Can You Afford To Stay Home?
by Sharon Davis
A few years ago, after the birth of our second child, my
husband and I were trying to decide whether or not it would be possible for me to stay home.
At first we thought that since we were just about breaking
even, there was no way we could ever make it happen. But when we decided to actually put pen to paper and calculate our bottom
line with and without my salary, we were quite surprised.
What we found was that it was actually costing us to have
both of us working.
While that may not be the case for everyone, you may find
that the second salary brings in much, much less than you think it does.
According to Jan MacGregor, a financial consultant and former analyst, “There are people out there who are expecting to be
able to meet their bills better (after they re-enter the work force) and never realize they are either working for a loss or
for something like $4,000 a year (after expenses).”
That may seem hard to believe, but if you consider the many “hidden” expenses of a two-income household it is often the
There are, of course, the obvious expenses such as child care and commuting costs. Some of the hidden expenses are the money
spent on lunches, more take-out and convenience food for dinner, dry cleaning bills professional clothing. There can be higher
medical costs due to increased exposure to illnesses for children who are in daycare.
Many families hire a housekeeper or gardener to keep up on
the household work that they don’t have the time to do.
A significant factor is your taxable income. A second salary
can push your taxable income into a higher tax bracket.
While the tax issue in and of itself does not eat up the
entire second salary, when you add in all the other expenses of a two income family, you might find that it’s not worth it to
have both parents working.
Here is a link to MacGregor’s cost of living chart that uses
a second salary of $40,000 as an example: http://cnnfn.com/1999/02/22/life/q_income/chart.jpg"
target="_new"Cost Of Living Chart
If you are considering having one parent stay at home, the
best thing to do is to actually calculate your income and
expenses, taking into consideration the difference in taxation. You may find that you can in fact afford to stay home with your
Sharon Davis, Work-At-Home expert, author and consultant, helps people to achieve their goal of working at home,
telecommuting or starting a home business.
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