We have recently made the adjustment to single-income living after deciding that my wife would become a stay at home mom and look after our daughter. Was it a difficult choice? Not really.
While there were many financial implications involved in this decision, the choice ultimately came down to the non-financial benefits that we felt would positively impact our family.
Let’s take a look at some of these financial implications.
Two Income Family or Stay At Home Mom?
- Loss of Income – As the primary breadwinner, I earned approximately 75% of the household income. Losing even a quarter of your income could potentially be devastating to your financial plans. However this was something we felt we could prepare for by adjusting to single income living early and banking my wife’s maternity leave benefits, creating a personal budget, and planning our meals.
- Day Care – The primary costs involved with going back to work full-time would obviously be child care. We checked around at various day care facilities in our area, and the monthly cost of full-time child care would run us about $750.
- Transportation – We would do our best to car pool, but we would at least be faced with an additional $100 in gas each month, especially with these high gas prices. We currently own a 12-year-old second vehicle that we are driving into the ground, but I wouldn’t trust this car to hold up much longer if we were driving it full time again. We would need to consider upgrading this vehicle sooner than later.
- Clothing – Don’t forget about your work attire, which would likely need an overhaul after a year in the closet. Add another $100/month to help get your spouse’s wardrobe back up to par.
- Meals – Due to time constraints from both Mom and Dad working, picking up your child from day care, and trying to keep up with the household chores, you may not be faithfully sticking to your meal plan. Factor in an additional $150/month for dining out, ordering in, and last minute impulse buys from the grocery store.
So financially we were looking at spending about $1100/month for my wife to go back to work rather than become a stay at home mom. After taxes, she would be earning less than $5/hour. That didn’t sound very appealing to us.
Plus, I would be able to claim the $10,320 spousal amount, which is a tax credit that can be transferred to the higher earning spouse if the lower earning spouse has little to no income, and the Universal Child Care Benefit of $1,200/year per child can be taxed in the hands of the lower income spouse.
Aside from the money, what we were really concerned about were our family values. We didn’t want to have someone else raising our daughter during the week. We heard horror stories about how often kids at day care spread germs and were constantly sick. And of course we wanted to share in every part of our daughter’s life while she grows up and reaches those early milestones.
It is certainly a personal choice whether you stay at home with your kids or go back to work. Some women focus on their careers and climbing the corporate ladder, while others dream of being a stay at home mom and raising their family. And as Boomer described in Boom and Bust, some best laid plans get thrown out the window due to unforeseen circumstances.
The point is, there is nothing wrong with either choice, as long as it’s right for you and your values.