In today’s economy it has become increasingly difficult to raise a family on a single income. The costs of raising a baby are quite high, and when you add those on top of your normal monthly expenses it can be too much for one parent to support on his or her income alone. But it is not impossible. If having a household with a stay-at-home parent is a high priority for you, it can be done. And you don’t need a six-figure income to do it (depending on where the cost of living is for your location).
Before my wife and I started trying for a baby, we already knew that she wanted to be a stay-at-home mom until our child starts school (at which point she would re-enter the workforce). We didn’t want to send our child off to a day-care all day while we were at work. However, we knew that it would take preparation and some lifestyle changes to be able to do this.
My Wife’s Job
One of our deciding factors was the fact that my wife’s job as an entry-level dental assistant did not pay enough (in our opinion) to make it worth working and paying for daycare. The average pay for a dental assistant with between 0 to 2 years of experience in our area is between $11 and $13 dollars per hour (or roughly $22,000 to $25,000 annually). But even looking at the high end of that range ($25,000) her true earnings would be a lot less than that. There are a lot of costs associated with her working while we had a baby:
– Federal, state, and local taxes ($5,000). This is calculated at 15% federal plus 5% state and local.
– Social Security & Medicare ($1,912.50). This is calculated at 6.2 for social security and 1.45% for Medicare.
– Gas for the trip to work and back ($468.00). This is calculated at today’s gas price of $3.79 a gallon, gas mileage of 20 mpg in city driving in my wife’s vehicle for 10 miles per day for 48 weeks.
– Depreciation and maintenance on her vehicle ($120). This is calculated at $0.05 per mile for general vehicle depreciation, oil changes, wear on tires, etc.
– Clothing and shoes for work ($200). This includes scrubs and good shoes.
– My wife typically brought her own lunch, but if you ate out with co-workers every day this would easily add up ($1,200). This is calculated at $5 per meal per day for 48 weeks.
– We would most likely eat out more meals, since there would certainly be days where neither my wife nor I felt like preparing a meal after working all day and then taking care of a baby in the evening ($2,080). This is calculated at $20 a meal two nights a week for 52 weeks.
– Daycare for the baby ($5,250). This would cost around $6,000, but $5,000 is tax deductible and reduces the total cost.
After subtracting these expenses, you’re only taking home $8,770 from that $25,000 job. This is roughly equivalent to $4.57 per hour. To us, having my wife stay at home and raise our little boy was worth more than the $4.57 per hour she could be bringing home by working.
Making it Work
There are a number of conditions that have to be met in order to raise a family on one income.
– Have Money Saved: One thing we did before trying to have a baby was to save up enough money to cover all the expenses related with having a baby, plus some of the money associated with the first year costs of raising a baby. This really helped us avoid feeling financially strapped right away from having a baby.
– Monthly Income: The parent that does work needs to make a decent income. This will obviously vary depending on what part of the country you live, and this is one of the advantages of living in the Midwest. Our cost of living is fairly low, and if one parent earns close (say, within $5,000) to the median household income of around $50,000, you could be able to make this work. However, there are a lot of other points to factor in as well, as you could get by with earning less if your monthly expenses are low.
– Debt Payments: This is probably the most important point. The more debt you have, the more of your monthly income has to be allocated to those payments. If you have two new cars with payments, a huge mortgage, and a pile of credit card debt, you will need a much larger income to get by with only one parent working. When we had our baby, we had our mortgage payment and a small student loan payment. We had no vehicle loans and no credit card debt. In the year since then we have needed to replace one vehicle, but we purchased a nice used vehicle with a very manageable payment. This is one of those lifestyle changes I mentioned above. Having my wife stay at home with Tyler is more important to us than the status of having a fancy new vehicle.
– Recurring Monthly Payments: Besides debt payments, you need to really take a look at all of your regular monthly payments. Are you spending $200 to $300 a month eating out? How much are you spending on satellite/cable, and can you scale back to a more basic package? Living on one income means you will need to find ways to cut back on these expenses. But it does NOT mean that life has to be boring. That little baby gives us more enjoyment than going shopping for the latest fashions or tech gadgets. And there are a lot of things you can do that don’t cost a thing. You can get books from the library (even to download to your Kindle), go for walks in the park, have friends over for dinner and games, etc.
– Priorities: Like I mention above, living on one income has a lot to with changing your spending priorities. My wife and I decided that it was more important to us for her to stay home with the baby than it was for us to have new vehicles, go out to eat, or spend money on new “things”.
The Bottom Line
If it is a high priority for your family to have a stay-at-home parent, know that it is possible. Try to plan ahead and pay down those debts early to alleviate your monthly cash flow. Review all your monthly expenses and see where you can cut back. I hear a lot of people say they wish they could stay at home with their babies, and I think some of them could do just that if the really made it a priority.