Being a stay-at-home parent comes with a ton of obvious benefits: more time with your children, no need to pay for childcare, free taxi service (okay, maybe that’s only a benefit for your kids) and much more. But quitting your day job, as it were, in order to stay at home with your children takes some serious financial planning—that’s an entire salary your household will be missing out on. Here’s how to plan and budget so you can afford to be a stay-at-home parent.
1. Look For Ways To Earn Money From Home
Whether it’s blogging, an Etsy shop or a part-time work-from-home job, it’s good to have a way to earn some money—even if it is much less than your full-time salary. If you can make a little cash by working from home during evenings, weekends or nap time, losing that second paycheck will be less of a shock to your bank account.
“For about a year before I got pregnant and all through my pregnancy, I worked on the side building a blog and freelance writing business,” writes Catherine Alford for The Penny Hoarder. “By the time I had my kids, I was ready to work from home on my own terms.”
2. Consider The Tax Implications
Remember, with just one salary, it’s important to consider the take-home pay, not the pre-tax income. When just one parent is the breadwinner, every dollar counts. Base your budget on your after-tax earnings for a more realistic financial picture. Also remember that when your income goes down, your taxes will as well.
“If your plan is to quit your job and stop earning money all together, you might be pleased with the effect on your taxes,” Alden Wicker writes on LearnVest.
3. Set Up A Rainy-Day Fund
This is so crucial. You should always have a little bit stashed away in case of an emergency, but this is even more important when you only have one salary. In the case of something terrible happening (or even just a little financial squeezing), this emergency fund is key in making sure you don’t fall into debt or get behind on bills.
You can jumpstart your emergency fund by decluttering: Have a garage sale, sell things on Craigslist or eBay and take clothes to consignment shops. That should give you a few hundred dollars (or more, if you have a penchant for designer jeans that no longer fit you) to get started. Ultimately, you’ll want to have three months’ worth of expenses saved up. It seems like a lot, but better safe than sorry.
4. Negotiate Household Chores
Being a stay-at-home parent is a job all on its own. Nobody wants to parent toddlers all day and then be expected to cook, clean and organize because you were “sitting around the house.” Nope.
“It’s much easier to talk about one another’s roles while you’re deciding to become a stay-at-home [parent] rather than after you’re already home with the kids,” writes Apryl Duncan in About.com’s Parenting section.
Talk about who will wash and who will dry long before one of you leaves your job. This will save you much heartache and frustration down the road, we promise. And there’s no shame in a chart—bonus points if your kids are old enough to help out around the house.
5. Test Your Budget
For at least a month or two, test your new, single-income budget. This is the perfect time to see if and when you feel squeezed by bills—so you can make adjustments as needed.
If your bills are feeling like too much, start deciding how you can trim them. Whether it’s scaling back your summer vacation, swearing off restaurants on taco Tuesday or cancelling your cable, there are many ways to save a few hundred dollars a month.
While you are testing your single-income budget (but still bringing home two salaries), stash away the second income. Then you’ll have that cash on hand to use as a cushion when you switch to stay-at-home parenting (or you can put it in that aforementioned emergency fund).