Make a budget—and test it.
To begin building your stay-at-home parent budget, make a list of all your current expenses, then consider them against your total household income. Make sure to include any new expenses that might arise if you’re leaving a job.
- Will you have to change your health insurance?
- Are there any cost-saving benefits you’re currently accessing through work that will disappear when you leave?
Do the math and look for costs that can be eliminated, then decide what changes you’ll need to make for your stay-at-home experience to be sustainable.
Once you’ve balanced the day-to-day budget, it’s time to think about savings.
- Can you build up your emergency fund now to give you an extra cushion while your family is living on one income?
It might be tempting to stop saving for retirement when you’re not working, but not saving will cause you to lose out on valuable years of compound interest. Even if you’re not able to save very much, anything is better than nothing.
If possible, test your budget by living on one income for several months before you leave your job and saving the balance. This should help alert you to any financial blind spots.
When you become a stay-at-home parent, it’s more important than ever to ensure that your family is financially protected. That means—should tragedy strike—the working partner needs life insurance that covers the entire cost of maintaining your family’s lifestyle. However, the stay-at-home parent should also own a life insurance policy. Why? Because the work of that parent is essential. Childcare is expensive, and the last thing you want is for your family to deal with financial worries should something happen to you. A financial professional can talk you through your options to make sure your family has the necessary coverage.
Consider part-time work.
Finally, being a stay-at-home parent doesn’t mean you have to stop working entirely or indefinitely. Returning to work can be part of your plan, and there are many options for flexible, part-time, and remote work. A few hours here and there or the occasional assignment can keep your skills sharp and allow you to contribute to long-term savings goals—like your child’s education or your retirement. Remember that being a stay-at-home parent won’t last forever—kids grow up! Start building a financial road map for your family that includes your time running the household, and if or when you plan to return to work.