Money Talks, So Should You

Q&A: How can I afford to stay home with my baby?

Erin Baehr
by Erin Baehr, NAPFA (@erinbaehr)

Whether you continue to work outside of the home or choose to be a stay at home parent, the reality is that having a baby will put a crimp in your finances (not to worry, parenting has many intangible rewards). Your precious little bundle comes with an entourage: toys, diapers, bags, bottles, monitors and all sorts of gadgets to make your parenting life easier. You name it, they make it. 

There will also be expenses for things like food, clothing and additional medical bills to pay for check-ups, shots and the inevitable illness. Planning for that increase in your budget is the first financial adjustment you need to make, whether you stay at home or go back to work. 

READ: Do I need my babysitter's Social Security number?

Adjusting to leaving the workforce to stay home with your baby may be a relatively easy transition or a very difficult one; it all hinges on how much your family depends on your income. Even if you choose to remain at work, your net income will be reduced by the cost of childcare, which can be significant. 

You’ll need to weigh your newly revised living expenses against two numbers:

  1. Your combined net take home pay, minus the cost of child care, and
  2. Your spouse’s take-home pay (after adjusting for any health or other benefits you might have carried that now will be funded by your spouse). If you’ve been “practicing” all along and living on just one income, you should be good to go. But, if like most couples you’ve been living on both incomes, you’ll need to make changes.

The key to balancing a budget is to make sure the expenses don’t exceed the income. You can do that by increasing the income or decreasing the expenses. As a stay-at-home parent, your income will certainly decrease and not increase, so the best way to make that budget balance is by reducing expenses even more. In that new budget, don’t forget to include a retirement contribution for you too, since that is a “hidden” piece of your compensation you’ll be missing. 

READ: Raising a child? That'll be $234,900

Your day-to-day financial success will depend on how well you keep those expenses within the income available to you. Think hard about the sacrifice to your standard of living and decide if you are comfortable with it  or if it’s possible with your current financial obligations like your mortgage or car payments. Not everyone can make it work given their financial situation.

Are you up to the challenge? Then let me share some tips from when I was a stay-at-home mom. 

It certainly wasn’t easy financially, but “a penny saved is a penny earned” was my motto. With three little ones, even if I had wanted to work outside the home, it wouldn’t have made economic sense for us after paying for childcare. What I could do was spend time paying attention to our finances and finding ways to save a dollar here and a hundred there.

You can do that too, and “earn” as much as a part time job or more. How?  Be vigilant about things like running hot water heater and laundry during cheaper off peak utility hours and buying food in bulk to repackage and store for later. Plan your meals around sales, and schedule things like pizza night or date night- this way you’re less likely to spend more than you wanted to. 

READ: Chores and household jobs teach kids how to earn their keep

Here are some other tips: 

Be resourceful: Shop on Craigslist or online yard sales to find good quality used items. Those indestructible outdoor plastic toys can be super expensive new but fairly easy to find used for much less. 

Be home: Life is simpler and the kids are happier on stay-at-home days. Find inexpensive recipes for play dough and paint and make them with the kids instead of buying ready-made items. Of course we all need to get out of the house at times, and when you do, plan your trips strategically and pack a lunch for the kids. It’s healthier than fast food anyway. 

Be entrepreneurial: Do you have a skill you could use to earn a little extra cash from home?  Perhaps you can paint, or bake, or even watch your neighbor’s kids before or after school. 

Be mission-minded: Resist the urge to give your kids the newest and best; you’re giving them yourself instead. When you feel deprived because your lifestyle is not as comfortable as your neighbors', remember the mission. 

And arguably the most important, be a friend: Build a support network to share struggles, joys, ideas and, of course, babysitting. 


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Erin Baehr, CFP, is the owner of Baehr Family Financial, LLC. Baehr is a member of the National Association of Personal Finance Advisors (NAPFA), a fee-only professional association and a Dimespring knowledge partner.