With the high cost of childcare, as well as the difficulty and challenges of being a working parent, many parents wonder whether they can afford to be a stay-at-home mom or dad.
According to the latest data by U.S. Census Bureau data, more than 11 million U.S. parents – or 18% – were not working outside the home. Of course, there are many personal considerations that go into this decision-making process, but families also have to make the dollars work. Here are some financial things to consider when making your decision.
Cost savings of being a stay-at-home parent
The largest cost savings you’ll experience in childcare. For an infant, you’ll likely completely eliminate this expense, but remember that as your child gets older, you may want to enroll him or her in preschool for at least part of the week.
Depending upon your job, you’ll probably also save money in other areas, including the costs of commuting, dry cleaning, and maintaining a work wardrobe. You may also benefit from decreased taxes as you may drop to a lower tax bracket if you are relying on one income rather than two.
Additional Expenses of a stay-at-home parent
Many parents don’t necessarily realize that they may incur additional costs by staying at home. For instance, you’ll need to pay for utilities during the day while you are at home. If you keep your heat low during the day while no one is home, this could add up during the winter.
If you plan to take any mommy and me classes while you are home or visit local museums and attractions, you should make sure that you budget for these. You’ll likely find some great free activities in your town (especially at your local library), but you may still want to partake in paid activities.
Before making any final decisions about staying home, you should research which benefits you’ll miss out on. If your family relies on your health and dental insurance, make sure you understand the ramifications to switch to your spouse’s plan. By quitting your job, you’ll also miss out on any 401k matches, as well as life insurance. You can make up for this by opening an IRA if you are eligible and purchasing life insurance separately.
There may also be long-term costs to your decision to quit your job and stay home. Depending on your career, you may need to return to school or continue certifications so that you can maintain the same career when you return to the workforce. It may also be difficult for you to find a job later.
Although staying home may be the right decision for you, these are important things to consider and plan for before you give your notice.