4 Financial Tips to Consider Before Becoming a Stay-at-Home Mom

Sometimes you just can’t put a price on things — and the intangible benefits of a stay-at-home parent is certainly one of them. At least it is to me.

According to the most recent US Census Bureau report, there are approximately 5.1 million stay-at-home moms in America; sadly, that equates to little more than one of every five married-couple family groups. I’m not too surprised.

The trouble is, being a stay-at-home mom isn’t for everyone. After all, not only is it one of the most difficult jobs in the world, but it doesn’t come with a paycheck either.

According to a Salary.com study, if the average stay-at-home mom did get paid, her annual compensation in 2012 would be $112,962.

By the way, a similar study by Salary.com in 2011 found that stay-at-home dads put in roughly half the time their female counterparts do. As a result, their compensation — assuming they actually got a paycheck — would only be $60,128 annually. Take that, fellas.

But I digress.

My mom was a stay-at-home parent and I still marvel at all the things she used to do. Mom did it all: cooking, cleaning, shopping, paying bills, yard work, running errands and shuttling me and my sister all over town — even when she wasn’t feeling well.

Mom also was responsible for a lot of our home maintenance too. For example, when the walls needed a fresh coat of paint, she was on it. I even remember one year she spent the entire summer painstakingly stripping and restaining all the woodwork in our house (and there was a lot it).

As a child growing up, I can’t tell you how comforting it was for me knowing that my mom was going to be home when I finished my day at school. It was an even bigger treat on the days I’d come home to find fresh-baked cookies or pie on the counter. After all these years, those memories are still fresh in my mind and, let me tell you, they are truly special.

Needless to say, after debating the pros and cons of one income versus two, the Honeybee and I decided to go the stay-at-home mom route about 14 years ago. Yes, we’ve since forfeited well over a quarter-million dollars in lost salary over that time — but it’s a decision neither of us regret. Not for one minute.

If you’re thinking about being a stay-at-home mom, here are a few financial tips and considerations you’ll need to keep in mind:

Determine your expenses. Ironically, for some families, the benefits of having an extra paycheck are often almost completely offset by additional taxes, childcare and other work-related expenses. Even so, before making the jump from two incomes to one, you’ll first need to evaluate whether you can live within the confines of a reduced income. If you haven’t already done so, now is the time to determine all of your non-discretionary expenses; things like your mortgage, utilities, insurance, groceries, and retirement contributions. Be sure to set aside money to handle unexpected expenses like car repairs or pop-up medical issues. Once you’ve done that, you’ll know how much you have left for the discretionary spending like vacations and entertainment.

Don’t forget to subtract your work-related expenses. Remember, by staying home, you will end up saving money by eliminating work-related costs like childcare, commuting expenses, clothing, and lunches. And because you’ll have the time to cook more meals at home, the odds are you’ll be eating out less too for even more savings.

Consider your alternatives. If you’ve cut your expenses to the bone and still can’t seem to make the bottom line work, don’t despair. If you are truly committed to having a stay-at-home parent there are alternatives to making it work even while both parents are still working. For example, perhaps one parent can take advantage of 4-day/10-hour shifts or work only part-time.

Don’t stop networking. Because job loss is always a concern in a one-income family, it’s important that stay-at-home moms — and dads — continue networking after leaving their old jobs. Stay in touch with your old coworkers and business partners and, if you haven’t already done so, create a profile on a web-based networking site like LinkedIn.

Being a stay-at-home mom can be extremely rewarding, but sometimes it’s just not possible. However, if you are fortunate enough to be in a position to make it work, I urge you to give it a shot.

I promise that it’s one of the greatest gifts you can ever give your kids.

Photo Credit: Dustin and Jennifer Stacey

34 comments to 4 Financial Tips to Consider Before Becoming a Stay-at-Home Mom

  • It’s too bad that men are only worth half as much as women when it comes to parenting. If we were equal, more would stay at home more!

    • Len Penzo

      Well, Sam, apparently us guys prefer to spend the bulk of our time on the couch watching TV as opposed to caring for the kids and running the household. Men just need to be more disciplined. ;-)

  • My kids loved it when I decided to stay with them,look after them, drive them to school, pick them up in the afternoon and do the house chores. But we cannot live in a single income, so I have to continue working as well. Blogging and freelance writing has given me the opportunity to earn as much, if not more than what I receive from my previous job.

    • Len Penzo

      Wait a minute, Cherleen … do you mean to tell me you’re actually making money blogging?

      We need to talk. ;-)

  • Spedie

    I was a stay at home mom after the birth of my second child 19+ years ago. After I did the financial analysis of taxes, communiting costs, daycare and the like, I found that I was netting $1 an hour or about $40 a week.

    I then analyzed the budget and found that $40 per week.

    It was one of the best decisions I ever made. However, as soon as my youngest went to preschool, I was back at the university in the mornings to finish my bachelor’s degree.

    That step ended up being the second best decision I ever made in my life.

    Never, never, NEVER underestimate what can happen in life and having a degree that is practical and employable also saved my rear end.

    There are many things that can happen to you and your spouse: divorce, death, disability, loss of the job of the main wage earner (in this economy, who knows?), etc.

    Always, always, cover your rear end with a backup plan!!

    Spedie

    • Len Penzo

      Our “work or stay home” analysis that turned up similar results, Spedie.

      For us, it really ended up being a no-brainer financially. I think that is usually the case when one spouse is making significantly more than the other, as it was in our situation.

  • Amanda

    I thought the difference in the valuation of stay-at-home moms and stay-at-home dads was interesting. The salary.com article mentions it may be due to the parents surveyed counting their hours differently with dads only counting alone time and moms counting all time, even if dad is there.

    That’s quite a flaw in the survey, but in my experience it is typical. I find many mothers are “on duty” as primary caregiver whenever they are with the children. If I’m there, my husband just kind of sits back and assumes I will take over, which I usually do as it is easier than constantly reminding him that our kids have TWO parents who are equally able to fill a sippy cup or supervise a craft project. Who wants to be a nag?

    Social commentary over…. Don’t forget the insurance considerations. I could quit my job and stay home, but then we’d have to switch our medical coverage to the one through my husband’s employer, which is a much costlier policy, not just in premiums, but also in co-pays (none on annual checkups on mine = $120/year), deductibles (his limit is double mine), and all the medications and types of treatments not covered at all.

    • Len Penzo

      Re: Insurance … in my case, my employer levies an annual penalty (in the form of higher paycheck deductions) on folks who have a spouse who works for an employer that also offers health insurance.

      As for the Salary.com survey, I too found the valuation disparity interesting, if not a bit odd. I mean, if the men were true stay-at-home dads, why wouldn’t they be doing everything the typical stay-at-home does?

      It would be very interesting to compare the answers of the stay-at-home dads and moms and see how their tasks and daily routine differed.

  • I was raised by a stay at home mom. I’m glad our family sacrificed on income for what they thought was a better parenting strategy. I would like to try the SAHD thing, but I’ve only got three more years before my youngest is in school, so I’d better get cracking

    • Len Penzo

      If you think stay-at-home moms are few and far between, SAHDs are even rarer: According to the US Census Bureau, there were only 154,000 SAHDs in 2010!

  • We have always lived on a single income and it wasn’t easy. But, it was definitely worth it. I usually took the kids on weekends to give my wife a break. By Friday, she usually had cabin fever.

    • Len Penzo

      I think the cabin fever part is the toughest part of being a stay-at-home parent. It’s not as if they can just get up and leave if they’re ill, or when the kids are bouncing off the walls.

      I know I’ve had to come home from work early on a few particularly trying occasions in order to preserve the Honeybee’s mental health. (For example, the infamous “baby powder” incident where our kids decided to turn my son’s bedroom and the loft into a winter wonderland by emptying a couple very large containers of baby powder they got their hands on. I know. We laugh about it now, but it wasn’t funny back then!)

  • When my children were small my wife worked part time skewed to the weekends (Friday evening & Saturday). There was just 2 hours a week that one of us was not with the children. It worked out well for us.

    • Len Penzo

      Those kind of alternatives are the next best options if you can’t completely make ends meet on one income. Split shifts will work too, where one parent works day shift and the other works swing shift or graveyard.

      • on the other hand, parents splitting shiftwork means that they *never* see each other. I don’t think it’s so necessary for children to have a parent with them at every moment that it’s automatically worth putting that level of strain on a marriage. Parents are people too, and it’s not wrong to maintain some amount of life around your parenthood. And I think a strong marriage is a great thing to be able to demonstrate to children.

        • Len Penzo

          I agree, Rachel. Split shifting parents would definitely be a marriage strain; it’s certainly not an ideal option. I know it would most likely be my last-resort alternative if I couldn’t afford to make it on one income but still wanted the kids to have a stay-at-home parent.

  • K Williams

    Len,

    Good points…I would especially encourage the fact that the stay at home mom (parent)needs to have a retirement account opened. I was married for sixteen years, with my kids’ mom being the stay at home parent, and we failed to start one for her. Unfortunately, she decided that she wanted to change her (our) life and followed thru with a divorce. As a result, my teacher retirement account will be halved for those years, yet I did not receive anything monetarily from her because we did not open a retirement account for her. She has since remarried and is in a much more secure financial arrangement than she was with me. At this point, since I paid child support for the past 9 years, I was unable to provide much extra to my 403b account. I write this not to whine about her getting half of my account for the sixteen years we were married but to reiterate your point about retirement. I would not have changed the arrangement of her being a stay at home mom, for she sacrified much for our children. Unfortunately, I was left financially in a bind retirement-wise but am such a thankful person for the two wonderful kids I have. This arrangement worked for my kids, and for that I am grateful. I am just finishing my 30th year and most likely will need to teach for about 15 more!

    Kenny E. Williams

    • Len Penzo

      Wow, Kenny, that is a bummer about your divorce and the resulting retirement split.

      The important thing is you have no regrets. I can completely understand why you feel that way.

      Thank you for the recommendations.

  • Chris

    We made the decision for my wife to stay home 7-8 years ago and it was a no-brainer. It has required significant sacrifice, but we both know with 100% certainty it is worth it. We would not change the decision for anything. Now that the kids have been in school for a few years, my wife works PT. The money isn’t great, but it allows a little extra income that provides us some funny money, gives my wife a purpose outside of the house/kids/husband, and still allows her to pick them up from school each and every day.

    I am constantly amazed at the people so fixed on material possesions that they sacrifice being there for the kids. We all know them – the ones who drag the kids out 7am, get home at 7pm, then make dinner, nd before you know it, they are repeating the next day.

    We’ll gladly pass on the new car to avoid that rat race!

    • Len Penzo

      If one parent can get or maintain a part-time job with hours that allow them to see the kids off to school and then get home before they walk in the door in the afternoon, well …that is probably as good a compromise as one can get, Chris!

  • This is an interesting article – I have a dissenting opinion. I think that there are definite benefits to having a stay at home parent, but I don’t think it’s the best bet for every couple.
    I was raised by two full-time-working parents, and have never felt remotely deprived (even when growing up in a community where we were the oddity). My parents certainly weren’t so focused on material possessions that they weren’t around to spend any time with us – they simply balanced things differently.
    I enjoyed daycare as a child, and formed good social skills in daycamps. I felt confident and independent, and ready to try things. I never felt like my parents weren’t there for me just because I walked home with a babysitter. My parents didn’t have many date nights, or weekends away or anything, as they tended to prefer to spend the time they could with us.
    Looking back, my mother thinks that the pressure of the time might have contributed to her decision to work, as though she’d otherwise have been a traitor to the second wave of feminists, but personally, I don’t think she’s temperamentally suited to being a stay at home parent. I think my mother thrived in the business world and balancing it with motherhood. Knowing her, I feel pretty confident that she would have been miserable staying home with the kids and making us an after-school snack, and that would have had a serious negative effect on us.
    I think a person can be well-suited to parenthood without being suited to stay-at-home-parenthood (like legions of fathers throughout history), and i think two good parents can do a good job of raising children without staying at home with them the whole time.
    (If you want to stay home with your kids, and can do it well, I support and encourage you. I simply don’t think that’s the only good way to raise kids.)

    • Len Penzo

      It’s always nice to see a dissenting opinion, Rachel. Thanks for your comments!

      And I do agree: some parents just aren’t cut out to be in a stay-at-home role.

    • Amanda

      Well said, Rachel. That is my situation. I could stay home, but I don’t think I’m suited to it, while I thrive in my job. The kids are in a healthy, happy environment while I’m gone. I spend time with them when I can, and during those times I’m a happier person for what I do when I’m away from them. Sometimes I feel guilty, but that’s part of parenthood, and I know deep down that they need a mother who isn’t bored or resentful of being at home. The example I set of a woman who excels at something she’s passionate about while still being involved and interested in their lives is nothing to feel guilty about.

      • I agree. I think my major point is that it is not lesser parenting to decide that it’s not necessary to have a parent with the children at all times. Today’s hyper-parenting culture puts an incredible guilt-trip on all parents, and especially mothers, that they are doing something wrong no matter what they do.
        Plan your children, make sure that you arrange your life to do well by them, sure. But that can take many forms, and wonderful children are raised by all kinds of different parents.

  • When it comes time for us to have children, I’ll be staying home to raise them… until they’re all in school full time. For us, it’s a no-brainer.

    Right now we live off of my husband’s full-time job and part-time job income… and my income and the rental income is saved. When I stay at home with the kids, we’ll continue to live off of my husbands income and continue to save the rental income.

  • TLSF

    Also a good idea if you are trying to figure out if you can afford to stay home: Take your entire check and put the ENTIRE amount either on a bill or in the bank. Putting it towards paying down debt will help you later once you do stay home; and if you are blessedly debt free, then putting it into the bank will create a very healthy emergency fund!

  • Beckbeq

    I didn’t plan on becoming a stay at home mom, but I was laid off while in the hospital having a Csection. BEST thing that ever happened to me! My oldest was diagnosed with autism at age 2. He’s 13 now, mainstreamed, honor roll, track team. Youngest is 11, in the gifted program & musically inclined. I can take care of their needs due to the fact my man-of-a-lifetime hunny made sure I was able to stay home with them.

    I walked away with an MBA, 10 yrs as a financial analyst, and haven’t missed a thing. Well,maybe the eating lunch with coworkers once in a while. :o)

  • We made this sacrifice about 7 years ago. It wasn’t easy but we’re glad we did it. My wife has been able to stay at home with our two children and it’s been a great blessing for them to have the extra time with mom. We definitely followed the step of identifying our expenses. We created a budget and worked to live off of my income for a year while we used my wife’s income to pay off car loans and student loans. As you said, there are alternatives to consider even after people can’t cut expenses further which include alternative work schedules, etc.

  • Ranica

    Hi Len
    My 2 cents: of course, people should do whatever works for them, every situation is different, but I worry about the trend of it being women who stay at home, if one parent has to. Even if your marriage is perfect and you never break up, and even if the SAHM keeps networking, etc, she isn’t paying into SS and isn’t building up savings of her own. If the working partner gets ill or passes away, her re-entry into the workforce will be much lower-paying than it could be no matter what she does simply because of her absence for so long. All these things are contributing factors to why elderly women are disproportionately poorer than their male counterparts. In fact women in general are much more likely to live in poverty than men because of the bulk of parenting falling on them, and because of the tendency for males rather than females to abandon families. It’s a sad trend. bah. It worries me.

    • In this day and age, any given couple who wants to have a stay-at-home parent can choose which parent will do so. The fact is, far more women are interested in being home-parents than men are. If you survey even single people, many women might already think that they’d be interested in staying home with their hypothetical children, while very few men find that a desirable situation.
      Men and women are equally valuable, but the balance in skills over the population does tilt differently. And while any woman who wants to work can, and any man who wants to stay home should, it’s not sexism if many couples decide that of the two of them, the mother is more interested in staying home.
      The other major concern that is brought up is earning power – the man more often has it, and is thus the logical worker. Women who would rather be the breadwinner can go into professions that tend to make more money if they would like to.

      Smart couples recognise their marriage as a partnership and save for the futures of both partners regardless of who is bringing in how much money. if she doesn’t have anything in savings, she has failed to prepare herself for life’s possibilities.
      Women also have the choice as to whether they want to become parents, and how much parenting they want to do – and they are much more likely to be the ones to divorce their husbands and deliberately keep the children.
      The trend is – people have choices and opportunities. Women can make the best of the millions of opportunities available, but a failure to think through her choices is what primarily results in problems later on.

    • Len Penzo

      Ranica: That’s why it is so important for single-income households to have the right amount of life insurance, not only to protect against the loss of the bread-winners income, but also to cover the childcare and other expenses that will arise with the loss of the stay-at-home spouse.

      I have enough life insurance to ensure that my family will be adequately covered in the event I die early. I also have a smaller amount of insurance in case the Honeybee kicks the bucket to cover child care, housekeeping and other expenses.

  • Almost every family today has a working mom and a working father, that’s really too bad because the kids are left with a nanny or a neighbor or a teenager. Having a parent stay at home can really cause financial shortage but definitely worth it.

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