Making the decision to stay at home with the kids has been life-altering. Not only has it changed my career and career path, but it has altered our personal finances and the way we view personal finances.
While I certainly considered the financial ramifications of staying home with our first child, I didn't do so in such depth as I did with our second. Having experience with the role by the time our second child was born nearly five years after my move to the at-home role, I was able to conduct a more thorough cost/benefit analysis.
Lost income/increased savings
By staying at home with the kids, while I've managed to build an income from freelance writing, it is substantially lower than if I had continued to work in my previous hotel management role. However, not all is lost when it comes to this reduced income since I'm able to narrow the gap significantly through the cost savings we realize from my being at home.
Not having to go into work each day meant that we could downsize by one vehicle, cutting our transportation costs by between $2,000 and $3,000 a year. Less income also means lower income taxes, which likely saves us another $5,000 to $8,000 a year. Then of course there is the savings on childcare, which potentially equates to another $10,000 to $13,000 a year in cut costs. So factoring in the additional $17,000 to $24,000 in savings we recognize by my staying home helps to narrow that income gap significantly.
Reduced job-related costs/lost retirement benefits
Having a job can bring with it a variety of costs, some of which I already mentioned such as the expenses related to commuting back and forth between work. However, there are also things like clothing costs, lunches, gifts exchanged with co-workers, work supplies, outings with colleagues, and similar costs that sometimes go largely unnoticed in a regular budget but that still tend to be part of our working lives outside the home. While the savings from this aspect of at-home life is nice, it brings with it the question of losses elsewhere.
Remember that lost income I mentioned earlier? Well, with that reduction in income also comes a reduction in the amount of money that is going toward benefits like Social Security or an employer-sponsored retirement plan. Such losses could add up to somewhere in the range of $10,000 a year that I won't have going to my retirement savings and that could equate to hundreds of thousands of dollars (depending upon the rate of return) over the course of time that won't be there in my golden years.
Lost career progress/new opportunities and less stress
I've figuratively shot myself in the foot when it comes to the path I was on in my previous career. For six years now, I've been doing something - writing and raising children - completely unrelated to hotel management, and during my prime years this is obviously a severe setback to my career progression in that industry had I a desire to one day go back.
That being said, there have been a variety of opportunities that have come with being at home as well. The opportunity to try a new career in which I'm self-employed. The opportunity to watch my children grow. The opportunity to work when, where, and how I want. The opportunity to alleviate much of the stress that accompanied a 9-5 job.
Therefore, doing a cost/benefit analysis can be an important instrument in deciding whether to stay home or continue work, but there are some things that are priceless. It's up to each individual parent though to conduct a cost/benefit analysis of their own and come to their own determination.
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