You may dream of becoming a stay-at-home parent (SAHP), but can you afford it? This question may seem complicated, but it is simple math. Can your family survive on one income? Consider this scenario:
The Jones family currently pays $1000/month for two children to attend daycare. Mrs. Jones’ take home pay is $1800/month. If she were to quit her job and become a stay-at-home mom, the family would be short $800 month. However, she spends approximately $200/month on gas to get to and from her job, as well an estimated $200/month on work-related expenses (clothing, lunches out, etc). That brings the shortfall to $400/month. If the Jones family can find some other savings in their budget, it just might make sense for Mrs. Jones to quit her job.
Before making the decision to go from a two-income household to a one-income household, consider the following issues:
Health insurance and other benefits: While one income may be lower, the benefits associated with it could be of significantly higher dollar value. Make sure that you will have adequate coverage before making the change.
Job security: Living off one income is riskier than living off two, especially in times of economic uncertainty and high lay-offs. Make reasonably sure that the spouse who plans on retaining his or her job has strong job security and that the company is in good shape.
Job Satisfaction: If you enjoy a high level of job satisfaction, you may regret quitting your job to stay at home. Being a stay-at-home parent is tremendously rewarding, but it is not for everyone. If you desire more time with your children, but are unsure of whether or not you want to be a fulltime stay-at-home parent, consider exploring part time options. This may be ideal if your children are already in school.
Strength of Your Marriage: If your marriage is “on the rocks,” jeopardizing your future earning power by quitting your job may not be wise.
Retirement: Consider retirement vehicles available at your spouse’s work and whether or not these are enough for comfortable retirement down the road. If not, you may consider being a stay-at-home parent in the short term, and return to work when the children are older.
Network with other SAHP: Community and online groups for stay-at-home moms and dads are teeming with play date schedules, coupon clipping tutorials and frugal-living advice. Check out resources in your area.
Less Money = More Time: The trade-off to reducing your household income is of course all of the priceless time you will now have to spend with your children. This is a great motivator to stay on budget and find savings wherever possible.
Set Ground Rules with Your Spouse: Make sure your spouse understands that being a stay-at-home parent does not give them an excuse to slack off on helping out at home. Stay at home parenting is hard work too.
Get Help from the Kids: Since the kids will be spending more time at home and less time in daycare, you can count on them to start helping you by assigning chores.
Career Re-Entry Strategy: Unthinkable as it may be, consider mapping out a career re-entry strategy for yourself in the event that your spouse loses his or her job. This may be a long term plan that involves additional coursework or licensing but that paves the way for the kind of flexibility you may want down the road.