The percentage of stay-at-home parents has increased dramatically in the US. According to a report based on US Census Bureau data, the number of parents staying at home with their children increased by 60% between 2019 and 2021. That eye-popping increase occurred across all 50 states and the District of Columbia. As of 2021, 18% of American parents didn’t work for pay. Of those who identify as stay-at-home parents, 26% are cisgender women while 7% are cisgender men (the report didn't specify other gender identities).
The report offers a variety of potential causes for that marked jump, including the loss of some 9.9 million jobs during the COVID-19 pandemic, the lack of child care options for some parents, and disabilities or health issues linked to the pandemic.
:max_bytes(150000):strip_icc()/Parents-GettyImages-1304727641-f48475bbf84c4447a802436dc6874add.jpg "Can You Afford to Be a Stay-at-Home Parent? (1)")
For those tempted to join the ranks of stay-at-home parents, there are many factors to weigh carefully before making the leap. Parenting while living on just one partner's income can be difficult.
Read on for some of the costs and questions to consider if you're pondering the question, "Can I afford to be a stay-at-home parent?"
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Assess Your Income and Expenses
Determining whether you can afford to be a stay-at-home parent can be a challenge for you and your partner, one that requires being thoughtful, practical, and realistic. Colleen McCreary, chief people officer and financial advocate for Credit Karma suggests this decision-making process should start by looking at your current income and expenses.
Review Your Expenses
"There's a bit of math that goes into deciding whether you can afford to quit," says McCreary. "First, look at your monthly income after taxes, as well as your partner's, in order to figure out what you're working with. From there, get a clear, comprehensive grasp on your expenses."
When totaling up your expenses, be sure to include everything, including but not limited to:
- Mortgage or rent
- Car payments
- Utilities
- Monthly grocery expenditures
- Debt payments
- Emergency fund contributions
- Vacation funds
- Subscriptions to Netflix, gym memberships, and magazines
- Any other recurring or expected expenses
You'll also want to include non-monthly items such as life insurance premiums, auto repairs, vet bills, and home maintenance costs, says Shelly-Ann Eweka, a senior financial planner with TIAA Wealth Management Advisors.
Bottom line: The more robust your review of current expenses, the better you'll understand where you stand financially and what it will take to successfully make ends meet.
Review Your Savings
"Next, look at any potential savings you might achieve, including savings on child care expenses like a nanny or daycare that you've been paying for," says McCreary. Also, look at any work expenses you may be able to eliminate, such as the cost of your commute.
Once you add all of these things up, you should be able to see more clearly how much your family's lifestyle costs right now, how much you would save with one parent staying at home, and whether one income will be enough to cover expenses if one of you stops working.
"Run the numbers with a financial planner who can help you understand how reducing your family's income will impact your household," says Eweka.
Evaluate Tax Ramifications
When calculating whether you can afford to be a stay-at-home parent, it's also a good idea to factor in how much less you might be paying in taxes if only one parent is employed. If the family income falls from a higher tax bracket to a lower one, for instance, the parent who continues working will likely not need to have as much withheld in payroll taxes and thus may bring home a bigger paycheck.
"Talk to your tax professional to understand how reducing your household income will decrease your overall tax liability," says Eweka. You can also estimate how much tax you'd need to withhold from a single salary by using the IRS's withholding calculator.
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Consider the Impact on Your Long-Term Financial Goals
Your day-to-day living expenses aren't the only costs you should review as you determine whether you can afford to be a stay-at-home parent. To protect your family's financial security, it's essential to also consider how a reduced income stream might impact your saving habits and long-term goals.
"Consider potentially large expenses in the future and how those will be paid," says Carrie Casden, a financial coach and founder of Summit Financial.
Some essential items that often get shortchanged when families reduce their income and seek to cut expenses include saving for college and retirement. But these are important goals that you should not neglect.
Financial planners encourage one-income clients to keep putting something away for retirement. Even if it's as little as $25 a month, save whatever you can right now and resolve to boost the amount when you return to work or whenever your partner gets a raise.
"You should look at your financial goals as a family to see if losing the second income puts any of those goals on hold," says McCreary. "Whether it's saving for your kids' college funds or hoping to buy a new house in the next couple of years, keep those things in mind when making your decision."
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Consider the Mental Health Impact
As anyone who's gone from full-time work to full-time child-rearing knows, quitting a job requires more than just a financial adjustment. Many stay-at-home parents say they initially find it difficult to adjust to the round-the-clock demands of kids. Some say they miss the structure and predictability of the workplace, as well as regular interaction with other adults. Others worry about whether they'll be able to reenter the job market at the same level. And sometimes, there's pressure on the working parent to make career moves that are more about money than job satisfaction.
"Being a stay-at-home parent is about finding balance," says McCreary. "If you make this choice to quit and be a stay-at-home parent, you may need to give up other aspects of your old life, like vacations or dining out frequently. It's also a full-time job, and just as we all need occasional breaks from our office jobs, be sure to carve out time—and budget—for those same kinds of breaks."
Giving yourself some mental health time may involve hiring someone to provide part-time or occasional care or including personal time to attend exercise classes. Stay-at-home parents can also look for other adults to befriend when they bring their kids to the playground or library or join playgroups.
In addition, some parents use the break from their career to retrain for more satisfying work or work that will allow them a flexible schedule once the kids are in school. Other parents opt for part-time work (or working from home) to bring in extra income.
Key Takeaways
While living on one income so one parent can stay home comes with tradeoffs, stay-at-home parents can enjoy benefits that can't be measured in dollars. "There is a tremendous value in being able to spend precious time with your children. And if you're able to stay at home and happily manage child-rearing and other household management tasks, it can be an excellent option for some people that brings tremendous joy and self-fulfillment," says Casden. "It's a completely individual, personal decision, one that is unique to each family. There is no right or wrong answer."
