The decision to leave a job and stay home with children is often a difficult decision. During the COVID-19 pandemic, there was an increase in the number of stay-at-home parents – often driven more by necessity than by choice. As some parents now re-enter the job market, others are considering their options. With a new era of hybrid and teleworking ushered in by the pandemic, there are more opportunities than ever for parents who want or need to spend more time with their children at home – whether it is teleworking, moving from a full-time to a part-time plan, or step away altogether.
Whatever the reason, the decision often comes with significant lifestyle and financial changes. It is important to review family consumption patterns and set goals when going from two household incomes to one. Here are five tips for parents reviewing this change:
Nr. 1 – Estimate your time frame. Look into the future to decide if this change can be permanent, and adjust your financial plans accordingly. If you plan to go back to work, determine the time you expect to be home and make sure you are still able to maintain your financial goals during this period. If there is a gap, you may want to explore other employment opportunities such as working part-time or contract work. It is also a good idea to keep in touch with your professional network if you decide to – or need to – go back to work.
Nr. 2 – Make sure you are insured. Examine your spouse’s insurance benefits and make sure you and your children are still adequately covered if your benefits are not available. If possible, plan to have life and long-term care coverage for yourself and disability insurance for your spouse in the event that something should happen to one of you and you are no longer able to work or care for your children. .
Nr. 3 – Understand your value. A single-income family does not mean that only one spouse contributes financially. As a stay-at-home parent, you save your family a lot of costs associated with working parenting households such as day care, cleaning, and other expensive convenience products and services. You may even find that in your new role you have more time to spend money-saving activities like comparing shopping and cooking instead of eating out.
Nr. 4 – Keep your goals on track. Your household budget may need to be adjusted with your decision to become a single-income family, but do not neglect your long-term goals. Consider working with a financial advisor who can help plan a family budget, prepare for both spouses’ retirement, and set realistic financial goals based on one household income.
Nr. 5 – Communicate with your spouse. It is important to communicate your plans, desires and financial concerns with your spouse. Acknowledge together the benefits and challenges that will come with the decision to become a stay-at-home parent. Make sure you are aware of any career or salary changes that may occur in the near future for your spouse before committing to staying home. Ultimately, these factors and many more can be part of your decision to stay home. But whatever you decide, go for it with a full understanding of how it can affect your finances.
Bronwyn Martin is a Financial Advisor and Chartered Financial Consultant at Martin’s Financial Consulting Group, a financial asset management practice from Ameriprise Financial Services, LLC. in Kennett Square, and Havre de Grace, Md. She specializes in two fee-based financial planning and asset management strategies and has been in practice for more than 21 years. Visit www.ameripriseadvisors.com/bronwyn.x.martin to contact her