Planning Money Matters
Fear of losing a second income paralyzes some couples from becoming a stay-home parent family. Yet with the proper planning and devotion to their goal, many couples can help dispense with that insecurity and find workable options to help them.
Certified Financial Planner™ Steve Hawkins with American Express Financial Advisors, Inc. in Cincinnati, Ohio, says a couple that decides to have a stay-home parent should prepare financially for bringing a new person into the household and dropping an income. "One of the best strategies I've ever seen is for a couple to actually live on the one salary prior to the pregnancy or birth," says Hawkins. He recommends that couples serious about stay-home parenting live on the husband's salary while placing the wife's into a savings account, not to be touched. This gives the couple an idea of how the money will flow after switching to a single income while building some savings.
Hawkins adds that it's crucial a couple look at committed expenses versus discretionary expenses. "You've got to pay the mortgage or rent, auto insurance and groceries, but do you have to have a high entertainment budget?" he says. "I see people with three or four cell phones that go out to dinner every week, and they're not willing to change that. Ask, ' What do we have to pay for and what do we choose to pay for?'" He says anything from magazine subscriptions and cable TV to extravagant vacations can be considered discretionary expenses. "You can decrease your lifestyle and increase your income, but you need discipline in doing it."
To help separate committed and discretionary spending, Hawkins recommends a couple keep a diary to track expenses. "Put yourself on a budget and see where the money is spent," he says. "Keep a record; it's too easy to pay in cash and not remember where the money goes. It's easiest with one credit card, one checking account."
When evaluating finances, couples should also consider the costs a working woman may incur after the baby is born: childcare, commuting costs, business clothing and dry cleaning, lunches out with co-workers, taxes etc. While you may have less family income if you're a stay-home mom, the difference in what you take home after expenses may not be as extreme as you'd expected, and with some sacrifice you can make staying home a reality.
The prospect of becoming a stay-home mom may be very appealing to some women, while others may have mixed feelings about the loss of a family's second income. Additionally, they may be reluctant to give up the mental challenges associated with involvement in the workforce and concerned about keeping up with their careers.
In today's business world, becoming a stay-home mom doesn't have to be an "all or nothing" proposition. Some companies are willing to re-negotiate a woman's job description, enabling her to work from home. Telecommuting options and flexible work schedules are becoming more commonplace and can even be economically viable options for employers as opposed to investing in the training of replacement personnel.
Other opportunities worth exploring include home-based businesses, consulting, web-page designing, freelance writing or translating. Moms working from home face additional demands, but it can be the ideal solution for a woman who wants to earn supplemental income or keep a "foot in the door" of her career field, yet be home with her children.