Budgeting for a babysitter or nanny shouldn’t be stressful. This handy resource will help you create a simple family budget to cover childcare expenses and babysitter pay so you can lead a well-balanced life without unnecessary worry over childcare costs. We’ll show you how to create a budget, discuss how much a babysitter costs, and help you factor in childcare taxes.


Flickr / meddygarnet
Flickr / meddygarnet

Creating a Family Budget

The first step in budgeting for a babysitter or nanny is to see how it fits into your overall family expenses. Whether you use a sheet of paper or a fancy software or online program to create a family budget, the trick to building a budget you actually use and depend on is to keep it simple and to use actual amounts for income and expenses, rather than amounts you hope to earn or plan to spend.  Family budget experts recommend starting by devising two sections: net income and expenses.

Net Income

Net income deducts taxes, healthcare and savings plans your employer subtracts from your paycheck.


The expense section should include all of your monthly expenses, including these common expenses:

  • Mortgage or rent and insurance, as well as monthly association fees.
  • Food, including groceries and dining out.
  • Healthcare costs, including prescription drugs.
  • Utilities, including gas, electric, phone/Internet, cable, water, sewer.
  • Childcare, including day care, babysitters and nannies, and taxes.
  • Travel and transportation, including car payments, gas, commuter expenses, auto insurance, and maintenance.
  • Education.
  • Incidentals and household expenses.
  • Personal (such as haircuts, etc.)
  • Entertainment.
  • Clothing.
  • Pets.
  • Gifts and charitable contributions.
  • Emergency and unplanned expenses.


Determining a Budget for Child Care

Second, you’ll want to calculate how much you should budget for a babysitter. Here are some things to consider: 


First determine how often you will need a sitter. Do you need someone on a regular basis so you can work or attend a weekly or monthly appointment? Do you just need someone occasionally so you can run an errand or have a night out with your husband? It’s wise to take the time now to determine how often you’ll use a sitter on a monthly basis so that you can budget appropriately and limit end of the month surprises.

Hourly Rate

How much should you pay a babysitter? UrbanSitter analyzed tens of thousands of babysitting jobs booked across the website and app to find out what the average is for the nation and in large cities to find out what babysitters are being paid. On average in 2022, babysitters in the San Francisco Bay Area are paid the most at $23.32 per hour.  Babysitters in New York City are paid up to $23.45 per hour for one child.  Parents in San Antonio are paying the lowest rate of anyone surveyed –  $12.70 per hour. Almost all sitters expect a higher hourly rate for sitting more than one child at a time.

Ask Friends

Ask other parents in your circles to get a sense of the going rate for a sitter in your area, and talk candidly with any prospective sitter so you know what she charges before you hire her.

Lowering the Cost of a Babysitter or Nanny

If you need to lower the cost of the babysitter or nanny, maybe you can share a sitter with a friend. The sitter babysits both families at one or the other’s home. While she’ll charge more than if she was just babysitting one family, the rate isn’t likely to double and you and your friend can split the cost.

Another way to lower your childcare costs might be to hire a mother’s helper, who is typically a pre-teen age girl or boy looking to get some babysitting experience and will likely work for a much lower rate. This is ideal if you only need someone to play with your kids while you make dinner or if you plan to do something else in the house while she is there.

Flickr/401(K) 2013
Flickr/401(K) 2013


Considering Child Care Taxes

Child and Dependent Care Tax Credits

One way to offset the cost of a babysitter or nanny is to take advantage of the child-care tax credit. In short, the credit for childcare expenses is a percentage of the amount you’ve paid in childcare for children under 13, as long as you are paying a childcare worker, babysitter, or nanny to care for your children while you work or look for work. This means you cannot take advantage of the credit if you are hiring a sitter so you can take care of personal errands, run to the gym or simply enjoy some well-deserved time to yourself.  

You can count up to $8,000 in expenses for one qualifying child or up to $16,000 in expenses for two or more qualifying dependents. The amount of the tax credit is based on your adjusted gross income and can range from 20%-35% of your expenses. Remember, to be eligible for the childcare tax breaks, you must identify the care provider on your tax return, report the wages paid to the nanny and remit the necessary employment taxes, which leads us into the next section – the nanny tax.

Nanny Taxes

The Internal Revenue Service requires you to pay employment tax if you are paying a domestic household employee – including a nanny or babysitter – more than $2,400 per year.  There are several qualifiers and exceptions, so check the IRS page on the web to determine if you are required to pay the taxes. Federal Employment Taxes on domestic workers are paid annually as part of your Federal Income Tax Return.  Generally, state taxes must be paid on a quarterly basis. Check your state’s requirements and schedule to learn more.

With a straight-forward budget in hand and an understanding of child-care tax credits and required nanny taxes, you are well on your way to covering your childcare needs with confidence and know-how. Think of all you can do with the newly found time away from the kids!

Search and book babysitters online at UrbanSitter.com


Find, book & pay sitters all in one place.

UrbanSitter brings all the sitters & nannies of everyone you trust in one simple app. Most babysitters reply within 2 minutes.