Can You Afford to Stay Home?

Could staying home end up saving you money?

Big-Ticket Expenses

One of the toughest decisions facing new parents is whether or not to return to the workplace. In many cases, moms go back to work because they, or their partners, believe they need the money. You may be surprised to learn that living on one income is not just for the rich.

You may be working for pay, but once you have a baby you will want to figure out your "costs of going to work" because they are only going to go up. As any working mom knows, the biggest expense associated with working is child care. Day care is the most affordable option, but even that will run you $5,000 to $15,000 a year depending on where you live. And if your hours are unpredictable or too long for day care, you'll need to hire a babysitter or nanny instead. In this case, your child-care costs could reach $25,000 a year. It doesn't take an accountant to see that you have to earn a pretty decent salary to make working worthwhile.

Your other major work-related expense is commuting. Gas, car insurance premiums, and car maintenance can run you several hundred dollars a month or more. Even mass transit begins to add up when you use it every day.

Finally, income taxes are a major consideration for two-income families in the U.S. Couples with two incomes actually pay at a higher tax rate than those with just one. The smaller paycheck, often the working mother's, is taxed at this higher rate, resulting in the so-called "marriage penalty."

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