Stay-At-Home-Parent Decision

Can you afford to keep one parent home? We all know that 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. In this article we give you several financial and non-financial considerations to ponder when making this major life choice.....

​Knowing all the factors involved will help you decide whether both spouses should work, or you have one parent stay at home.

Calculating Your True Pay Rate
It’s 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:

• Work clothes
• Car gas
• Daycare
• Eating out (If both are working and tired at night, who’s cooking? Likely the local fast food joint!)
• TAXES! (How heavily is that 2nd spouse’s income being taxed? Is that income putting you into higher tax brackets, as well as phasing you out of certain other deductions?)

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

• Retirement (Does your job carry with it a pension or deferred compensation that’s your main path to retirement? i.e. – teachers)
• 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?)
• Insurance (Are you left without insurance benefits if the 2nd spouse quits work? What’s the cost of independent insurance?)
• Time away (Yes, for some it’s better to have some time free of children yelling. A job may provide much needed stress relief!)

Other Family/Life Considerations

• Do you want somebody else spending more time with your kid than you in those early years?
• Is it stressful to have both spouses work? (Both cooking, both shopping, both housekeeping, etc. No separate duties = more work = less free time together)
• Do you want the freedom to be home when your child is sick?
• 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’s 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’d like a tax projection on the financial pros/cons of having only one spouse work, contact us...we’re here to help!!