Becoming a Stay-at-home Parent: The Financial Process

Yahoo Contributor Network

Making the call to become a stay-at-home parent can be a major decision and have impacts ranging from shorter-term cash-flow issues to long-term financial ramifications. And there can be all sorts of factors to consider before moving into this role, many of which can be financial in nature.

Having been a stay-at-home parent for going on six years now, I can speak to the nature of the financial process involved in this potentially life-altering decision. But I didn't just jump into the role; instead I took time to evaluate certain financial issues involved in the move before I made it.

Review the ramifications of a job loss

Leaving a regular, full-time job to become a stay at home parent can involve more than just taking a pay cut. While the loss of income can of course be a huge financial ramification of the move, there can also be the impact of loss of employer-sponsored retirement contributions, employer-sponsored health insurance, and contributions to Social Security.

In my case, and not even taking the lost of regular income into account, losing these benefits alone costs me thousands of dollars in employer contributions in the near-term, and over time will end up costing me additional tens of thousands of dollars in the form of decreased retirement benefits.

Consider at-home income sources

One factor to be considered in the move into at-home parenting can come in the form of income sources that may be available to the parent while at home. Some people choose to watch other children to earn income. Some are able to continue to work at home in their previous role or industry, but maybe to a lesser degree or capacity. Some learn to sell things online, while others try a completely new line of work.

The latter is what I chose as an at-home parent. I decided to use the opportunity of being a stay-at-home parent to chase the dream of being a writer. While it hasn't garnered me the full income of my previous role in the hospitality industry, the work has made up for some of the lost income from the move and helps to break up the monotony of at-home parenting downtimes.

Factor in childcare and other savings

Another huge aspect in the financial considerations of being an at-home parent can be the potential savings involved. While lose of income can leave a gap in the family budget, at-home parents may find ways to start filling in this gap, even if it doesn't involve earning income.

From eliminating childcare provider costs, and cutting home maintenance costs by being around the house to handle cleaning and repair duties, to cutting transportation or other work-related expenses (clothing, work supplies, and even lower income taxes) from not having to go to a job outside the home each day, the savings from being an at-home parent can reach into the tens of thousands of dollars each year.

I've done an analysis of my own family's savings in this area, and including childcare, transportation (since we downsized from two vehicles to), reduced income taxes, and reduced home maintenance expenses, I'd estimate that our savings easily top the $20,000 mark annually.

Get together, create a budget and re-evaluate moving forward

While all this financial information can be good to know ahead of time, actually sitting down with a spouse or partner and reviewing it together can be helpful as well. Putting your findings into a budget and actually seeing on paper what the ramifications of the move might be can be helpful to both of you and may have more of an impact as well.

By forecasting a budget, you can see where potential pitfalls may lie before you reach them, and by continuing to utilize this budget moving forward, you can re-evaluate as you go, possibly helping to ensure that your at-home attempt isn't a one-year-and-done type of experience.

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The author is not a licensed financial, career or parenting professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.


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