenings if you need them to, as long as the compensation rate for this extra labor is established in advance, according to My BabyManual. The flexibility can be immensely helpful if some emergencies come up at work, or if you need some alone time to unwind for your physical and emotional health.

With great flexibility comes great dependability. When you're reliant on one caregiver to take care of your kids, you're in for some major inconveniences when the person calls in sick or resigns abruptly, according to Parents. There are just no backup options.

While having a nanny offers your child the benefit of a primary attachment figure and a pillar of emotional support, conflicts are unavoidable if you and your nanny have different parenting approaches. Finding a nanny who is on the same page as you in terms of disciplining your kids is important for your child's development. Not to mention, many moms develop feelings of guilt or envy when they see how much time and emotional connection their hired caregivers share with the children.

"The reality is that many nannies do have more parenting skills than parents," parenting expert Michelle LaRowe tells CNN. "For a mom to realize that someone else can meet her child's needs faster is hard." Nannies — especially those who live in your home — can actually score the second mom figure and form a special attachment with your kids. Unless you're ready for a stranger to enter your turf and overshadow you in the role of a caregiver, hiring a nanny or an au pair is not the best option for you.