New York – Many individuals wonder whether or not the wife or husband can quit working to take care of the kids. Many individuals do not want to place their children in childcare; however, believe they cannot afford to do so.
Many individuals overestimate the impact of a having a second income to financial support their families, especially during the child’s early years. Much of the second income is spent on the costs of childcare, a professional wardrobe and other work-related expenses. Not only that, but there is also the additional stress of a second job, the time to commute and the time at job-related work functions.
Although each family’s spending varies widely, staying at home may requires only a slight change in spending habits. You need to calculate the after-tax impact of one spouse not working. Remember, if you lose one income, your total taxes and tax rate will decrease significantly. This after-tax effect may be enough to offset the loss of one income that when combined with a small lifestyle change, will be sufficient for one spouse to stay home at raise the kids.
Long-term, it is important to understand that one spouse not working will reduce your overall financial wealth, especially, if the second job provided retirement benefits. As the child grows older, most people who stayed home in the early years desire to reenter the workforce. Childcare costs begin to decrease as children grow older (e.g., no more pre-school or nursery school expenses).
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