Happy 2013! It’s the new year and nannies are signing on for another year of work, and employers are trying to figure out what to put in their new contracts.

A client called and wanted to know how to deal with a raise for her nanny of 4 years. Since she has raised her salary by a dollar an hour for the past years, she is worried that she will not be able to sustain this level of increase indefinitely. She is in a very enviable position of having a wonderful nanny whom she wants to keep with her children for the next decade. Giving the nanny less than a dollar raise did not seem enough.  What to do?

Here are some of the options we discussed. A contribution toward health insurance was my first suggestion. It’s a great benefit that is not taxed. So an extra $40 or $50 a week toward health insurance is actually more money for the caregiver than a straight $40 or $50 a week raise which will be taxed. The  raise for this year could be for half of the policy. The next year, the client could pay for the whole policy.

Another option was to add vacation time. Sometimes, employees would rather more paid time off in lieu of a weekly raise. Or the client could gift the nanny the cost of an airline ticket to her native country. Caregivers are from all over the world and often the cost of a ticket home makes that visit impossible to afford with any regularity. Many have elderly parents, siblings and even children  they would love to see.

Toward the end of the conversation my client mentioned one of the best options. Her nanny has her own children. My client suggested that she could offer to pay for the children’s camps. What a great idea!  Not only would it be a great help financially to the nanny, it shows how thoughtful the employer is.  While her children are always front and center in the relationship, it is a lovely gesture to consider the nanny’s children when thinking how to reward her for her service.

We are always trying to help our clients think of creative ways to reward treasured caregivers. Please let us know if you have other suggestions we can share.