Stay at home or working mom?
Wednesday, April 25, 2012
When I was pregnant with my son, there was no question that I would go back to work. The choice made absolute fiscal sense. Besides, being a "stay-at-home" mom sounded as fun as Chuck E. Cheese on a Saturday afternoon. But when my second child came along two years later, the decision wasn't so clear.
Jacoba Urist, a family finance expert and attorney specializing in estate planning and family law, counsels families to remember that their baby and toddler childcare needs are temporary. "I see so many mothers who make a short-term financial decision," she says. "They see the cost of childcare and the salary they would make if they go back to work and say it doesn't make sense to do so."
She suggests running the numbers for the year you have your new baby, and also some years into the future. "Don't just look at the first 18 months when you make your decision. Three, five, certainly 10 years out, the math is very different."
Urist says the best way to maintain your standard of living is to remember babies don't actually need most of the things we buy.
Each family faces unique circumstances. When deciding whether or not to go back to work after a baby-whether it's your first or your fifth-ask yourself the following questions.
1) Who's bringing up baby?
The preschool years can be extremely expensive. At a group childcare provider you will pay extra if you are late, you may not be able to take a sick child in and if you do you'll certainly pay extra. Hiring in-home care makes sense for some, but according to Urist, many parents forget about the payroll taxes. "If you're not using a service or agency which takes care of the tax portion for you, a parent's requirement to pay those so-called nanny taxes kick in after less than $2,000 for the year."
On the other hand, if you decide to stay home with a child you'll probably pay for activities or occasional childcare. Make sure to factor these costs into your new one-income budget if you think you want to stay home.
2) How frugal are you?
You may be able to make up a good portion of your former income by seeking out bargains and doing things yourself that you may pay others to do for you now. The trick is, a person really has to enjoy these things. A working parent should not expect that the parent at home has unlimited time to clip coupons, chase down deals all over town and complete the previously outsourced yard maintenance. But if you love the thrill of getting a bargain or whipping up meals from scratch, you may not even notice the lost income.
3) What will you and your baby eat?
One big expense is formula. You can save hundreds-if not thousands-of dollars by breastfeeding for the first year of your baby's life. Not so easy to do if you're working full-time. Breastfeeding is extremely difficult to maintain while physically removed from your baby for most of the day, no matter how many pumping stations Corporate America provides.
4) What else are you giving up?
Aside from salary, think about the other things you leave behind with regular employment. Consider the lost career opportunities that result from taking yourself out of the workplace, including continuing education requirements your employer provides. If one parent does not have access to health insurance, the premiums for good coverage can be prohibitive. And don't forget about the years after your baby has babies of her own. Lost retirement savings, and the compound effect of employer contributions to your account, can add up to much more than your net take-home pay after childcare.
The real question
The decision to stay home or return to work depends on many things, including your support system, where you are in your career and what kind of part-time employment opportunities are available.
Most importantly, ask yourself what will really make you happy. No matter the financial considerations, you can't function well over the long haul if you're not enjoying your days.