Can You Afford To Quit Work And Be A Stay At Home Mom? Financial Experts And Real Moms Share Tips On Creating A Family Budget On One Income.
Erica Sandberg, the financial education director and co-host of the upcoming web and TV program Change Starts at Home, author of Expecting Money: The Essential Financial Plan for New and Growing Families and weekly advice columnist and reporter for CreditCards.com, offers this advice for moms considering the stay-at-home plunge.
Are you dreading going back to work after maternity leave is up? Check out these five budget tips to help moms who are currently in decision mode whether or not to make the leap to stay at home mom status.
Can you afford to live on one income?
1. Consider your feelings toward your job. Quitting a position you love is not an easy decision, even if you really want to be a SAHM. This is especially true if it’s a position you’ve been specifically educated for, have worked hard to achieve a certain a standing, or simply enjoy because that’s where your close friends are. Do not let social conventions influence you one way or the other – do what’s right for you and your family.
2. Develop a post-baby budget. When you cut a household income in half, most of your household bills will remain whole. Can you really pay your mortgage, car loan, groceries and other key expenses on one salary? Mind too that some expenses will increase – it’s important to add additional savings and insurance into your budget, not just clothes and other baby expenses. Never just quit and hope it all works out. Create a detailed cash flow plan and adjust is until you feel confident that dropping that income is sensible.
3. Discuss the matter at length with your partner. Couples must think and act as a combined force, especially with something as serious as having a baby and making sure all concerned are financially comfortable. Review the numbers together. If you have to cut back in order to make it all work, make sure both of you are willing and able to make the sacrifices.
4. Be economically flexible. If living on one income will cause too much stress (or simply isn’t doable) consider all the ways you can stay at home and earn money. You may be able to telecommute, do childcare, or find a work at home position. Be open and flexible to all reasonable options.
5. Do a dry run. While you’re pregnant, deposit 100 percent of the income you’ll lose into a savings account, and live on the remaining salary. How does it feel? Manageable, stressful? Take the test to find out. Whichever way it turns, at the end of the exercise you’ll end up with a nice nest egg to start your baby’s life off with.
5 Budgeting tips for stay-at-home moms
You took the plunge and are now officially a stay at home mom! How do you keep your budget on track? Sandberg offers these 5 suggestions:
1. Borrow as much as you can. If you’ve got friends with kids, chances are they have stuff to share. Ask around. Most parents are happy to donate what they are no longer using.
2. Buy as you go along. You don’t know what you or your baby will like, so purchase things slowly. Millions of jogging strollers, bassinettes, and vibrating bouncy chairs do little more than collect dust and take up space in garages around the country.
3. Recognize marketing hype. Babies need remarkably little of what’s being sold. Ask other new and experienced parents about what they really used and valued, then buy (or borrow) accordingly.
4. Don’t get caught up in neighbor envy. Who cares if your friend has a $1,000 stroller? Never, ever spend more than you can afford just to keep up appearances. If you do, you’re destined for debt. That said, one or two high-end items can satisfy the very natural parental desire to wrap your baby in luxury. Just make sure you love the item/s and have the money to pay in cash.
5. Breast feed baby. Of course not all mothers are able to, but if you looked just at straight economics, the savings are strong. On a monthly basis, the average cost for formula and bottles is over $100 – and what you produce is free.
Real moms share their budgeting tricks
When Wyoming stay-at-home mom of two, Pamela LaPlante married her husband 15 years ago she gave up a job that paid $12.30 an hour in favor of being a stay-at-home parent.
“It was my desire to be a stay at home mom and my husband wanted a wife not a second income," says LaPlante who admits the fact that both she and her husband were raised as the youngest of five children in single income homes, helped to solidify her decision to be at home with her kids and gave her a greater understanding of distinguishing between wants and needs. “I’m in Wyoming and daycare is around $400 to $500 a month for one kid. My feeling is, why pay someone else a large chunk of your income to raise your kids for you! You’d probably do a better job yourself anyway and you can live on one income by adjusting your wants.”
LaPlante, whose husband’s income has fluctuated between $12 and $18 an hour over the last 15 years, shares her secret to maintaining her stay-at-home mom lifestyle on a budget.
- Don’t pay interest. Use credit cards but pay them off every month. The cards are a convenience not a loan. Also don't get a loan, even for a car or anything smaller than a house. “ We bought a new mini van a couple years ago when the old one wore out and paid cash, “ says LaPlante. “If we didn't have the cash for a new vehicle, we would have bought something used that we had the cash for.”
- Don't eat out every week. LaPlante’s husband packs a lunch for work (before the kids were born she packed it for him.) Only treat yourselves to dinner out about once a month. Learn to cook without buying expensive mixes and prepackaged foods and comparison shop! “The stores are making it so much easier by listing the price per ounce on the shelves, “says LaPlante. “When I find good sales on nonperishable items I stock up a little at a time. When my husband was out of work for 6 month we ate well.”
- Plan your errands and shopping so as not to waste gas and wear out your vehicles early. Try to work in errands between piano lessons and little league baseball so it’s an all in one trip.
- Take advantage of free entertainment. Take the kids to the park, library, museum, etc. Get rid of pay TV.
Melissa Newby, a stay at home mom of two kids for the past five and a half years living in Virginia, originally went back to work when her son was three months old, worked for six weeks, and then decided that she wanted to be with him. Although she made an abrupt switch from two incomes to one, she advises moms contemplating whether or not to stay-at-home to consider the cost of working.
“While most people focus on the income lost when one parent quits work, there are also savings when a parent decides to stay at home,” says Newby who credits trimming her food and utility costs with helping the transition go fairly smoothly. “My 'mom' wardrobe of jeans and sweatshirts is cheaper to maintain than my professional wardrobe was. Staying at home often means eating at home, decreasing the cost of lunches out and the trip through the coffee drive-through on the way to work!”
Newby notes that,” Not having to look professional means moms can go longer between haircuts or highlighting and even switch to a lower maintenance hair style. Staying at home also eliminates your commute, which decreases what you spend on gas, limits the wear and tear on your car, and may even qualify you for a cheaper rate on your car insurance.”
For more tips on family budgeting: