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Family Finance Matters
Stay at Home Dad
Being a Stay at Home Dad or Mom- You CAN Afford It (part 2)
When deciding if you want to be a stay at home mom or dad you need to look at your finances carefully to determine if you can give up one income. In the first part of this article we discussed the costs of
keeping both incomes. Now we want to consider what you need to do if you do decide to live on one income.
Letting Go of One Income
For many the knee jerk reaction when considering this to be a stay at home dad is “we cannot live
on one income”... but before you say this take a good, honest look at your
finances, your expenses and what’s important to both of you.
Yes, you will have to make sacrifices if you cut one
income…that’s a given.
But what my wife and I found out was that the satisfaction we both got
from my wife being devoted to raising our children far outweighs the cable TV
we had to give up or all the shopping we can’t do.
So just like you did in the first part of this article, let’s calculate the financial
impact of going down to one income and how to deal with it:
- Make a Budget – Considering that you will not have any of
the expenses of having a job listed above make a list of all your expenses:
rent or mortgage, credit card payments, other loan payments, groceries,
utilities, entertainment, insurance, car payments, savings, investments, fuel,
car maintenance, dining out, clothing and miscellaneous expenses. If you need help with budgeting see our pages on budgeting help.
- Prepare a Spending Plan – Considering the one income you are
keeping and the fact that it might be a bit higher than it is now due to paying
less taxes, use a spending plan to distribute your money so you can see how you can cover all your expenses.
- Determine if You Have Enough – if the one income can’t cover
all your expenses then it’s decision time... Separate the NEEDS from the
WANTS…what can you do without? Maybe it’s downsizing a car, a cheaper TV plan, spending less money in miscellaneous stuff, less dining out,
etc. Also think of ways to save money: eating out less, bulk shopping, coupons,
family discounts, less expensive entertainment options, etc.
- Insurance – since most people get life and health insurance
through work, if one of you gives up the job make sure they are still covered
by the other spouse insurance at work or factor in the cost of a supplemental
insurance you buy on your own.
- Savings, Investments and Retirement – just because you give
up one income does not mean you have to give up building wealth, we didn’t.
Part of your budget is to still have money go into savings and into
investments. Whether it’s a 401k plan at work or investing on your own, you can
keep on building your nest egg. Make sure you plan for it.
- Another Source of Income – a job is not the only way to earn
money. A well-organized, resourceful and ambitious stay at home dad or mom can
create a source of income that can be done from home without interfering with
your main job of being a parent. My wife has been able to become a real estate
agent and help run our real estate business while being first and foremost a
mom. There are many options to create an income from home.
From our experience of being a single income family I will tell you that we have had to make plenty of cutting back and tightly control our spending . Even though the financial sacrifice
of dropping one income can seem steep it was one we easily accepted when we
saw the benefits to both my wife and our children of her being a stay at home
You might think you cannot afford to be a stay at home dad or mom. But if you sit down and really calculate the costs of keeping both incomes vs. the benefits of dropping one to be a full time parent then you'll see that with some planning you can do it too.
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