Recently a coworker and I were discussing how his wife would not be returning to work simply based on the fact that child care was too expensive. At the rate it would cost her to place the child in daycare and go to work, she’d actually be “losing” money.
Simply put: If you compare dollar to dollar, it may not make any sense to go to work if you’re going to pay out more than you take in.
As a parent, I can definitely tell you – kids are expensive! They eat a lot of food, wear a lot of clothes, need a lot of entertainment, and require a lot of stuff.
It wasn’t that long ago that my wife and I had to make the same kind of decision ourselves. At the time, my wife was making around $1,000 net per paycheck. The cost of our daycare: About $1,200 per month. So over half of her net income was simply going to daycare! There were times where we said “What’s the point?”
Choosing Child-Care Over Work:
The media also has no shortage of stories that highlight the same issues as well. Some of the other popular reasons parents are choosing to stay at home (outside of just daycare costs) include:
• Low wages
• Long hours
• Insurance costs (if you have a high co-pay deducted from your paycheck)
• Commuting costs (gas, car maintenance)
• Costs to otherwise keep up on household or yard maintenance (i.e. paying someone else to clean up your house)
• Lack of optimism for career advancements
• Overwhelming sense of purpose to raise their children themselves
But Forget About These Perks:
While all of these are perfectly valid reasons, I would urge that people don’t forget about some of the potential benefits that going to work still may provide them:
• Insurance: I’m hoping your work covers your insurance with little co-pay. This was probably one of the biggest reasons my wife did not stop working. At the time we were enjoying “the Cadillac” of life insurance benefits and knew we’d spend a fortune in medical bills if we didn’t have it.
• Employer Retirement Plan: In the case of my wife, we would have had to give up a 403b and a government pension plan. Unfortunately as a stay at home mom, my wife would not have enjoyed these great benefits.
• Other Small Gestures: I know if I quit my job, I’d have to give up my Smartphone, my laptop, and a variety of other perks I enjoy as a result of having a job. The cost of these things should be added to your list of things to consider before making the cut.
• It’s Only Temporary: It was only five years until our first child started Kindergarten. Not too far after that, both our kids were in school full time. Once that happened, the +$1,000 we were sending in daycare payments vanished. So what did we do with all that money? We still pay it, but to our IRA’s instead. From a budget standpoint – we never got our money back!
• Career: Lots of women (and men) go to college for a reason – to one day start a career doing something they’d love. Although it may make financial sense to put things on hold, this may not fulfill your career desires. Couples should be careful to weigh each person’s sense of goals and accomplishments with respect to how they would like to approach the subject of daycare.
Readers: What do you choose, and why? Are you a stay at home mom (or dad) that decided it would be better than going to work? Do you know someone who has done this? Did you decide to move forward with your career? What were the reasons?
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Photo Credit: “Lillian’s First Week at Angie’s” by mbaylor on Flickr
Ultimately I think it’s important for a parent to stay at home if they really believe it’s important to truly raise their children and be the major influential person in their lives. If your child is at a daycare you have no idea what they’re learning from other kids and those sorts of things.
Certainly you can’t shelter your kids but I know I believe we’d take better care of them than anybody.
I can’t argue there! Especially when they are young, you just want to do everything you can for them!
Justin @ The Family Finances says
I actually wrote a post a while back about whether it’s still possible to raise a family on one income. My wife is a stay-at-home mom, and that’s what she wanted to do. We knew that was our goal before we started trying for a child, so we laid all the groundwork ahead of time to make that possible. I think if that’s something that is really important to you (like us), you can make it work.
I remember that post! I actually do believe it’s possible to live on one income. But I think it’s much harder than our parents’ generation (since income levels have basically not changed).
Modest Money says
It would be tough to give up those extra job benefits and the extra money. Sure childcare might eat up a large portion of your paycheck, but it’s a lot more minor when you also take the other stuff into consideration like insurance and retirement plans. I guess in some situations it would still make more sense to leave your job to take care of the kids. You have to think about stuff like the quality of the care they would get otherwise, other responsibilities around the house, the other person’s salary, etc.
It would be a lot easier if you didn’t have to consider all those “extras” versus the invaluable experience of raising children. Definitely something you and your spouse have to sit down and discuss.
Anthony Thompson says
Here in Atlanta, we’ve had recent child safety issues with a few daycare centers. Many of the stories in the media were outright terrible and sad. So, safety concerns is another important reason many parents opt out of paying for daycare. There is also the home-schooling matter. Many parents prefer to home-school, which means staying at home.
Great point! That was another one of our big concerns!!!!
It’s very sick when you read (or hear about) daycare nightmares like that. Although it was a pain, paying for daycare was thing we didn’t take lightly. We wanted a place that would take great care of our most “treasured” little people.
From Shopping to Saving says
I would like to be a stay at home mom for a few years too but deciding between fostering my career when I am fresh out of grad school versus raising kids is a tough tough choice as a woman. You feel like you’ve worked your whole life to get to your career, but at the same time, motherhood is something that you also want and want to thrive at.
I’m still debating on what to do because I know childcare is expensive, but I do know that a career will not be able to grow if you get back to it later. Having the BF be a stay at home dad is also not a viable option since he brings in a lot of income too.
Your BF isn’t up for being like Will Arnett in that NBC show “Up all Night”? 🙂 He seems to have a great time while Christina Applegate is busy rushing around at work.
I chose to go back to work, but it was a tough choice. I found a babysitter who I was very comfortable with and I like the fact that my kids get social interaction with other kids their age.
On the other hand, child care is very expensive. Right now I pay her about 1/3 of my monthly income. And she has low rates!
You’re lucky to find someone you trust. And usually sitters charge much less than standard daycare. I’m also a believer in the social interaction aspect. In many ways I feel that their outgoing-ness is related to this (or maybe it’s just them).
[email protected]&More says
This is a great debate and you really have to consider all of your options. A lot of it has to do with how you want to raise your kids but there is always the financial implications as well. I don’t think it’d be worth working if all of your money goes to child care and keeping up with the job, but to each their own.
Luckily over the years our incomes exceeded the daycare cost. So aside from the other benefits, it also made sense take-home pay wise. And once they’re off to Kindergarten, you basically pay almost nothing for daycare. So if you can deal with it until then, you’re in the clear!
Julie @ Freedom 48 says
It’s important to look at both sides. While we don’t have kids yet, we plan for me to go back to work after our first child, but then stay at home after our second child. I’ll likely take on an extra kid or two though – to continue to earn a little bit of money.
That is the first time I’ve ever heard of staying home once the nest grows +2. But I like that you have a plan! And nice job working some side income into it by watching other children.
Financial Independence says
We have had the same desicion sometime in the past.
The point I would add – diversity of the income. Should you loose your job, you can still be a home, with at least some money..
It is a mind boggling experience be with the child on your own the whole day long. For a kid it is more benefitial to be among the children.
But the kids are expensive about 20% of our family budget is goes towards child:
Do not kid your self – it will never stop till s/he is over 25. In nowadays many parents supporting their kids to get them on the property ladder.
Another vote for income diversity!
I’m a SAHM. If I had continued working, I would have been netting $200/mo after child care costs. It just wasn’t worth the stress of working 40 hours/week for $200 for me. Besides, the decision has allowed me to go back to school full-time, which will eventually increase our family’s income (and make those child care costs less scary.) Until I graduate, money’s rough, but it’s going to pay off in the long run. And I do enjoy spending quality time with the DC everyday. 🙂
At first I saw your post and thought you wrote SHAM. I’m glad I figured it out though … 🙂
Going back to school was definitely the right thing. More time with the kids, more opportunity for education, and more potential to increase your income one day. Yes it will be rough, but it will pass!
michelle (my wife) stays home with the baby, and she stayed home with my middle son as well, when he was 0-5.
daycare is expensive and GOOD daycare is REALLY expensive..
we’ve always said that if she is unhappy at home, we would make it work, but as long as I have solid employment, and we can make it work– we will keep doing what we’ve been doing.
You absolutely PAY FOR WHAT YOU GET! My advice to anyone is get a ton of referrals, check the place out, perhaps even see if there have ever been any incidents filed. When it comes to your kids, you can’t take chances!
You have an excellent system in place. Pretty much everything rides on the wife’s happiness 🙂
That is true Diversification! And a very good point. With layoffs and swift changes in company structures, it wouldn’t be a bad idea to hedge your family by having two working individuals.
Alik Levin says
Same dilemmas here. We decided my wife stays at home. We admits though she has the toughest and the hardest part [work]. At first she felt uncomfortable since she doesn’t’ bring money home, but then we adopted the mindset of mutual investment in our joint venture called family. It fixed it all.
You have the right idea about having a mutual venture! The work done at home to raise the children is just as important as the money that is brought in.
Astro Gremlin says
MMD, nice one! If one spouse has insurance, you don’t need that. Sometimes a home-based business can work. The ability to raise a baby is an “intangible” that’s hard to put a price tag on. Your article should get people thinking creatively about making it work. Moms and babies like to be together. It’s a biology thing. Dads, meh, they are usually better at work than child care. But every dad should take care of a baby for a week — you learn what real work is!
Thanks and welcome to the site! I can agree on the Dad’s staying home part. There have been a few days where I’ve stayed at home with the kids when they sick. I couldn’t wait to get back to work!
our daughter started pre-school at a little over 18 months. couldnt believe they start so early now. i think the first priority is what the parents feel comfortable with. economics should be a consideration but not hte driving factor.
Definitely agreed. It should be a communication between spouses. Not dictated by our budgets.
Here’s our economist-style break-down. https://nicoleandmaggie.wordpress.com/2011/11/21/the-wohsah-decision-finances/
Definitely– you should have seen the stress my BIL was under when they got laid off. (Why SIL couldn’t have entered the labor force was beyond me, but her constant “encouragement” that he’d find something soon definitely wasn’t helping him.)
*he* got laid off… she was a SAHM
Lisa @ Thriftability says
I was a stay-at-home mom for 10 years, due to the fact that the cost of day care would have taken a significant chunk out of our earnings. I feel lucky to have been able to spend quality time with my kids when they were little.
One interesting fact: I went back to work the year before my daughter started Kindergarten. She had a year in daycare, and is actually the most self-sufficient of the three. So maybe there’s something to be said for the experiences kids have away from their parents.
Thanks Lisa and welcome to the site! I think daycare can do a lot of good for a child’s independence. But I never fault anyone who wants to stay at home with the kids when they’re young. It only happens once and it goes by very quickly!
Impressive website! Where do you find the time to write all of these articles? You’re talented enough to work for Money Magazine. As you know, we’ve faced this dilemma but as expensive as daycare is, we made the right decision to keep both of our jobs. Of course adding that 3rd baby and paying for three full time over the summer is really hurting the pocket book. Have you explored the pathetic tax breaks for child care? Having children and being working parents (productive tax payers) should be encouraged through the tax code, not discouraged.
Thanks Larry! The tax breaks for daycare are a joke – enough to say you got something is really all it amounts to. Unfortunately the way our society works is to tax those who work hard and earn well because that’s where the money is! The unfortunate have nothing to offer, so they get all the breaks. On a similar note, that is why the HARP loan rules drove me crazy! Although we were able to barely qualify for the loan, we would have had a much easier time if we had been irresponsible and not paid our bills or taken out a mortgage that was too high. Unfortunately the people who create these laws don’t always use logic and fairness.
I took time off from a low-paying job I really loved in the nonprofit industry to care for my children. I would have stayed had the benefits or the pay been a little bit more, but the value wasn’t just in the money. If I could make a little more or make a little more for retirement, my decision may have been different.
With that said, after having been out of the workforce for nearly four years (raising two new children), I find it extremely difficult to find employment. My resume looks a little skimpy with that huge employment gap on it. I have a military background and two degrees, but it is not uncommon for others to have the education and the current work experience.
So…another consideration is the employment gap, especially in a highly competitive labor force (we’re at 9 percent unemployment rate where I live).