Both of you work outside the home. You are expecting your first child and the wife would like to be able to quit her job and be a stay at home mom with the baby. This is very important to both of you, but can you afford all the new baby expenses?
This is a big decision, both emotionally and financially, and certainly not one to take lightly. Failure to consider the financial ramifications of this change could create huge debt and huge problems for you, but exactly what is the process of knowing whether you can afford it or not?
Prepare the Budget
The first thing you will need to do is prepare a working budget with life as it is today. Then, subtract her salary to see if you can continue your current lifestyle on your salary alone. If you can, then by all means she should stay home with the baby. However, if you are like most couples, you won’t be able to. But don’t despair. Once you know how much your negative shortfall is, you will also know exactly what you need to do to make it on one salary. Here are some tips:
Make a List (and Count it Twice)
photo credit: cesarastudillo
List all of the expenses you be able to avoid if she stays home. Some possibilities are child care, clothing for work, travel to work and lunches out. Does she drive an expensive car to work? If so, could she sell it and buy a less expensive one in order to save on car payments?
List all additional expenses you may incur if she stops working, such as company provided health insurance. You should also calculate the additional taxes you could be paying if she has to give up that flexible spending account her employer offers.
If your proposed single income budget is close, and if you have enough time, try living on the new budget for a few months before the baby comes so you can prove to yourselves that you can do it. You may need to cut some things from your normal spending such as cable TV or eating out, but it is good to know now what sacrifices you may need to make in order to accomplish your goal.
Consider Plan B
If the numbers still don’t add up, maybe she could make some money from home. What is she passionate about? Crafts? Accounting? Tutoring? Piano or art lessons? Try the home business, but make sure it is profitable before she quits her full time job.
If the deficit is still too great, don’t give up. Could you afford this change if you had little or no debt? You could take on a second job (temporarily) and use all the additional income toward debt reduction.
I really believe that if you set goals and stay focused, you can achieve those goals and see your dreams fulfilled. I wish you the best.
Also check out A Mother’s Struggle Between Work And Kids at Free From Broke for great story on a new mom and her struggles with this exact situation.
Joe,
Thanks so much for your post. My wife is educated (Master’s Degree) and very marketable. However, we decided that she was going to stay home when we had our first child. We now have three kids and live on one income.
One suggestion I would add to the list is to make the decision (at least have the conversation) about mommy working as soon as you are married. This way you can make every decision in light of that goal. We waited five years after we were married before we had any kids and for those five years we planned and saved with the realization that my wife would stay home. If we hadn’t had that extra planning and saving time living on one income would be very difficult for us.
Thanks for the great post.
I agree with what Craig says above. We cut our expenses ASAP and banked what we could. We put away a lot while we both worked, basically living off of one income. We expected to dip into our savings but we’ve surprised ourselves and managed to live entirely off the one income and actually continue to save as well!
As soon as you can try living off of one income!
I totally agree that living off one salary and banking the other is a huge step in deciding whether you can afford to live on one salary. The differences in expenses between working and staying home, might add up to as much as formula, diapers, baby food, etc. But be forewarned, babies are expensive in ways that you never expect and they don’t get less expensive as they grow up.
My wife and I are making the move to 1 income and 1 kid. We never made a great deal of money and were able to save enough to be comfortable. We caught a big break when we were placed on our state’s healthcare plan for pregnant women. This saved us 5-10 thousand dollars and will make it possible for her to stay home. I’ve been planing for 8 months on where to buy diapers, clothes, toys and food. Churches in our area have giant (2 gym sized) baby stuff sales. I have a these set on next years calendar, and have already bought clothes to last me until the next season of sales. I pay about 30 cents for an outfit.
For diapers I found http://www.babycheapskate.com, a site that lists out this weeks “diaper deals”, where and how to get them and what the price per diaper is. They are usually around 20 cents a unit if you follow directions on gathering coupons.
When baby gets to the baby food stage I’m going to buy a food processor and some ice cube trays and make my own. I can save about 75% by making my own which is between 50 – 75 cents in savings per serving . I have some friends who want to save money but don’t have time to make their own food. I’m going to sell my food to them. I’m going to charge cost + 10 cents a cube which will pay for about 50% of the food my baby consumes and save them about 50% on food.
Meoip,
Great and practical ideas of how to spend less on raising your baby. Janice and I were determined to use real diapers on our first born, but we succumbed to disposables after putting up the smell and the laundry and actually sticking a pin through our son’s flesh.
We used a little hand turn food grinder with all four of our kids (no commercial baby food) and always believed we were not only saving money, but feeding them something more healthy than the yellow or green paste in a jar. We told our friends that we fed our babies “table scraps”.
Me and my husband bought a two family house with the idea of renting out one half while we have a young baby, and eventually as the baby gets older and needs his own room, and we start making more money we could use the whole house. My concern about staying home with a baby is not that we can’t afford it now, we probably could if we lived very frugally, but what it’s worrying for me is not to pay into my companies’ retirement system anymore. Staying home would mean that I have to work more years later on, as well as not be able to put anything aside for the child’s college education. I would like to have some ideas on how to plan for the future while living on one income.
Caroline,
I love the fact that, at a young age, you are thinking about how the decisions you make today will impact your future. You are a rarity.
How do you plan for the future while living on one income? Great question, and one about values as much as money. If staying at home with your baby is a high priority, you and your husband will need to be in agreement on what sacrifices you are willing to make in order to achieve that goal.
Whether with one income or two, you plan for the future the same way: live on a budget, spend less than you make, get out of debt and stay out of debt, build an emergency fund and invest for retirement. It is admittedly tougher with one income, but that is why the two of you need to be in total agreement.
Having said this, you implied that you would go back to work at some time in the future. At that time, you will have learned to live on one salary and you should be able to keep the same standard of living and use all of your salary to make up for the time you weren’t working.
I hope these thoughts help. Other readers…any additional thoughts that can help Caroline?
What a great article. It is all about shariung what we know and re creating communitites. I blog about baby budgeting and I have written a whole book on the subject (How to Afford Time Off with your Baby – Vermilion 09) Check out my site for the blog and loads of tips http://www.babybudgeting.co.uk
Cheers
Becky Goddard-Hill
Credit you for details. It helped me in my assignment
These are some great ideas. We’re newlyweds and are a single income couple. Thanks for the ideas!