For numerous mothers, maternity leave often represents a unique season of their life where they can stay at home with their child. It’s common for many families to decide that resuming work outside home after maternity counts as a beneficial financial move. The rationale behind this is that any extra income flowing into the home is considered positive.
However, with the escalating cost of daycare, rising 70 percent between 1985 to 2011 as reported by the Census Bureau, has led a number of couples to debate whether the price of working truly compensates for the steep childcare fees.
Given the thought, if the expenses of resuming work or staying at home do not differ significantly, under what circumstances would it be more advantageous for the child if a parent opts to stay at home?
Both options have their upsides and drawbacks, hence you must understand which will best suit your family. As you determine if continuing to work outside home is financially viable, take these factors into account.
1. ANALYZE YOUR FINANCES
In all financial matters, your primary step should be to fully scrutinize your finances. This entails listing down every cost, fixed or variable, that you incur. This should include mortgage, car payments, utilities, loans, groceries, fuel, entertainment, and any other staple expenses.
Next, assess how much of your monthly earnings are consumed by these costs. Are your earnings barely covering your expenses or do you have significant surplus that could cushion you if your family income got reduced to one salary?
Other considerations include the possibilities of cutting back on some aspects of your life. If plausible, identify these areas, and see if savings from them could make up for a lost salary.
For instance, perhaps you could opt to work out at home instead of maintaining a gym membership, or switch from expensive cable TV subscriptions to cheaper alternatives like Hulu.
2. DEEM THE JOB-RELATED EXPENSES
Work life incurs more costs than just daycare. While you should reflect on your monthly spending on childcare, you should also account for other work-related costs. Transport, office-appropriate attire, car maintenance, and meals out are among these expenses.
3. WHAT HAPPENS TO YOUR SAVINGS?
Before terminating your job, examine your financial priorities and the status of your savings. It’s essential to plan for contingencies, retirement, or your child’s future education.
Having a single income might suffice for your daily expenses, but ask yourself if it can still allow for ample contributions to your savings. This is vital, especially if your employer contributed to your 401(k) or IRA. Consideration should be given not only to if you can live without these contributions but also if it’s financially sensible.
Test out your new budget before making a job termination decision.
4. ASSESS YOUR LIFE QUALITY
Monetary concerns shouldn’t be the sole factor in your decision. Ponder over the quality of life for you and your family with and without employment.
However, if terminating your job adds serious financial stress, the trade-off might not be worth it. While cutting back on expenses is possible, it should not eradicate all pleasure from life.
5. TRY OUT A NEW BUDGET
One reliable method of seeing if a single income is feasible is to design a new budget and live with it for a month. If successful, you’ll find excess funds from the month’s budget. Add these to your savings for the month to keep yourself from overspending. This trial period can give you a good idea of the practicability of a single-income lifestyle.
Ultimately, the resolution to stay at home is highly personal and financial. With many cost aspects to evaluate, the final decision belongs to you.
If you have a desire to stay home but the cost of childcare is proving exorbitant, it might be worthwhile to analyze the financials and try out a single-income lifestyle to ascertain if the price of childcare truly compensates for your time away from home.
Have you thought about becoming a stay-at-home parent, or did you choose to resume work?
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