Photography by Oslo In The Summertime [1]
I’m scheduled to return to work in a couple weeks after a 5 month maternity leave. As the date draws closer, I find myself questioning whether I want to stay home or go back to work. It’s a dilemma that many moms face, and I had the same questions when I went back to work part-time after my first son was born.
I’ve decided to calculate it financially and go from there. Because I’m sure I could make the excel spreadsheet come to any conclusion that I want, I’m going to put together a list of the inputs before I put the numbers in!
Financial Aspects
Income that I would give up
- Salary
- Benefits – Health & Dental (none because we use my husband’s plan)
- Benefits – Life Insurance
- Benefits – Disability Insurance
- Pension
- Profit Sharing Bonus
- 401k Bonus
- Holiday Bonus
- Corporate Lunches
- Other company perks (Discounted/free events)
Expenses that could be eliminated
- Nanny (less amount saved using dependent care account)
- Taxes – Federal, State, Social Security and Medicare
- Commuting (including depreciation on the car)
- Lunches out
- Work clothing
- More dinners out due to not being home as much
Additional Expenses
- Social Events – Mom’s clubs, etc.
- Money spent to do stuff with kids – playgroups, sports, etc.
Can the following categories cover the difference?
- Changes in budget (and the impact to our standard of living).
- Changes in savings (and the impact to our long term dollar plan [2]).
- Earning additional money.
Other Financial Considerations
- There’s a possibility that by putting us in a lower tax bracket, we might be able to qualify for other tax benefits that we weren’t eligible for before. I’ll have to research those.
- Less credit card arbitrage [3] (my income would be lower, so it’s likely we wouldn’t qualify for as high of limits.)
- Changes in our mortgage, currently in an ARM. Refinancing without my income may change our options.
- Our kids will likely get more expensive as they get involved in sports and activities.
Non Financial Considerations
Because I realize it’s not completely a financial decision, I’ve been brainstorming all the other things that I have to consider.
- Impact on my career in the long run. I’m only 28, so it’s likely I might go back to work [4] once my kids are older. What would I have to do to maintain my marketability? Would I need to renew my professional designations (at my own cost)? Would I need to keep networking?
- Do I have enough credits to be eligible for Social Security? I’ve never factored Social Security into our long term plans. However, if it is available, it would be a shame to find out I was one quarter short.
- What is our plan for additional children? How is it impacted if I stay at home?
- Can I work part-time? I already know the answer to this one. It’s actually what I did when I went back after my first son. I am also planning on working only 4 days a week until my baby is 1 year old. After that though, it will be back to full time.
- If I didn’t go back, would I resign, or would I take a leave of absence (which preserves my start date)? How does it affect my pension calculation?
- I like my job. I have lots of friends there. While I don’t believe that you need a job for the social aspects and an identity, it is currently what I’m used to, so I’ll have to consider embarking on some new social adventures.
- Over the holidays we had the luxury of extending our vacation to 3 weeks. It was really nice! It’s something I might enjoy doing all the time.
- I would have time to volunteer for VITA [5] which is something that I really enjoy, but don’t have time for right now.
- I might have time to devote to our new business that we launched… then again I might have less time!
- I could get involved in the mom’s groups. I looked into joining one with my first son, but couldn’t get very involved because many of the activities were during the day.
- I would need to look into new social activities for the kids. Right now we share a nanny with our neighbors, so the kids have other kids to play with during the day and lots of socializing. I would need to explore what to do with them so my 2 year old doesn’t crawl the walls.
- Read more considerations [6] from readers.
Calculators
I found a calculator to stay at home [7] and another can you afford to quit? [8] In the cost of being a stay-at-home mom [9] ($1 million) there’s also a second income calculator. I’m not sure how good they are, but I’ll compare the results to my home-grown worksheet that I’m putting together.
Action Plan
Whether or not you would actually consider staying home, I think it is an important exercise to go through. You’ll have a complete picture of the true value of your job. I’m planning to run the calculations for both myself and my husband. See our results [10].
What am I overlooking? Any monetary categories I missed or other considerations?