Planning to Stay Home With the Kids? Here’s What to Do First
Leaving my job to stay home with my kids was one of the best -- but most challenging -- decisions I’ve ever made, and I’m not alone.
The number of households with a stay-at-home parent has increased by 6% in the past few years, partially due to the influx of freelancing and work at home jobs, according to the Pew Research Center.
If you’re interested in becoming a stay-at-home mom or dad but you’re worried about how to survive financially, know that it is possible to make it work. The key is to have a strong understanding of your expenses and to prepare for making the switch by following the steps below.
Know Your Timeline and Make a Plan
I knew I wanted to stay home with my kids before I was even ready to start my family. I actively followed bloggers who worked from home and raised their children, and to me, it was the perfect lifestyle. Because my husband was still a student, I knew if I wanted to stay at home, I had to work from home to make it work financially.
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. By the time I had my kids, I was ready to work from home on my own terms.
You and your family might have a different timeline and variables. Some of you will not have to work from home because your spouse can financially support your family. For others, simply cutting back on some basic expenses will allow enough wiggle room in the budget to make it work.
If you know you want to stay home with your child, I would advise you to start planning as soon as you’re ready to grow your family. If you know you want to have children in the near future, sit down with your partner to discuss how much money you will need to make it happen.
Talk about different variables and what would happen if you moved to a less expensive area or cut back on cable and other extra expenses. Do the math over and over again to help you set a goal that works for you and your family -- whether it’s having a certain amount of money stashed away or building a side business to a specific level.
When you’re ready to start a family, you could get pregnant right away or it could take a while. However, having a goal in mind is crucial. If you start working on your plan before you’re pregnant and save throughout your pregnancy, you should be able to find a way to quit your job and stay home with your baby for the long haul.
Set Up an Emergency Fund
The next step is simple: Commit to setting up an emergency fund.
Setting aside this money is a great way to prepare for rough financial months or unexpected expenses. When your family depends on one income, an emergency fund is the perfect backup plan to help you avoid going into debt or falling behind on your bills.
A great way to start your emergency fund is to declutter and purge your home, selling excess items online and in garage sales. Most people own several hundred dollars’ worth of items they don’t need.
Once you jump-start the fund by selling your clutter, slowly cut back on eating out or other entertainment spending until you’ve saved up three months’ worth of expenses. That might sound like a lot, but you can get there.
Pay Off Debt
Saving money is important when you’re planning to stay at home, but paying off debt should be high on your list, too. The more debt you pay off, the more wiggle room you will have in your budget when you become a one-income family.
You can pay off debt using many different methods, so choose the one that works best for your family.
I like the snowball method because most of us deal with money more emotionally than mathematically. If I pay off a small debt first, I get excited and motivated to pay off the next one, even if it’s bigger. If I try to tackle a huge debt first, it’s easy to give up.
You don’t have to pay off every one of your debts before you become a stay-at-home parent, but the more you can pay off, the better. Even paying off a few smaller debts can free up a few hundred dollars a month, which could mean the difference between successfully being able to afford staying at home or not.
It’s also important to try not to take on any new debt. For example, my husband and I both drove very old cars with over 200,000 miles on them. Even though we wanted to drive newer cars, doing so would have affected my ability to stay home. That’s just one example of a trade-off or choice you might have to make to be able to be a stay-at-home parent; they will be different for every family.
Create a New Budget, Then Test It
It’s time to put your plan into action: Plan a budget around only the working parent’s take-home salary.
Sit down with your partner and work together to decide what you might need to cut out to make it possible for your family to live on that single income. You can use popular budgeting apps like Every Dollar or Mint, or even a simple spreadsheet.
Allocate every dollar of that single income to a budget category, such as debt repayment or entertainment.
Many people like to follow guidelines such as the 50/20/30 budget, which means you use 50% of your income for essentials, 20% for saving and 30% for personal use. I think 30% is a little high for personal or fun use, but I’m also committed to paying off my debt as quickly as possible. Do your research and find a budgeting system that works best for you.
Then, take a month (or two!) to test your new budget before you quit your job. Although you don’t have to stick to that single salary yet, pretend as if you do.
If your bills are a little too high to live off of one parent’s income, it’s time to start looking at how to cut expenses. Typically, the fastest way to reduce your costs is to stop eating at restaurants and replace your cable service with Netflix or Hulu (especially if you can get Netflix for free). These two changes alone could save you a few hundred dollars a month.
The best case scenario is that during the months you test out living on one income, you can save the other parent’s income and use that money as a cushion for when you finally make the switch.
Consider Working From Home
As I mentioned, the main reason I was able to stay at home with my kids is because I built a blog and freelance writing business which helped supplement our income. Plus, working from home is more popular than ever, and can be a great way to bring in a little extra cash while you raise your kids.
So many opportunities exist for stay-at-home parents, whether you find a work-from-home job or start your own business. You just have to find what works for you. Here’s how I manage raising my twins and running my business from home.
Adjust Your Plan as Needed
I know from experience that even if you take the time to plan, life tends to happen. There will be unexpected expenses, emergencies and more.
The good news is that as long as you have a solid savings cushion, you can tweak and adjust your budget as needed.
This lifestyle isn’t one-size-fits-all, and what works for one family may not work for yours. Going from the corporate world to being a stay-at-home parent can be scary, but having a plan in place can give you a little peace of mind.
Taking the step to stay home with my kids has fulfilled me in ways I never dreamed possible. If you want to do the same, I hope it does for you, too.
Catherine Alford is an award-winning family finance expert and financial writer who lives in Detroit, Michigan, and blogs at CatherineAlford.com. When she is not working, she enjoys yoga and spending time with her 3-year-old boy/girl twins.