How to Manage Nanny Expenses and Reimbursements: A Guide for Busy Families (Especially Physician Households)
Hiring a nanny doesn’t just involve negotiating a weekly salary—it often comes with a web of other financial responsibilities like mileage reimbursement, petty cash for outings, last-minute grocery runs, or supplies for craft time. For physician families, whose schedules are already stretched with early rounds, overnight shifts, or back-to-back calls, managing nanny-related expenses can easily slip through the cracks.
This guide breaks down how to create a streamlined system that makes tracking nanny expenses and issuing reimbursements less stressful and more sustainable.
Why It Matters
Even if you're paying your nanny a generous hourly rate, it’s not fair—or legally appropriate—for them to cover job-related expenses out of pocket. Having a clear process in place helps:
Maintain a healthy employer-employee relationship
Prevent confusion or disputes
Keep your household budget in check
Ensure compliance with labor laws, especially if your nanny is classified as a household employee
Common Reimbursable Nanny Expenses
Depending on the nature of your nanny’s duties, these are typical categories of expenses families should expect to reimburse:
1. Mileage or Gas
If your nanny is using their personal vehicle to drive your child to school, activities, or appointments, you should reimburse mileage at the IRS standard rate (currently 67 cents/mile for 2024).
✅ Tip: Keep a shared log or app (like MileIQ or Everlance) where your nanny can easily record trips.
2. Activity Fees and Admissions
Children’s museum trips, play cafes, splash pads, library events—these small charges add up. Unless you explicitly prefer your nanny to stick to free outings, it’s important to fund these costs.
✅ Tip: Set a monthly activity budget and consider a prepaid card or petty cash envelope.
3. Food and Snacks
If your nanny is out and about with your kids during lunch or snack time, they’ll need funds for meals. Likewise, if you expect them to grab groceries, you should cover those costs—ideally in advance.
✅ Note: Some families also reimburse nannies for meals they eat with the children at home, especially during long shifts.
4. Craft or Educational Supplies
Markers, paint, sensory bins, science kits, sticker books—it’s easy to forget these small purchases, but they enhance your child’s development and are work-related expenses.
5. Public Transportation or Parking Fees
In urban settings, reimbursing transit fares or garage parking fees is common when your nanny doesn’t drive.
How to Track Nanny Expenses
Let’s be honest: when your workday is unpredictable or you're being paged during a code blue, expense tracking might be the last thing on your mind. That’s why setting up a simple, repeatable system matters more than getting it perfect.
Here are three effective ways to manage reimbursements:
1. Prepaid Debit Card or Household Credit Card
Give your nanny a card linked to a set household budget. Apps like Bento for Business, True Link, or even a Chase Authorized User card allow you to:
Set spending limits
Monitor purchases in real-time
Avoid reimbursements entirely
✅ Best for families with frequent outings, grocery runs, or larger weekly spending.
2. Petty Cash System
Keep a labeled envelope or lockbox at home with a set amount of cash (e.g., $100/week). In exchange, ask your nanny to:
Save all receipts
Tuck them into the envelope
Leave a brief note about each purchase
✅ Best for occasional, small-dollar expenses
3. Reimbursement via Monthly or Weekly Report
Use a shared Google Sheet, Notion page, or even a notebook where your nanny logs:
Date of purchase
Item or service
Amount
Photo of receipt (optional but helpful)
Then reimburse them via:
Zelle
Venmo
Payroll add-on during next paycheck
✅ Best for families who prefer transparency and digital records
How Often Should You Reimburse?
Ideally:
Weekly if purchases are frequent
Biweekly or monthly for lighter expenses
Immediately if the amount exceeds what your nanny can comfortably float
Letting reimbursements pile up can lead to resentment or financial strain on your nanny—especially if their purchases were on a tight personal budget.
Handling Disputes or Confusion
Every once in a while, a family and nanny will disagree over what counts as a reimbursable expense. Here’s how to prevent those issues:
✅ Create an “Approved Expenses” List
Add it to your nanny work agreement or house manual. It doesn’t need to be extensive—just clear. For example:
✅ $0–$30 for kid outings without approval
✅ Pre-approved grocery hauls
❌ No purchases for household cleaning supplies unless requested
❌ No toys without discussion
✅ Talk About It Early
Review your expense policy during onboarding—not after a disagreement.
✅ Have a Monthly Check-In
Physician families often skip this because time is tight—but a quick 10-minute monthly Zoom, phone call, or text thread can go a long way in keeping things smooth and respectful.
How Much Should You Budget Monthly?
Here’s a general ballpark for a full-time nanny working 40–50 hours a week with moderate activity expectations:
💡 If your nanny is doing more errands or driving multiple kids to different schools, budget toward the higher end.
When the Line Gets Blurry
One common question is: What about personal items the nanny buys but also uses with your kids? For example, sunscreen that stays in her purse, or snacks her own child eats when they tag along.
These gray areas should be handled with care, but also compassion. If it’s something that clearly benefits your child’s care and experience, and is a small expense, err on the side of generosity.
One family shared that their nanny picked up a portable potty for park outings and never asked for reimbursement—until they noticed it saved them so much trouble they retroactively reimbursed her with a gift card and a thank-you note.
Real-World Stories from Other Families
A two-physician household in Boston gives their nanny a monthly $200 “kid fun” allowance via Venmo and lets her allocate it as she sees fit—with the condition that she shares one or two photos each week from their outings.
In a Seattle-based family, their nanny logs everything in a shared Google Doc. At the end of each month, the family reviews the log and includes the reimbursement amount in her direct deposit.
One family admitted they forgot to reimburse their nanny for months until she gently brought it up. Now they use a color-coded spreadsheet, and the dad (an ER doc) set a recurring calendar reminder to review it every payday.
Integrating Expenses Into Payroll
If you're already using a household payroll service (like HomePay, Poppins, or SurePayroll), you can typically include reimbursements in your nanny’s regular paycheck without taxes being withheld, since they're not considered wages.
📌 Just make sure expenses are itemized separately and do not count toward taxable income.
Final Thoughts: It’s About Respect and Fairness
For many physician families, the nanny is not just a caregiver—they’re an extension of the household. They support your family when you’re operating at full capacity. By managing expenses clearly and respectfully, you're sending a clear message: I value your work, your time, and your trust.
The goal isn’t to nickel-and-dime every snack or outing—it’s to remove the guesswork and let your nanny focus on what matters: nurturing your child while you do life-saving work (or just finally sit down to chart).
Helpful Tools and Apps
MileIQ – Automatic mileage tracking
Venmo/Zelle – Instant reimbursements
Google Sheets – Shared expense tracker
Bento for Business – Prepaid expense cards
HomePay / Poppins Payroll – Expense integration with payroll
Sources and Inspiration
The guidance in this post was informed by experiences shared on parenting and nanny forums like r/nanny, r/parenting, and r/physicianfamilies, as well as blogs and feedback from real families across the U.S. managing nanny teams. Special thanks to those who’ve shared their systems, frustrations, and creative solutions publicly—you’ve helped shape better relationships between families and caregivers everywhere.
