My daughter Ollie says it everyday, “Daddy, you came back from work!” She says it that exact way. Her concept of object permanence is clearly still lacking. Every time that I hear it, a part of me wants to sell everything that we have, move to a remote shack in the woods, and spend every waking moment of our lives together. Fortunately, I snap out of this lovely idea the second that I hear Dora scream “vámonos!” from the unattended television in the living room. Nonetheless, I love my daughter, and often consider what it would take to stay home and raise her.
If you’ve ever had the thought, “How can one of us stay home and raise the kids while the other person brings home enough income to support us?”, then you aren’t alone. It may be a legitimate goal of yours, or it may simply be a pipe dream, but is it possible? Yes! It’s very possible. You just need a plan. Fortunately, my name isn’t Pete the Aimless, it’s Pete the Planner. Let’s do it.
Constructing a plan to stay at home
What goes away when you stop working? Right, your value. KIDDING! Your income. But the good news is that other things disappear when you stop working. Things like fuel costs, work lunches, and possibly daycare costs. These expenses are important components to what I like to call the “Stay At Home Net Difference Index.” Yes, I made that up. But fortunately, it’s brilliant. Here’s how it works.
Identify the income that is lost. For instance, if you’re take-home pay is $2,500 per month, then you would lose this amount of income if you stayed home from work. That is unless you can convince your boss to let you work from home. That is different blog post altogether, but a good one nonetheless. But we can’t stop there. You may have lost $2,500 per month, but you will most likely save some money by not working too.
Here are list of expenses that will go away or be reduced when you stop working. Calculate how much money will be saved by eliminating each category.
- Work lunch
- Work clothes
- Daycare (if currently paying for it)
Bridging the gap
Alright, you will be down $900 from your pre-stay-at-home income. There are SEVERAL ways to bridge the gap. First, if you are following Pete the Planner’s Ideal Household Budget, then you will be saving 10% of your take home pay. That means that you can reduce the $900 by another $250. See what I did there? 10% of $2,500 is $250. If you aren’t earning the income, then you aren’t saving the money.
Another way to bridge the gap is to be very purposeful with the way that you mind your spending on all of your other categories. Can you dine out less? Can you get a competitive quote on your auto and homeowners insurance? If you want to stay at home, then you must sacrifice some expenses that you have previously taken as necessary.
You can also Increase your household income to fill that $900 void. I know that I just reduced it by $2,500, but you can always raise it again with some focused effort. If you have the skills to freelance, then consider doing enough work to earn you at least $900 per month. Or the working spouse can become more purposeful about increasing his/her income. He/she can look for overtime, commission, or other bonus opportunities.
Run the numbers
You owe it to your family to run the numbers. Staying at home with just one income is much more achievable than you might think. It requires sacrifice, but you can do it with proper planning.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.