One of the biggest issues facing families right now (and we have a laundry list of issues, don’t we?) is the question they face about work and childcare. Even under normal conditions not involving a pandemic and whether or not your kids have a school they can actually get up and go to each day, the decision to be a stay-at-home parent or to find work and supplement your family income isn’t an easy one to make. But right now, the stay at home or daycare decision is a real dilemma!
Who Watches Your Child If They Can’t Go to a School?
If you have a choice, what choice will you make? For the moment, your choices may be very limited. Do you have a job to return to or you can find? Is your child’s school offering on-site instruction or virtual classrooms? For how long will your life decisions remain in effect because of the pandemic?
You may be right in the middle of making your decision right now and it isn’t an easy one. If you have a job, that may be one thing, but if you have a career, it may be another. Your well thought out plan of managing children and earning a living never included a what-if scenario like a world-wide pandemic and changing your plans right now is painful for everyone concerned.
This is a new decision. It’s not just whether you should work and earn extra family income, but whether you can work and earn extra family income.
What Does It Actually Cost to Raise a Child These Days?
In 1985, thirty five years ago, the average cost for childcare in the United States was $84 a week.
By 2011, it had risen to $143 a week and more than $7,000 a year. That means that since the mid-1980s, the price of childcare has increased faster than annual incomes, accounting for 7.2% of the average salaries of families with working mothers.
Based on the most recent data from the Consumer Expenditures Survey, in 2015, the cost for a family had risen to $251 a week or $12,980 annually per child in a middle-income ($59,200-$107,400) married-couple family. That means that middle-income, married-couple parents of a child born in 2015 will have paid over $233,610 and even more if inflation costs are factored in for food, shelter, and other necessities to raise a child through the age 17. This figure doesn’t include the cost of a college education for a child.
If we just use the rate of average rising rate of costs seen over the 30 years between 1985 and 2015 (about 7% annually) as our “today” number, parents in 2020 are facing right now a weekly cost of about $335 a week or $17,585 per child per year.
Where Does That Money Go?
For a middle-income family, housing accounts for the largest share at 29% of total child-rearing costs. Food is second at 18%, and childcare/education is third at 16%. Expenses vary depending on the age of the child. The price of childcare has increased faster than annual incomes and the average salaries of families with working mothers, so we must draw the conclusion that it won’t necessarily maximize your household income if both spouses work outside the home after you have kids.
These Are Averages But They Do Mean Something!
It’s true that numbers can be manipulated and they don’t always tell the whole story. And yes, what I have told you are just the averages.
Where you live in the United States can have a big effect. On the West Coast, for instance, you can expect to pay between $12,000 and $15,000 annually for childcare, and in parts of the Northeast like New York and Massachusetts, it will cost even more.
Your Decision May Require Some Simple Calculations
What this research tells us is there are actually cases when it is more cost effective for one parent to stay home than to work and pay for daycare. Staying home can be a tough decision.
Spending years getting a degree or going through years of training and development just to walk away (even temporarily) from your work is very hard to do. Yes, a decision to have a child was always in the mix of reasons why a career and earnings were going to be difficult, and you now are coming face to face with this, possibly for the first time.
Take a Closer Look
A reduction in income can be hard, but there are some financial perks when you decide to or have to stay at home. For one thing, having a job actually does cost money.
Stay-at-home parents cut out transportation costs (maybe even giving up that second car or saving on car insurance), clothing expenses, outside food, and all the other costs that come with being out of the house all day. Some families with one parent staying at home even fall into a lower tax bracket, which can amount to even more money savings via tax deductions. Those savings can actually make a real dent into any loss of income you might have when you decide to give up or defer your career.
But all of this doesn’t mean staying at home is always the right choice. Remember, staying at home doesn’t just cut back on current income; it also puts careers and earnings on pause. That means a halt to promotions or advancements that could eventually cut into future income, too. Returning to the workforce after a long absence can also be difficult, especially with outdated skill sets that would never have happened if you had continued working.
There’s Even More to Consider
Your Social Security takes a hit, too, if you decide to stay at home and that also means your 401(k) plans and health benefits will be a concern as well. So when thinking about staying home for financial reasons, make sure that you really are coming out ahead of the game.
One consideration you can think about is the idea of working “at home” which now more than ever is a real possibility. It not only has the support of the worker, but more and more the support of the employer, too, for a load of practical reasons. If you have the option of doing it, your decision to change your work and family style and life will be a lot easier!
August and September used to mean going back to school and that the kids would now be doing loads of activities in addition to their schoolwork. Social skills and extracurriculars which build character and interests are under attack as well as their health and yours these days. That’s why deciding to stay at home is such a big decision, even if it’s just for a month or three until things become more normalized again. The problem is that we just don’t know when that will happen and that means we have to make some hard decisions.
Are you facing the decision to return to work or stay at home because of childcare? Have you crunched the numbers to see if paying for childcare makes sense for you and your family? Do you have the option of working from home or doing a side gig from home to replace lost income?