The Financial Benefits of a Stay-at-Home Parent

Daniel Bortz

Before Lance Somerfeld's son was born in July 2008, he was working as a sixth-grade teacher at a high-need public school in the Bronx, earning a salary of roughly $45,000. He left his career to be a stay-at-home dad, wanting to be involved in his boy's early milestones--milestones Somerfeld's own father missed while he worked a full-time job throughout Somerfeld's childhood.

The decision to become a stay-at-home dad also made sense financially. "For a quality day care or a nanny, it would have cost us about my take-home salary," Somerfeld says. "Why would I pay someone else to take care of my child when I can do it for the same cost?" His wife's job as a corporate actuary also served as a financial cushion.

Somerfeld is among a growing number of men who leave the workforce to raise their children while their spouses continue working--a group that more than doubled from 2000 to 2010, to 176,000, according to U.S. census data. While stay-at-home dads are becoming more common, women are still the archetype, with about 5 million American moms staying home to take care of the kids.

As it was with the Somerfelds, the decision for a spouse to become a stay-at-home parent largely reflects today's steep costs of childcare. According to a census report released earlier this month, in families where children are younger than 15 and the mother is employed, average childcare costs have increased by 70 percent since 1985--jumping from $84 to $143 per week. In fact, in 36 states, the average annual cost of having a kid in daycare exceeds in-state college tuition, according to Child Care Aware of America, an information resource for parents and childcare providers.

[Read: Dealing with the Rising Cost of Childcare.]

Small savings add up. Melissa Stanton, author of "The Stay-at-Home Survival Guide: Field-Tested Strategies for Staying Smart, Sane, and Connected While Caring for Your Kids," says many people underestimate the financial contribution of a stay-at-home parent. "Earning an income and taking care of the kids are of closer value than people think," says Stanton. "Even though the stay-at-home parent isn't bringing money home, there is still financial value to what a stay-at-home parent does."

Converting to a single-income family--despite the loss of earnings--can put a household in a lower tax bracket. For example, married couples who will file their 2013 taxes jointly and have a household income of $17,851 to $72,500 will be in the 15 percent tax bracket, while those with a household income anywhere from $72,501 to $146,400 will fall into the 25 percent tax bracket.

Dianna Scofield of Meridian, Idaho, was always a savvy consumer, but becoming a stay-at-home parent for her first son in 2006 gave her more time to practice frugal living habits. She started cooking almost all of the family's meals. She also began making foods that take longer to prepare but are less-expensive than purchasing at a grocery store, such as cooking with dried beans instead of canned beans. She even bakes their bread; it doesn't take long, she says, but points out one needs to watch dough as it rises. Preparing more at-home meals reduced the family's food budget, which is the third-largest expense for the average American household, according to a 2011 estimate by the Bureau of Labor Statistics.

The tendency among stay-at-home parents to eat out less can also save money. Seth Leibowitz, a stay-at-home parent in Westchester, N.Y., says he socks away an extra $50 that he used to spend on lunch while working.

[See 10 Ways to Start Earning Extra Money Now.]

Staying home to take care of the kids can also put money formerly spent on work clothes or dry cleaning to better use. When Somerfeld was working, he would spend $8.50 on suits and $4 on pants at the dry cleaner. Now, he says his typical "stay-at-home dad outfit" is a shirt and a pair of jeans.

He also saves the $5 he used to spend on the subway for his commute to work. A $5 commute may seem paltry to many consumers, as the average American's journey to work takes 25.5 minutes each way, according to a recent report by the Census Bureau. But commuters in San Francisco, New York City and Washington, D.C.--the metro areas with the highest mean travel time--especially feel the pinch. Factor in today's high gas prices (AAA estimates the national average is $3.51 per gallon), and the journey to the office doesn't have a number of workers excited to start their day.

A stay-at-home mom is still an "employed mom." Stanton says a number of stay-at-home parents feel many in the working class belittle what they do. "I call it an 'employed mom'--not a working mom--because all moms do a lot of work to maintain the household," she says.

According to Stanton, a former stay-at-home mom herself, her husband was able to advance in his career because she stayed home to care for their kids, which gave him more job flexibility in terms of his hours and the ability to take business trips. "His 401(k) is as much mine as it is his," she says, adding she lost eight years of earnings by leaving the workforce.

[See these 50 Smart Money Moves You Should Make Now.]

The bottom line. The decision for a spouse to become a stay-at-home parent has significant financial consequences. In many cases, losing a source of income is too much for a household to bear. However, for some families, the monetary benefits and the extra time spent with their children outweigh the costs.

For a rough estimate to see if your family can afford to have a spouse leave his or her job to take care of the children, see Parents.com's stay-at-home calculator (parents.com/app/stayathomecalculator).



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