plonkee money an english-er's thoughts on personal finance

May 6, 2008

stay at home parenting is costly

Filed under: Uncategorized — plonkee @ 12:38 pm

The costs of being a stay at home parent are very real, and it is not something to be entered into lightly. When a man decides to stay at home to look after his offspring, he is of course sacrificing his current earning potential. Should he later decide to return to the workforce, after several years without gainful employment, he’s unlikely to be entering on the salary he would have made if he hadn’t left. It might not even be the inflation adjusted amount that he left on. His lifetime earnings potential is likely to be irreparably damaged, and he won’t have had much money himself in the meantime.

But, people make financially reckless decisions all the time. The decision to have children itself isn’t likely to pay off in monetary terms, but apparently, some people really like their children and want to spend all day with them. It takes all sorts 😉 . No, really, the decision to stay at home with your kids can be enabled by your finances, but money shouldn’t be the main driver. If you can’t stand the thought of it, then it doesn’t matter whether you can afford to or not, you shouldn’t do it. On the other hand, if you really, really want to you only need make sure that you can afford an acceptable lifestyle on one income before making a decision.

If you have decided to become a stay at home parent, you should give some consideration to how you’ll cope financially in all potential circumstances. You might end up separating from your partner. They might end up dead. What will happen if you become disabled and can no longer look after the children? How will you have enough money for retirement, regardless of whether you reach that state single or married?

I think that you need to accept that financially speaking you will as a family be worse off especially in the long run and that whichever partner stays at home will bear the brunt of this financial penalty.

Sure, I don’t have any children, but I’ve got eyes. It’s painfully obvious to me that regardless of the cause, giving up your biggest income stream is likely to diminish your finances. Does that mean that I think being a stay at home parent is a poor choice? No. It does depend on the individual, and it needn’t be the end of your days of generating income. But don’t pretend that it’s cheaper, because in the long run, it isn’t. Make a choice with open eyes, work out how to mitigate the downsides, and then own it, enjoy it and don’t criticise people for making different choices.

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