Many people will tell you that being a parent is rewarding and interesting work. Indeed, many people insist that, even though having children is difficult, it also offers a great deal of fulfillment. However, it’s important to understand some of the financial realities that accompany being a stay at home parent. You might say that it’s worth it to sacrifice, and that you would rather have quality time with your kids than more money, but it’s still important to recognize some of the realities that come with staying home, and not working outside the house:
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One of the biggest factors that many cite when one parent stays home is the loss of household income. Whether you are a stay at home mom, or a stay at home dad, the reality is that you are no longer bringing home a “traditional” income once you decide to stay at home. Deciding whether or not you can afford to have someone stay at home is a tricky numbers game, since rising child care costs can offset any financial benefit from working outside the home. However, in some cases, a stay at home parent in the household really does mean a lower household income overall.
Of course, technology, being what it is, it’s possible for some families to see some income, even if only one partner has a “traditional” job. Many stay at home parents are starting home businesses, or monetizing web sites, or looking for other jobs that can be done from the comfort of home. This can be a way to provide a little extra income to make up for the “loss” of a traditional job in the household.
For years, stay at home moms have recognized some of the particular issues that affect stay at home parents. Women have seen, firsthand, what happens when you try to re-enter the workforce after a 10, 15, or 20 year absence. Women’s earning power, over their lifetimes, have been affected by career breaks for quite some time. This has always been a consideration for stay at home parents, and now, with more men staying home than before, a wide swath of the population is being affected.
When you stay at home, you do not have the same opportunities to keep your skills fresh, or to gain experience and promotion. It can be difficult to find a job after the kids are grown up. Additionally, you haven’t spent those years building up career contacts and networking. This, too, can affect your ability to find employment and to earn more money.
Many stay at home parents ease into the workforce as their children age, taking on part-time work so that they can at least keep up with the industry. Others make sure to maintain certifications, take a class or two, as well as continue to stay in touch with old contacts. The Internet offers opportunities to stay up to date with your field, and maybe do a little consulting from home, or just keep in touch with the “right” people. If you decide your stint at home is over, you will want to be able to show that you are employable.
Unfortunately, many stay at home parents lack retirement plans of their own. For married couples, there is no reason for this. The spousal IRA, and other partner strategies, can allow a stay at home parent a retirement account of his or her own. However, if you aren’t married, you can’t take advantage of spousal contributions to an IRA, and that can leave a stay at home parent with fewer resources. At the very least, the working partner should contribute to a savings or investment account in a partner’s name so that the partner has future funds for retirement, or for other purposes.
While staying home can be a great experience, it’s still important to carefully consider the implications, and do what you can to ensure that the stay at parent has the opportunity to find ways to retain earning power and prepare for the future, from adequate life insurance for the breadwinner to adequate emotional and financial support.