Can I Afford to Be a Stay at Home Parent?

Thinking of trading in your briefcase for a diaper bag? Here's how to figure out whether you can manage on just one income.

The percentage of stay-at-home parents increased dramatically between 2019 and 2021, skyrocketing 60 percent in just a few short years, says a recent report from MagnifyMoney, which is based on U.S. Census Bureau data. That eye-popping increase took place across all 50 states and the District of Columbia.

The report offers a variety of potential causes for that marked jump, including the loss of some 9.9 million jobs during the pandemic, as well as lack of child care options for some parents, as well as disabilities or health issues linked to the global COVID-19 crisis.

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For those who are tempted to join the ranks of stay-at-home parents, there are many factors to weigh carefully before making the leap. As MagnifyMoney points out in its own report, parenting while living on just one partner's income can be difficult. Here are some of the costs and questions to consider, should you be planning to leave the workforce behind in favor of being a stay-at-home parent.

Carefully assess your current income and expenses

Determining whether you can truly afford to be a stay-at-home parent is a big decision for you and your family, one that requires being thoughtful, practical, and realistic. Colleen McCreary, chief people officer and financial advocate for Credit Karma, suggests this decision-making process should start by looking at your current income and expenses.

"There's a bit of math that goes into deciding whether you can afford to quit," McCreary tells Parents. "First, look at your monthly income after taxes, as well as your partner's, in order to figure out what you're working with. From there, get a clear, comprehensive grasp on your expenses."

When totaling up your expenses, be sure to include everything from mortgage and car payments to utilities, monthly grocery expenditures, debt payments, and even emergency fund contributions. You should also look at other expenses like vacation funds, subscriptions to Netflix, gym memberships, and any other recurring or expected expenses.

You'll also want to include non-monthly items such as life insurance premiums, auto repairs, vet bills, and home maintenance costs, says Shelly-Ann Eweka, a senior financial planner with TIAA Wealth Management Advisors.

Bottom line: The more robust your review of current expenses, the better you'll be able to understand where you stand financially at present and what it takes to successfully make ends meet.

"Next, look at any potential savings you might achieve, including savings on childcare expenses like a nanny or daycare that you've been paying for," says McCreary, noting that you'll also want to look at any work expenses you may be able to eliminate, such as the cost of your commute.

Once you add all of these things up, you should be able to see more clearly how much your family's lifestyle costs right now, how much you would save with one parent being a stay-at-home parent, and whether one income will be enough to cover expenses if one of you stops working.

"Run the numbers with a financial planner who can help you understand how reducing your family's income will impact your household," says Eweka.

Tax Ramifications

When calculating whether you can get by on a single paycheck, it's also a good idea to factor in how much less you might be paying in taxes if only one partner is employed. If the family income would fall from a higher tax bracket to a lower one, for instance, the parent who continues working will likely not need to have as much withheld in payroll taxes and thus may bring home a bigger paycheck.

"Talk to your tax professional to understand how reducing your household income will decrease your overall tax liability," says Eweka.

You can also estimate how much tax you'd need to withhold from a single salary by using the IRS's withholding calculator.

Consider impacts on long-term financial goals

Your day-to-day living expenses aren't the only costs that should be reviewed as part of such a major life change. To protect your family's financial security, it's essential to also consider how a reduced income stream might impact your savings habits and long-term goals.

"Consider potentially large expenses in the future, and how those will be paid," says Carrie Casen, a financial coach and founder of Summit Financial.

Some essential items that often get shortchanged when families reduce their income and thus seek to cut expenses include saving for college and saving for retirement. But these are important goals that you should not neglect. Financial planners encourage one-income clients to keep putting something away for retirement. Even if it's as little as $25 a month, save whatever you can right now, and resolve to boost the amount when you return to work, or whenever your spouse gets a raise.

"You should look at your financial goals as a family to see if losing the second income puts any of those goals on hold," says McCreary. "Whether it's saving for your kids' college funds or hoping to buy a new house in the next couple of years, keep those things in mind when making your decision."

Consider mental impacts

As anyone who's gone from full-time work to full-time child-rearing knows, quitting a job requires more than just a financial adjustment. Many stay-at-home parents say they initially find it difficult to adjust to the round-the-clock demands of kids. Some say they miss the structure and predictability of the workplace, as well as regular interaction with other adults. Others worry about whether they'll be able to reenter the job market at the same level. And sometimes, there's pressure on the working parent to make career moves that are more about money than job satisfaction.

"Being a stay-at-home parent is about finding balance," says McCreary. "If you make this choice to quit and be a stay-at-home parent, you may need to give up other aspects of your old life, like vacations or dining out frequently. It's also a full-time job, and just as we all need occasional breaks from our office jobs, be sure to carve out time—and budget—for those same kinds of breaks."

Giving yourself some mental health time may involve hiring someone to provide part-time care once or twice each week, or being sure to include personal time for yourself to attend exercise classes.

Stay-at-home parents can also look for other adults to befriend when they bring their kids to the playground or library or join playgroups. In addition, some parents use the break from their career to retrain for work that is more satisfying or that will allow them a flexible schedule once the kids are in school. Other parents opt for part-time work (or working from home) to bring in extra income.

Meanwhile, stay-at-home parents enjoy benefits that can't be measured in dollars: a more relaxed pace of life and the satisfaction of knowing your children are getting your full-time attention.

"There is a tremendous value in being able to spend precious time with your children. And if you're able to stay at home and happily manage child-rearing and other household management tasks, it can be an excellent option for some people that brings tremendous joy and self-fulfillment," says Casden. "It's a completely individual, personal decision, one that is unique to each family. There is no right or wrong answer."

Updated by Mia Taylor
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