Staying at home vs. returning to work

By Published On: March 15th, 2010

Deciding whether to be a stay-at-home mom or a working mom has always been a tough choice to make. More than just a professional decision, for many couples it’s a financial one as well. In the past, the equation has been relatively straightforward: If a new mom wanted to stay at home and take care of her child full time, would the father’s income be enough to support the family? However, with higher gas prices, inflation and rumors of a recession, the right answer may not be quite as apparent.
Working momFinancially, it becomes not solely about total income and whether or not it’s enough to sustain a family’s quality of life, but rather if rising expenses eat into one’s income in such a way that staying at home could actually save money. In our current economy, could staying at home be the better fiscal option?
Here are a few things to consider:
1. The cost of work. With everything from clothing to lattes increasing in price, how do work-related expenses impact your budget? Because the price of gas has risen dramatically, transportation costs top the list of considerations. A woman who is able to walk or use public transportation to commute to her office may feel little impact; however, most places in America are almost completely car-dependent, so suddenly driving an hour a day—30 miles from the suburbs into the city—becomes a serious wallet buster.
Likewise, for the woman who works in a more formal professional environment, it’s important for her to maintain a polished appearance. Since clothing prices have increased due to higher production costs and the weakness of the dollar, a working mama on a budget may now have to keep her fashionista genes in check—not a fun prospect if you’re returning from maternity leave in need of a new-size wardrobe.
It’s also important to keep in mind that a career gal’s gotta eat! Professionally, dining in restaurants isn’t solely for sustenance but for networking with co-workers and customers, too. Despite the social perks, eating out can pack a whollop to a tight budget. Bringing your lunch to work is the most popular money-saving alternative, but note that with the higher price of groceries, your food bill may still be a little on the high side.
2. The cost of childcare. When neither daddy nor grandparents are around to help take care of baby, proper childcare is essential for the working mom. The cost of daycare is typically dependent on the sitter-to-baby ratio and the city in which the family lives. In smaller cities, it is possible to have fewer babies per caretaker and lower prices, while bigger cities command higher ratios and higher prices. But with the expenses of daycare facilities increasing, parents might find that the cost of childcare, not to mention the money spent on gas to drive their kiddos there, is taking up a much larger part of their budget than in recent years. Even if a mother decided to employ a single at-home caretaker for her baby, such as a nanny or au pair, this person would be considerably more expensive than most basic forms of childcare.
3. Taxes. When a new mom decides to return to work,she should determine if the money coming in would put the family’s total household income into a higher tax bracket. A higher rate of taxation could negatively affect total household income, so that father and mother are both paying more in taxes than the second job’s net worth. In other words, between taxes and day-to-day expenses, it could be costing you more money to work than it does to stay at home. Naturally, this will depend on individual families’ financial picture, but it is essential to consider when planning a budget.
4. The cost of living. How does the cost of work and childcare balance out against the cost of living? Notwithstanding fixed expenses such as mortgage and car payments, plus an increased cost of living, which includes groceries, will leave less in the budget for other things … like baby gear and family vacations. For some moms, heading back to the office post-maternity leave isn’t worth it if her salary doesn’t provide for those extra little perks.
As a new mom chooses between staying at home and returning to work, she must have a full picture of her earning power. Although any extra income may seem better than no secondary income at all, it’s important to weigh all your options and find out how much you’ll really be taking home before heading back to the office to simply pad your bank account. It isn’t always as black and white as it may seem!