The Hidden Cost of Staying Home with the Kids

by Darwin on April 19, 2010

Whether or not to stay home instead of working often comes down to money.  Often times it doesn’t, and mom would really just rather be working, but for many families, mom would love to stay home but the numbers don’t work for varying reasons and they go back to work after maternity leave is up.

Can You Afford to Live on One Income?

There are some key assumptions and knowns that a family must factor in when making the switch from dual income to a single income.  On the income side, you’re obviously going to lose the additional income the working parent had been bringing in.  However, you’ll now get a $1000 child tax credit if income limits apply and won’t be spending money on things like a commute, dry-cleaning and other non-reimbursed employment expenses like perhaps eating out and happy hours with the office cohorts.  If going back to work, factor in the cost of daycare and any tax benefits derived from that.  There are more, but these are pretty much known or easily estimated costs that can be captured on a spreadsheet to allow you to see how your new budget’s going to look.

But, there’s probably one thing you didn’t think of if you’re going to be a new parent…

Moms Get Bored

This isn’t a knock on moms, but it’s reality.  Dads get bored too to be fair.  But this article’s about (typically) stay at home moms and the hidden costs of staying home that may not have been evident during pregnancy.  After considering the finances above, what my wife and I didn’t consider and what most others probably don’t is just how much more money is spent by stay at home parents simply because they’re home and not working.
Here are some examples:

As much as we talk about budgets, not impulse buying, etc., there’s no way a working parent can fathom and keep up with the flurry of bargains, buying ahead on “deals” for next year at the end of a season (does this REALLY save money in the long run if you wouldn’t have bought the item next year to begin with?), buying for all the birthday parties of your child’s friends (often other stay at home moms), getting pictures taken at the mall, eating out, going to the zoo and museum, Little Gym, etc.  These things all cost money – and they’re all things that mom (or dad) wouldn’t be spending nearly as much money on if they were working – there simply isn’t enough time in a weekend.

If you’re home with your child, especially all the way through school-age and with multiple kids, you’re talking like 8-10 years of staying home.  Is it reasonable to assume that for a full 8-10 years, mom’s going to sit around the house, be supermom who can provide for endless hours of entertainment and enrichment and never get bored or spend money on things they wouldn’t otherwise?

The reality is there are some days where that’s the case.  And there are other days where mom just needs to get the heck out of the house.  The kids are driving mom nuts, they’ve run out of stuff to do and it’s time to go out and do something fun – which usually entails some spending.  Parks and outdoor games only take you so far.  Moms have friends.  The Joneses phenomena is really incredible to watch.  Our friends, without exception, all spend way more than we do on seemingly frivolous stuff so I’m not knocking my wife (in case you ever read one of my posts after years of blogging?!?).  I’m sure it’s frustrating to always seem like “the cheap one”.  But I’m sure each wife is saying the same thing to complaining husband each time the credit card bill comes – “you should see what SHE spends when we go to the mall.  I spend the LEAST money out of our whole group.  Our kids don’t have NEARLY the amount of toys their kids have”.  The list goes on.  If each mom is saying (and I believe in many cases, actually believing) the same thing, it’s a gradual arms race of spending more and more money within a given network.  When mom’s at work, this simply doesn’t occur.  Little boy or girl is in daycare during the day and on weekends, mom and dad are typically doing family stuff, day trips or the occasional outing with friends for a birthday or something.  But it’s not this daily play group, trips to the mall to kill time or whatever.

The point here is to just make you aware that a) this phenomena exists and b) no matter how frugal or disciplined you think you are before kids, you WILL spend more money than you anticipate as a stay at home parent.  And you’ve gotta factor this into your budget assumptions so it still works with this reality factored in.

Another Reason to Live Within Your Means

In our family’s situation, my wife actually planned on going back to work after our first child!  Her mother worked while my wife was in daycare and she turned out OK, right?  Most of our friends and colleagues were dual earner families where both people did or planned on working once children came.  During the pregnancy, we didn’t necessarily make any big financial moves or relocate or anything, but based on my wife’s inclination, I assumed looking out a year and further into the future, aside from the 6 months off, we’d be back to two incomes.  But, in the back of my mind, I was always thinking, “what if something changes?”.  What if she changes her mind?  What if we have a “whoops” moment shortly after baby 1 arrives and she’s out again without a meaningful work stint?  As such, our spending was pretty much supported by my income solely and her income was supplementary (savings and nice vacations before kids came).

Well, as it turns out, about a month before delivering, my wife promptly announced that she wanted to stay home.  She didn’t want to go back to work.  Fortunately, we had that flexibility because we were living well below our means.  If her income was needed to pay the mortgage, car payments and other routine spending, we would have been in a jam – she would have begrudgingly returned back to work and probably resented other moms who were able to stay home.  We had this flexibility in part because I bought a house and had no car payments or credit card debt at the time of our marriage.  We had no real debt to speak of other than the mortgage and I was already paying that along with our other living expenses on my salary.  So, whether or not we had my wife’s additional salary wasn’t necessarily a requirement, but a bonus.

Plan Ahead

In summary, even if mom thinks she will be going back to work, why not plan as if she isn’t?  If she goes back, that’s a surefire way to start socking away that extra money in a 529 and retirement accounts, and have some excess cash for some nice family vacations, nice upgrades to the home, etc.  If she changes her mind and wants to stay home, you’ll both be happy you had the flexibility and lifestyle to be able to do so.

In the spirit of political correctness, there are stay at home dads (we know two), but this is a small fraction of all stay at home parents, so yes, I referred to “mom” throughout the article.  But of course, I’m aware that in some families, it makes more sense for mom to work than dad.  I’d actually be curious to hear how Dad finances stack up here and if they have the same spending pressures and tendencies.

Do You Agree with This Phenomena?


How Much Do you Think It Costs Monthly?

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April 30, 2010 at 1:21 pm

{ 7 comments… read them below or add one }

1 Financial Samurai April 19, 2010 at 9:02 am

Planning ahead is key. Love this topic Darwin, as going from two incomes to one, and all the nuances like you mention are interesting.

Besides, with under a 5% effective tax rate, you have a lot of disposable income to live on!

Best, Sam

[Reply]

2 Budgeting in the Fun Stuff April 19, 2010 at 12:27 pm

My husband and I decided in college right after we got engaged to only live off one income and use the other for savings when we graduated. We didn’t plan on kids (and still aren’t), but we knew we wanted to retire as early as possible since we both love our hobbies, volunteering, and travel. We also didn’t want a job loss to effect our goals too much…we figured that we could live off of one salary while the unemployed person finds another job.

Well, we’ve been out of college for 5 years and have always been able to live on one salary and save the other. We can’t live on the smallest salary (mine) unless we give up absolutely everything extra, but we do live on my husband’s and save 90% of mine…the other 10% funds our vacation account.

This system is good for all couples, kids or no kids or whatever, since it opens up options. There is a lack of stress when you realize you don’t “need” everything you bring in.

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3 Peter April 19, 2010 at 2:24 pm

We’re expecting our first child right now, and in the process we’re starting to plan for life with an extra person in the house. We’ve already been effectively living off of one income (mine), and we’re planning for the extra expeness – so it won’t be a problem if my wife decides not to go back to work. We’re already living that new reality.

[Reply]

Financial Samurai Reply:

@Peter,

Best of luck with your new baby Pete!

[Reply]

4 Money hints April 19, 2010 at 5:58 pm

If you don’t plan ahead then you really have nothing to plan for. If all you do is spend what you currently have then you will have nothing left. I have been saving as much as I can for over 5 years and I could stop working now if I wanted to and my family wouldn’t have to worry ever. That is all thanks to my wife and my planning.

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5 Money Reasons April 21, 2010 at 5:16 pm

Even before my son was born, we decided to have my wife be a stay-at-home money… Yes, finances did take a hit, but I was lucky because my wife is frugal, so she didn’t spend too much at first. Once my son was in school, she started volunteering to help out at school with various activites. This kept the expenses down too.

This year, both kids are in school, so my wife picked up a small job as a bookkeeper (she has an accounting degree), just for spending money. She spends that money on her own fun activities and kids activities.

Brilliant point about stay-at-home moms & dads getting bored and spending more!!! This is the first I’ve heard this point come up and a very strong one at that!

Nice, very nice!

[Reply]

6 Kate April 22, 2010 at 12:55 pm

I think the best idea is to find a part time job in your area of expertise. I have a friend who works part time as an accountant for a small company. She only has to go into the office once a week and works from home the rest of the time. The best part is that she is keeping up with trends within her industry for when she goes back to work when the kids are older. Not only does it give her family a little extra pocket money, it allows her to feel like she is contributing.

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7 Funny about Money May 6, 2010 at 12:19 am

It’s not so much how bored you are, it’s how lonely you are. Raising children when no other SAHPs live nearby can be very isolating. I don’t recall spending more because of it–who has time to spend when you’re running around after kids? What I do recall is that when I did earn, either on a freelance basis or for the peanuts jobs an editor with a Ph.D. in English can get, I raised our tax bracket, so that my take-home pay ultimately was negligible. I was working for pocket change.

Might be worth considering that if having a parent at home helps develop kids’ moral values and helps to keep them out of trouble in their teen years, it’s likely to save the family a great deal of money in fines, jacked-up car insurance, and lawyers’ fees.

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