Whether you have a growing family or perhaps one spouse wants to try a new endeavor in the home...deciding to live on one income is a huge decision. I'm finding that as a Millennial the question on whether or not one spouse is going to quit his/her job is becoming increasingly common as I near my thirties.
We started discussing this over a year ago, prior to getting pregnant because Kevin wanted to take a leap and begin to do graphic design at home full time. We didn't want to rely on his income at home for the first year in case it didn't end up being as profitable as we had planned. When we first discussed this, we decided it wasn't the right time. I was still working at a law firm without any benefits and a lower paycheck, photography wasn't quite as booming, and we really liked the benefits offered through Kevin's job. A little over a year ago we revisited when I changed jobs. Actually one of the big factors in my job hunt is that we wanted the OPTION to live on only my income long-term. We turned down other job offers as a result of wanting this option, and a variety of factors brought us to the job I now hold. While we were still discussing this again after changing jobs, we found out we were expecting (and decided to buy a house the same month) so we decided to wait til the baby came until Kevin would leave traditional employment.
There are incredible numbers of factors to consider when you make the change from a dual-income to one-income family. As mentioned earlier, I've had this conversation with many friends lately as well...so we aren't just talking about the factors we considered but some that our friends considered. I've also read a lot of books lately on women who choose to stay in the workplace. It isn't simply whether or not one spouse's income will pay the mortgage, or if daycare costs more than the other spouse is bringing in...looking at the larger picture can help with making this decision.
First I'm going to look at what I'm calling the Quantifiable Considerations. These are things that you should really consider writing down and putting actual cash numbers next to them.
The Quantifiable Considerations
What are your expenses? If your goal is to be a one-income family without a lifestyle change, you need to be looking at all of your expenses. Everything from how much you spend dining out, on clothes each month, utilities, entertainment...everything.
Can you cut back? This is where the lifestyle change comes in. Perhaps going down to one income is worth having a lifestyle change for you. For example, if one spouse is staying home perhaps you don't need to eat out as often because he/she will cook more, or maybe she will spend more time coupon-ing. If you're already paying for daycare, will you be forgoing daycare for a spouse to stay home? Look at the ways you can cut back. Could you get rid of a car payment because you could become a 1 car family? Could you downsize your living situation to decrease your mortgage/rent payment? Are you willing to let go of taking an expensive family vacation every year? We are fully aware that our BIGGEST lifestyle change will be the international trips we tend to take multiple times a year. However, we knew we would be giving up some of this just by starting a family not because of monetary considerations. If you don't want to change your lifestyle that's fine! But don't kid yourself and say you will cut back if you won't...that only leads to overspending and debt...which we believe is something to avoid.
What will you be saving if one spouse quits? To me this is slightly different than cutting back, because there are genuine expenses that likely won't be factored in when one spouse isn't working outside the home. Gas or transportation to get to work every day is one, including any parking you may pay for. When Kevin stopped working at Lowes he isn't coming home with holes in his shoes every couple months, requiring us to buy him new ones because they won't be wearing out so fast (and hopefully his jeans too). A lot of the other things will still be there for us. If we were already paying for daycare then we would factor that we would not be paying for that anymore into this category.
What expenses may increase? Your bills may increase if someone is staying home all day with the heater and water running. Maybe he/she will be running more errands rather than online shopping meaning you'll spend more on gas? Will the stay at home spouse decide to join a group/club/gym to get social interaction with others that will have annual fees? Moving our family over to my health insurance rather than Kevin's also will cause our premiums to increase. It can be big or little things here, for example we will lose the employee discount Kevin has had at his work the past 6 years. It all adds up!
Second, and what I think is most often overlooked are things that aren't as easy to put numbers next to...but are JUST as important as those ones above. Actually, in my opinion they are even MORE important.
This is where I get so frustrated by my least favorite phrase that friends tell me when they explain why they are leaving their job to stay at home. It is this.... "Well, it would cost more to put my kids in daycare than my income brings in." This is NOT the only factor you should consider!! It may actually NOT be costing more when you take into consideration everything else that will be changing! I want to also remind you to look at these other considerations when making this decision:
The Non-Quantifiable Considerations
What are you losing besides income? You're probably losing a lot more than you think. For example job rank. When you go back into the workplace (if you decide to) you are losing multiple years of experience which can convert to multiple years of lost raises and job rank. You're also probably losing health benefits and my personal favorite, matching contributions to a 401(k) (I actually would have you consider moving the 401(k) match up to the Quantifiable Changes since you can figure out how much of the Employer contribution you'll be losing each year). You're probably missing out on job opportunities from your years of lost experience and then there is the huge struggle of getting back into the workforce after leaving.
Do you like your job? This one is important. It is by no means implied that when you are having a kid, that you have to give up your job...and it's OKAY to say you like your job. Guess what...I LOVE my job. That doesn't mean you like your job more than your child, but don't feel ashamed that you enjoy what you do! (you're one of the lucky ones!) The simple fact that you enjoy what you do should certainly be considered when you're discussing whether or not you'll be leaving to stay at home.
Do you want to stay home? Also a big one. Not everyone WANTS to stay home with a screaming child. We understand it is basically impossible to know this until you've tried it. The beauty of FMLA is that you can try out staying at home before totally giving up your other job if you have a new baby. Not only do I like my job...but I don't really want to stay at home. These two are completely distinct questions....just because you don't like your job doesn't mean you're going to like staying at home!
Is there a part-time alternative? Could you go part-time in your current job or find something that would allow you to do that? Does trying some other alternative career or income source sound interesting to you? For example, starting your own business or using this as an excuse to change career paths. You shouldn't just be considering staying at your current job, but in the job market in general. It isn't "all or nothing" get creative in finding a way to possible work some and stay home some!
Are there daycare alternatives? Perhaps there is another neighbor choosing to stay home that would be awesome at watching your child and could use the extra income. You could alternate with neighbors, or even with spouses. Perhaps there are family members around that could be on some sort of schedule. Everyone is different on this one, so I'll leave it at that.
Are you comfortable with the risk? This was another HUGE reason we put off doing this earlier...I'm incredibly risk averse. For example it just about kills me to put my retirement into more risky investments that I should be at my age...if I went with only my gut feeling...I'd be investing like an 80 year old. Having 1 source of income is a huge risk to me. What if something happens and I can't work? It also takes my mind a lot of training to go through what Kevin's day is going to look like at home, and I need to constantly remind myself that even if he is home he is still working....he isn't being lazy! There are ways to help with feeling this way about one partner staying at home. We are increasing the amount of life insurance I have in case something were to happen to me as the primary source of income, we also are keeping more money in savings to handle emergency events that may arise, and we are doing all we can to plan financially for the unexpected. That way I'm able to cope with the additional risk that we are taking by having 1 source of income. This is also were you may want to look at one spouse having a small part-time job instead of leaving the workplace entirely...it's nice to know there would be a little money there if needed.
Are you comfortable with the risk? This was another HUGE reason we put off doing this earlier...I'm incredibly risk averse. For example it just about kills me to put my retirement into more risky investments that I should be at my age...if I went with only my gut feeling...I'd be investing like an 80 year old. Having 1 source of income is a huge risk to me. What if something happens and I can't work? It also takes my mind a lot of training to go through what Kevin's day is going to look like at home, and I need to constantly remind myself that even if he is home he is still working....he isn't being lazy! There are ways to help with feeling this way about one partner staying at home. We are increasing the amount of life insurance I have in case something were to happen to me as the primary source of income, we also are keeping more money in savings to handle emergency events that may arise, and we are doing all we can to plan financially for the unexpected. That way I'm able to cope with the additional risk that we are taking by having 1 source of income. This is also were you may want to look at one spouse having a small part-time job instead of leaving the workplace entirely...it's nice to know there would be a little money there if needed.
Okay, let me stop here and take a moment to say...I am not against having one spouse stay at home. We are doing it, and excited about it! However, it doesn't have to be your only option just because your quick 10 minute math tells you that daycare is more expensive than one spouse brings home each month! This also is not intended to be an exhaustive list of considerations!
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