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Finance for Parents

Can You Afford to Become a Stay-at-Home Parent? How to Find Out

By Julie Pierce OnosSep 22, 2020

Maintaining a career while being a mom has always been a huge part of my identity. Being the youngest of four, I just thought it was normal for my mom to be home with me; when she went back to work as a special ed teacher, I felt special to share her with other school children. 

Growing up, most of my friends’ mothers worked at least part-time. As an adult, most of the moms I know work as well. Now that I’m the mother of multiple children, I see that no decision can be taken for granted. There’s a lot of thought and energy around the decision whether to stay home with the kids or not!

According to the Pew Research Center, about 18% of American parents take care of their children full-time. This percent is virtually the same as it was in 1989, although these days more dads are staying home; about a quarter of stay-at-home parents today are fathers. 

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Staying Home in the Age of Coronavirus

In these times of COVID-19, the job description of “parent” has changed drastically—especially for those attempting to get work done with kids running around the house, without formal school or childcare. Even as schools reopen, the spectre of new waves of the pandemic threatens the stability of our best-laid childcare plans. 

Among couples in which both parents work, women provide about 70% of the childcare during working hours, and experts warn that the pandemic could have very serious impacts on working parents for years to come—especially working mothers. 

The situation has changed for stay-at-home parents, too. It’s one thing to stay home with the kids in normal times . . . and quite another when you can’t even go to playgroups or parks. 

Of course, most of us aren’t (and shouldn’t be) making a decision about our future based on vague concepts of gender and workplace equality. COVID-19 or not, we need to consider the reality of our specific day to day lives, support systems and financial picture. The decision whether to stay home with the kids or return to work can’t be made through logic alone. 

Still, we’ve created a clear framework to provide financial clarity and help you be confident you’ve made the best choice for your family. 

Start With What Matters to You

Balancing the demands of working, parenting, relationships and life can be draining. In some cases, it might be less burdensome to focus on parenting or working, rather than both—in other cases, you might find it isolating to quit a job that’s meaningful to you. 

Start with these key questions:

  1. Some people have strong feelings about sending their kids to daycare or leaving them with a nanny. How do you feel about someone else taking care of your child(ren)?

  2. Is childcare even an option for you right now, with COVID-19? In what form? Center? Full-time nanny? Part-time sitter?

  3. How will your family handle an unexpected, large emergency expense if it’s down one income?

  4. Do you love your job? Does your career give you a sense of identity? 

  5. Do you want to spend all day taking care of your children?

  6. Are there other factors that might impact your decision, such as a child with special needs?

One mom we spoke to, Isabel, went back to work for seven months after maternity leave. She tried returning full time for a month, but then she went part time before finally stopping altogether. “The biggest factor in our decision was our happiness as a family,” she says. “I felt really burned out trying to be the perfect employee and perfect mother/wife.”

In other cases, circumstances may change even the best-laid plans. For Kate, having an extremely premature baby weighed heavily in her choice to leave her finance job: “I always believed I would go back. I agonized over the stigma after having such a ‘big’ career. Then one day I realized that it doesn’t matter what others think.” Eventually, she started her own business and structures her time so that she can better balance work and family. 

On the other hand, if you wake up excited to go to work, that’s not something to be minimized. Being happier, healthier and more fulfilled will help you as a parent and enable you to model positive attitudes toward work for your children. Before having kids, Arielle assumed she’d want to stay home. “But when I was pregnant, I realized I loved working and did not want to give it up,” she says. 

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...Then Weigh Your Finances

Not everyone has the luxury of quitting their job—and not everyone has the luxury to continue working if childcare costs more than what they’re bringing home in their paycheck.

Here’s an “equation” to help you understand what staying at home might mean for your family’s finances.

Step 1: Calculate your baseline spending

List out all of your regular monthly household expenses, including:

  • Housing

  • Utilities

  • Groceries

  • Eating out and entertainment

  • Clothes

  • Household expenses

  • Transportation expenses including gas and car payments

  • Exercise and wellness

  • Health insurance and prescriptions

Step 2: Calculate work-specific expenses

Now, note expenses that might be unique or different when you’re working as opposed to when you’re not:

  • (Expected) child care costs

  • Additional costs of commuting

  • Take-out and other on-the-go food you buy specifically because you’re busy and working

Step 3: Account for any extra stay-at-home expenses

Think about whether there would be any additional expenses if you didn’t work—for example, if your family is on your health insurance through your job, would costs go up if you quit? Could your spouse’s job provide coverage, or would you have to get insurance on the open market? Roughly how much would that come out to? 

Also consider any fringe benefits provided through your job that you might miss if you were to leave, such as flexible spending accounts or bonuses. 

Massachusetts CPA Rachael Hylan helps clients review which benefits they’d lose if they left the workforce, ranging from 401(ks) to health and dental, disability insurance, and so on. “We review the impact of the tax cost of their spouse's earnings once they transition to a single-income household,” she says. “This helps provide a better comparison of the true cost of daycare versus lost wages.” 

If your situation is complex, you might consider consulting with a professional to make sure you’re understanding the full picture.

Step 4: Do the math for your partner, too

If you and your partner would both consider being the stay-at-home parent, try totaling these two scenarios (working and non-working) for each of you. For example, would the health care situation be very different depending on which of you were to quit working? Does one of you have an expensive commute while the other works from home?

Step 5: Understand your current income 

Total your monthly household income from all sources (remember to subtract taxes). How much does your family bring in when both you and your spouse are working? What would be the total if either of you stopped working? 

Step 6: Map out your ‘working scenario’

Take your family’s current total income and subtract your total expenses if you were working, including childcare. Let’s call this “A.”

Note that for many people, childcare costs match or even exceed what they make at work. Chelsea, a Connecticut mother of 16-month-old twins, says, “When we saw the cost of full-time daycare in our area, it made sense for me to stay home, at least for a little while.” 

The equation might also change if and when you have additional children, as expenses will go up accordingly. Chelsea says, “I often think I would’ve continued working if we had a singleton.” Having two infants in full-time care doubled the cost and would have eaten up so much of her paycheck that it wasn’t worth it. 

If your current working scenario means juggling work from home with all the responsibilities of caring for your children, factor that into the equation, too. Does it make logistical sense to trade off with a partner? Can you work a flexible schedule? If working scenario “A” depends on reliable childcare, you may need to sketch out a new plan to account for possible pandemic closures.

Step 7: Map out your ‘non-working scenario’

Now, to compare, take the total household income if you were to quit. Subtract your household expenses in the stay-at-home scenario (i.e. your expenses without childcare, but maybe higher health insurance). Let’s call this “B.”

Step 8: Analyze the numbers

If the number you get for A is positive but B is a negative number, you cannot afford to stay home right now, at least without some serious changes to your budget. 

Are both numbers in the black? These figures represent the difference between how much you make and how much you spend. Essentially, how much you’d be able to save in each scenario. 

According to one rule of thumb, you should ideally be saving 15% of your income. Particularly if you or your spouse are considering quitting, you might consider that a floor, since you’ll likely want some ongoing cushion against unexpected expenses.

You will probably also want to take stock of your emergency fund before making a final decision about whether to stay in the workforce. Many experts recommend savings of about six months’ living expenses. Especially if you’re fully reliant on just one spouse’s income, you might choose to save at least this much or even more before quitting. It’s also worth noting that during a pandemic and/or recession, it can take longer to secure new employment.

If you’re confident that both your “A” and “B” scenarios are sufficient for your family financially, you can decide whether or not to stay in the workforce solely based on what would make you and your family happiest. 

Remember That Nothing’s Permanent

Both being home and keeping a career on track are valid goals. Misty Lynch, a Certified Financial Planner (CFP) in Massachusetts says, “I like to remind people they can change their minds.” 

Brittany has been a stay-at-home mom since her son was born. “We made the decision mostly because that was what I had always imagined doing, but also my income was not significant enough to go back to work,” she says. Yet, after staying home for almost two years, she’s feeling ready to return to the workforce in the next couple years, at least part time. “It is important to find something that is fulfilling, which I didn’t realize I would miss.”

If you want more time at home but don’t want to leave your job entirely (or leave a gaping hole on your resume), you might find creative compromises, too. 

For example, Jessi, mom of two, worked out an agreement with her husband. He reduced his hours to 80% for six to eight months after their first child, and she did the same for more than a year after their second, to reduce the amount they’d have to pay daycare. “I stayed in the workforce because quite frankly I couldn’t see myself staying home full-time,” she says. 

A hybrid approach can also help avoid a drastic hit to your lifetime earning potential. Studies have shown that in the developed world, women experience a post-baby income drop that they never fully recover from.

Of course, not all people leave the workforce by choice. There are layoffs, illnesses and other unexpected, sometimes forced changes. Having a financial plan and a savings cushion will help your family stay afloat regardless of what life brings. 

Approaching this decision in advance allows you time to not just save money, but also to take some time to dream about what your ideal life looks like. 

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Fabric exists to help young families master their money. Our articles abide by strict editorial standards.

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Written by

Julie Pierce Onos

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