4Nannies.com has been helping people find quality Nannies since 1998 and they recently published this article that gives good financial tips specifically for Nannies.

Nannies face some unique financial issues, issues that must be considered when they’re thinking of how to care for their financial health. As you navigate your finances, here are some things to consider that will help you stay on the right track.

Insist on being paid legally. This is the most fundamental action you can take to protect your financial well-being. When you’re paid on the books, you get a lot of important benefits. For starters, you have proof of income, which makes you eligible to apply for a car or home loan, rent an apartment, lease a car or get a credit card. Without proof of income, you’re not able to establish or increase your credit score, something that can affect everything from future job prospects to auto insurance rates. When you’re paid legally you also qualify for unemployment benefits, which can be a lifesaver if you’re fired from your job and not able to find another one right away. You also qualify for worker’s compensation in many states, as well as disability insurance. If you’re hurt and unable to work, those additional benefits can help you stay afloat until you’re back on your feet.

Save for federal and state income taxes. Your employer isn’t required to withhold federal or state income taxes from your paychecks. She is required to withhold your portion of Social Security and Medicare, though.  Some employers will withhold income taxes because they’re already doing payroll, but many won’t. If you’re not having those taxes withheld, make sure you’re saving an appropriate amount from each check so you’re easily able to cover your end of the year tax bill. An online salary calculator can tell you how much you should be putting back, depending on your state and the number of personal deductions you claim.

Ask your employer for a household account. There will probably be lots of times when you’ll want craft supplies, educational toys or other things to use on the job. Let your employer know what your needs are and ask for access to a household account to cover those expenses. Those things can quickly add up, and the expense is hard on a nanny’s budget. They’re also the basic supplies you need to do your job well, and it’s your employer’s responsibility to pay for them. It’s important to talk about setting spending limits around the needed supplies and making sure you provide a clear account of what you purchased and how much was spent.

Save for retirement. If you worked at a company, you’d probably have the option of opting into a 401K or other retirement savings plan. As a nanny, you’re on your own when it comes to retirement savings. Retirement ages creeps up faster than most people think, so it’s a good idea to start saving as soon as possible. The earlier you start, the better off you’ll be. You can talk with a bank representative or retirement specialist to get detailed information on the retirement program options that are available to you as an individual.

Unfortunately there aren’t any tax benefits for your employer to match the funds you contribute, so you’ll have to save more to get to the same place others do through matching funds. This can be frustrating, but it’s another great incentive to start early.

Take advantage of the health insurance tax breaks. As a nanny, you’re forced to get an independent health insurance policy rather than sign onto a company policy. This can be an expensive undertaking. However, if your employer pays for your coverage, it is tax free for you and her both. Even if full health insurance isn’t a current benefit, talk with your employer about restructuring your compensation package to take advantage of this tax break. She won’t have to pay you more for both of you to save money, and she may even be open to passing her savings onto you.

Make sure you get mileage reimbursement. If you use your own car for work, you’re entitled to get the IRS mileage rate reimbursed for every mile you drive during your time at work. That includes running to the grocery store or pharmacy, picking the kids up from school and going to the zoo. If you’re doing it for work purposes, it counts. Commuting miles aren’t included. This reimbursement is designed to cover the cost of wear and tear, gas and insurance. If you don’t make this reimbursement a required part of your compensation package, you could be losing out on literally thousands of dollars each year. That just doesn’t make good financial sense. Also remember that the IRS rate goes up every year, so make any needed adjustments each January.

With some smart planning, nannies can stay on the road to a healthy and happy financial future.

This article is also featured on the 4Nannies website.


  1. Daisy @ Prairie Eco Thrifter Reply

    I babysit on the side, so while I’m not a full-time nanny, I do understand some of these challenges. I think it’s beneficial to the parents to pay legally, too. In some places, they can write off child care costs.

  2. Great article! Whether you are doing this as a hobby or a professional, always maintain books and act professional.

    Build up good references. This is one field where references really mean a lot!

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