The decision to leave a job and stay home with children is often a difficult one. During the COVID-19 pandemic, there was a rise in stay-at-home parents often fueled more by necessity than by choice. As some parents now reenter the workforce, others are considering their options.
With a new era of hybrid and remote work ushered in by the pandemic, there are more options than ever for parents who want or need to spend more time with their children at home – whether that’s working remotely, moving from a full-time to a part-time schedule, or stepping away completely.
Whatever the reason, the decision often comes with significant lifestyle and financial changes. It’s important to review family spending patterns and set goals when transitioning from two household incomes to one.
Here are five tips for parents undergoing this change:
Estimate your timeframe
Look into the future to decide if this change might be permanent and adjust your financial plans accordingly. If you plan to go back to work, establish the amount of time you expect to be at home and ensure that you’re still able to maintain your financial goals during this period. If there is a gap, you may want to explore other employment options like working part-time or contracting work. It’s also a good idea to stay in contact with your professional network in case you do decide – or need – to go back to work.
Make sure you’re insured
Examine your spouse’s insurance benefits and make sure that you and your children are still adequately covered in the absence of your benefits. If possible, plan to have life and long-term care coverage for yourself and disability insurance for your spouse in the event that something would happen to either of you and you’re no longer able to work or care for your children.
Understand your value
A single-income family doesn’t mean that only one spouse is contributing financially. As a stay-at-home parent, you save your family many costs associated with working-parent households like day care, cleaning services and other expensive convenience products and services. You may even find that in your new role you have more time to devote to money-saving activities like comparison shopping and cooking rather than dining out.
Keep your goals on track
Your household budget may need to be adjusted with your decision to become a single-income family, but don’t neglect your long-term goals. Consider working with a professional who can help plan a family budget, prepare for the retirement of both spouses and to set realistic financial goals based on one household income.
Communicate with your spouse
It’s important to communicate your plans, desires and financial concerns with your spouse. Together, acknowledge the benefits and challenges that will accompany the decision to become a stay-at-home parent. Make sure you are aware of any possible career or salary changes that may arise in the near future for your spouse before you commit to staying at home.
Ultimately, these factors and many more may go into your decision to stay at home. But whatever you decide, go into it with a full understanding of how it may impact your finances.
Shawn Bumgardner is a financial adviser and president of Clear Horizon Wealth Advisors, a private wealth advisory practice of Ameriprise Financial Service Inc., in Southgate. He can be reached at 734-284-3700.