Should Both Spouses Work When You Have Kids?

Having kids is not a decision you make because you want to improve your finances! By no means do kids add to your “bottom line” financially. Knowing all the factors involved in that bottom line could help your decision-making when deciding whether both spouses should work.....

 
Calculating Your True Pay Rate
It is important to know the numbers when it comes to both spouses working when you have a child. Consider the following costs of having that second spouse work:

1. Work clothes
   
2. Car gas
   
3. Daycare
   
4. Eating out (If both are working and tired at night, who is cooking? Likely the local fast food joint!)
   
5. TAXES! (How heavily is that 2nd spouse’s income being taxed? Is that income putting you into higher tax brackets and eliminating certain deductions for student loan interest or child tax credits?)
   

Other Job Considerations
Jobs can provide things other than just a paycheck every two weeks. Consider the following:

1. Retirement (Does your job carry with it a pension or deferred compensation that is your main path to retirement? i.e. – teachers)
   
2. Free childcare/private school for kids (Does your job provide childcare? Does your position at work allow you free private schooling? i.e. – if you work at a private school, do you get free tuition?)
   
3. Insurance (Are you left without insurance benefits if the 2nd spouse quits work? What is the cost of independent insurance?)
   
4. Time away (Yes, for some it is better to have some time free of children yelling. A job may provide much needed stress relief!)
   

Other Family/Life Considerations

1. Do you want somebody else spending more time with your kid than you in those early years?
   
2. Is it stressful to have both spouses work? (Both cooking, both shopping, both housekeeping, etc. No separate duties = more work = less free time together)
   
3. Do you want the freedom to be home when your child is sick?
   
4. Would you rather be at work part-time so your child has a social circle at daycare that is larger than just you?
   

You have to ultimately decide what is most important to you. Is it more money, more retirement....or less stress, more free time, etc.?

**And if you do decide to have only one spouse work, remember to keep more in reserve savings. This will help smooth things out if that one income earner loses his/her job.

If you would like to do a tax projection on the financial pros/cons of having only one spouse work, contact us...we’re here to help!!

P.S. – It’s not too late to have us prepare your taxes. Consider these 5 reasons why you should have us prepare your taxes: Click Here!