Child care is a limiting factor for many parents who want to balance a career with a growing family. According to experts, child care inflation hit 21% between 2009 and 2016. The average cost of child care for a four-year-old ($9,589 per year) is higher than the tuition at many public colleges.
But if you’re calculating your savings from staying at home, consider that you may pay for some forms of child care anyway. Marcie Cheung says, “I thought we wouldn't have any childcare costs since I was a stay-at- home parent. We also pay for preschool, summer camps, and other enrichment activities.”
If you are motivated to take time off solely because of the financial cost of child care, it may be worth exploring employment at a company with a compassionate approach to working parents. Patagonia, for example, is a leader in providing free, on-site child care for families. Likewise, some platforms like Werk and PowerToFly are helping stay-at-home moms develop careers that enable a healthier balance.
Employee benefits and retirement savings
When parents step out of the workforce to raise children, they’re giving up employee benefits that include health care and retirement savings. Health care is a must for you and your children, so ensure you have an alternative before stepping away from a comprehensive insurance plan.
Likewise, parents leaving the workforce are also missing out on their prime years of contributing to a 401(k) or Roth IRA. This reality contributes to the fact that women, on the whole, have fewer assets going into retirement — even though they live longer than men.
There are a few creative ways to counter these losses. Stay-at-home parents benefit from frontloading their retirement savings while they are in the workforce and ensuring that they are equally entitled to their partner’s retirement benefits. You may want to check to see if you can contribute a small portion of your family’s income to your own investment account, to make sure you’re planning for the future.
Stay-at-home-parents also need to advocate for equal agency and access to shared finances with a partner. Marriage laws offer clear spousal rights, but if you’re stepping out of the workforce to raise your children with an unmarried partner, you may want to speak to a lawyer.
Before making the commitment to leave your job, clarify your and your partner's financial priorities. Make sure there’s transparency about the assets and debt of both individuals, as well as a clear understanding of your financial priorities. When it comes to finances, discrepancies about day-to-day choices and big investments can become a headache for both partners.
Here are five questions that Megan Ford, a financial therapist, recommends couples ask before combining their finances:
- How would you describe your money habits?
- How did your family manage money during your childhood?
- What do you want your money to do?
- What’s your financial picture look like?
- How should we organize our shared finances?
These questions can help guide a natural conversation. For a positive perspective, set aside time to talk through finances together every couple of weeks — that way, no one is ever caught off guard by the decisions of the other partner.
Preparing for an emotional shift
On top of negotiating the finances of full-time parenthood, there are additional factors that have a wide-reaching impact on the life of a person and a family. Just as you perform due diligence with your finances, be aware of the potential emotional experiences you may have stepping away from work.
Annabel Monaghan, a successful author and essayist, left her job in finance to care for her young son. She writes about her experience with both honesty and gratitude:
“It felt like such freedom to be able to devote myself completely to his care. What I didn’t realize is how much power and freedom came from getting a paycheck, how much of my self-image came from the fact that I was self-reliant. I wouldn’t give up a day with my kids, but I do wish that I’d kept a toe in the water during those years.”
Quite simply, many parents don't know how they feel about full-time parenting until they are knee deep in a new routine. It’s important to remember that the choice doesn’t have to be permanent unless it brings you joy and financial ease, rather than restriction.
Especially in the 21st century workforce, there are shades of gray in between full-time employment and full-time parenthood. Freelancing, consulting, working part-time or volunteering all offer increased flexibility that can translate directly to more time with children. Likewise, parents benefit from maintaining their network and exploring new possibilities. If and when you want to step back into work, you have the momentum to do so.
When stay-at-home parents think deeply about this choice and stay engaged with a passion — even when it's outside of a traditional career — they can open up to new experiences that help them (and their families) thrive, as their children become more independent.
Your practical checklist for full-time parenthood:
- Crunch the numbers and decide whether your family can afford to live on one income.
- Consider additional costs beyond infant care, such as occasional babysitting, preschool, summer camps, and enrichment activities.
- Ensure the family has created an emergency fund with three-to-six months of living expenses.
- Give yourself time to make the decision.
- Understand exactly what your partner makes, their level of job security, and all of their assets or debt.
- Consider any immediate and long-term financial changes you need to make to adjust to one income.
- Add extra money to your retirement savings, and make a plan to contribute to investments in your own name (from your family’s income) once you leave your job.
- Keep an independent checking account open in your name with your own small financial cushion.
- Ask your partner to create a will with you as the beneficiary.
- Purchase life insurance for you (and your partner).
- Make sure you have access to all of your shared accounts.
- If you’re not married, speak to a lawyer about your rights to a shared income, both in the present and in the case of a breakup with a partner.
- Imagine your life as a full-time parent, and plan ahead to build a support system.
- Set a bi-weekly time to have clear, transparent conversations with your partner about financial goals and habits.
- Consider maintaining your professional network. Invest in exploring a passion or side business outside of your work as a parent if it brings you a sense of independence and joy.