Stay Home or Go Back to Work: The Results
I put together a comprehensive list of all the financial considerations to help determine what the impact would be if I stay home from work. Readers added the things I overlooked. It’s not a decision I’m making lightly. My husband and I have been discussing it at great lengths, sometimes in circles.
Thanks for all the emails and thoughts; especially those of you that shared your personal decisions. It’s one of those topics that really doesn’t have a right answer. You make the best decision with the information that you have right now.
I ran the numbers using both my full time salary and my 4 day workweek salary. Wow! It was very eye opening to see that we effectively only get to use about a third of my salary. Of course, a lot of it has to do with some very large expenses we have, paying for an in-home nanny and Uncle Sam! We pay our nanny over $20,000 per year. In addition, the tax bite on a second income is huge.
What I really want to do is stay home. However, even with my “new” lower salary, we’ve determined it doesn’t make sense financially for me to stay home. Although we haven’t ruled it out for the long run, it’s the decision that makes sense for us right now. Here were some of our considerations:
- As I stated yesterday, I have the larger salary in our family. It’s one thing to scale back to one income, it’s another thing to take away the higher of the two.
- We’re planning more children and I have an option for a leave of absence in the future that may be worth using.
- I’m currently planning to go back to work 4 days a week for seven months. It was a schedule that I was very happy with 2 years ago and I maintained a good work/life balance.
- I scaled our retirement contributions back to 23% last year and to 15% this year. It makes virtually no change to our long term plan. If I were to stay home, I would reduce it to 11%, also having no real effect.
- We want to do some more planning for the new business before having to rely on it.
What This Means
While I ultimately want to stay home, I do feel that I owe my family a level of financial security that my job currently provides. My children are in wonderful hands with our nanny and I’ll only be going back part time for now, which is the best of both worlds.
However, I do feel some “mommy guilt” for going back. I guess I wouldn’t be human if I didn’t. I come across pretty cut and dry when I start talking about the bottom line, but my family always comes first. They always will. I wouldn’t be going back to my job if it wasn’t a flexible, family-friendly working environment. I don’t travel much and for the most part I can take off when my kids are sick, have an appointment or a function I want to attend. I still want to stay home and I’ll be working towards that for the future.
I’ve come up with a plan to make some changes over the next two years. What I’d like to do is financially set ourselves up so that when we have another child in the next 2-3 years that it wouldn’t make any difference financially which decision I make.
I’m setting a goal to make a $2800 per month difference in our finances. I’ve already started brainstorming some possibilities to make this happen:
- Remove $1170 from our budget. I’ve identified $812 that I can easily eliminate over the next two years. Paying off our car or selling it and paying off the motorcycle. Both were financed because the interest rates were lower than savings rates. However, with the recent cuts, that’s not so much the case.
- I could drop our retirement savings by $800 month, but I’m not ready to do that right now. I would be able to do that in 2 years without much change to our overall plan.
- That leaves roughly $830 a month that I would need to earn per month to cover the difference. We’ve launched the first part (My Dollar Plan) of our small business. We have plans to add 3 additional components, but we’ll likely need the next two years to get them completely up and running before we would feel comfortable depending on any of the income.
With this decision made and the creation of 3 additional long-term goals to supplement our dollar plan, I’m finally ready to put together our 2008 goals. Look for it soon!
In addition, I’ll be working hard to make the choice for me to stay home in the future easier by doing the following:
- Remove $1170 per month from our budget.
- Replace $800 per month in retirement savings.
- Earn $830 per month from our new side business.
Thanks for sharing the details of your thought process! It was interesting to hear about.
Every family’s situation is different, and it changes as we go through different seasons in our life.
My mom ended up with a job earning a lot more than my father. I was a baby, and the only way they could afford to, well, live, was if he stayed home with me and she continued working. They simply couldn’t afford paying someone to watch me. Unconventional, but it worked for us.
A four-day workweek really does seem shorter than a five-day.
Best wishes with everything!
It looks like you’ve put a lot of thought into this and made a good decision for your family. I like you you’re not stopping with going back to work, but that you have a plan for 2-3 years down the road as well!
Good for you, Madison.
As long as you keep thinking about improving your work/life balance, it will start happening.
All the best to your meeting your goals!
It has meant sacrifices here, but it has been great to give the kids something that we both would have prefered!
Sounds like a great decision for you!
My child is now 18. After living through the work/life struggle, I would advise any mom to always keep a toe dipped into her career no matter the number of children at home. The “toe” could be occasional contracting work on projects that relate to the career and even volunteer work that puts the skills of the career to work. Whatever the situation, keep on _networking_ and keep that career identity.
Two big reasons: a woman needs a portion of her life to be about her and not about kids and you never know when life may change, forcing you to return to your career/income.
Best of luck!
It was very interesting reading your posts on this topic. I actually consider myself “lucky” to make a lot less than my husband since I know it will make it easier to switch to one income when we have kids 🙂
Congratulations on navigating this emotional minefield with your values and future goals intact. It sounds like you guys are super focused and committed to a well thought out plan, and I have every confidence that this will only mean good things for you and your family’s long term happiness.
My wife has stayed at home with our six children and we\’ve never thought twice about what we\’ve missed out on financially because of it. It\’s simply made such a difference in our lives and for our children.
Quite frankly, I\’m jealous. I\’d love to be the one that gets to stay home with them. Perhaps someday I\’ll get enough of the \”multiple streams of income\” going to where I can be home more, but we\’ll see.
Good for you for trying!
Don’t do it! The benefit to your kids (and your relationship to them) is priceless. (Just look at all the comments you’ve received on this and other posts telling you how others didn’t go back to work and never regretted it.)
So what would I suggest instead?
1. Cut expenses. Some will drop as a direct result of you not working, but others can be added because you’ll have more time to focus on them (such as taking time to food shop using more sales, coupons, etc.)
2. Have your husband work on growing his income.
3. Start a business at home. You have a good blog here — and you can probably build it into something that earns you $1k-$2k per month if you work at it and stick to it.
My wife has stayed at home with our kids and always says she’s been so blessed to do so. And I think it’s made a HUGE difference to our kids and our relationship with them.
Thanks for this post. We aren’t ready to have kids yet but off and on I’ve been thinking about the best ways to prepare our household. The way you laid things out will make planning a little easier.
Also, I think the most important thing to consider is what is best for your family.
I am glad I found your site… we are struggling with a similar decision, I am currently at home, but it seems to make much more financial sense for me to go back to work, but it is a heart wrenching decision…
Thanks for sharing this! I have never blogged but had to for this one. I am so glad I found your blog as this is greatly helping me with my own analysis to determine if my wife “SHOULD” stay home. We now have a three month old. Although. I am sure that we could cut back and so that my wife could stay at home, the numbers show that she needs to work. I am concerned that too many people don’t realize that in today’s day and age need to be setting aside a ton of money. People really aren’t doing the math and considering all of these variables they are just making an emotional decision without understanding the ramifications. Trust me when I say I would love to be able to afford to have my wife stay at home.. We just can’t afford to and I live below my means and make very good money. Some things that I would encourage you to add to your considerations:
– Future $$$ Value you give up by stepping out of the work force – You to a great job of identifying short run things you give up but there are also long term impacts. Are you likely to have a lower salary when you matriculate back in??? (not telling you something you don’t know)
o 401k what will the 3Yrs that you are not contributing mean to you at retirement? I have a high-end financial planner that tells me that I need between $7MM & $9MM at the age of retirement to live like I make $150K a year.. I am 34 now. You need $3MM to retire today and to be able to take out $100k/yr and not impact the principle..
o Saving for College Education for your child now: Assuming that my child’s tuition will be $50K in today’s dollars 18 years from now (a really good school) I am going to have to set aside about $1200 a month to pay for college 18 years from now. Or I will have to save $400K +
o Social Security: You touched on it but I think you should also consider…. assuming you are stepping out of the work force for a few years 3 or 4. All things being equal… What impact will not paying into SS now will have when you actually are of the age that you can collect it.
These are just some thoughts… Thanks for hitting this head on.. You won’t believe how many people avoid this issue and the lack of info out to support these thoughts… I could use some help.. Have you seen any Good studies that support the $$ value impact stepping out of the workforce really has on an man or a woman.