Monday, 4 May 2015
Congratulations! You and your partner are now expecting a little bundle of joy.
In between planning for the nursery and booking flights for your babymoon, you are grappling with one big question: Can one of you afford to stay home from work once the baby comes? This is a highly personal issue that involves emotional and financial considerations, so here's are six questions all new parents should ask themselves to help make the decision a little easier.
Study your monthly take-home pay and subtract your fixed costs, including mandatory payments like rent/mortgage, utilities, medical bills and groceries. The number you are left with is just your starting point. But even if you want to stay home and your partner doesn't make enough to cover expenses, don't fret — there are ways around this. Look closer at your expenses.
Bills like extensive cable plans are good places to trim, and so are dinners out and lavish vacations.
Try living on one income for three months. Better yet, track every single penny that leaves your bank account, in cash and credit. The results will surprise you.
What expenses are related to your job? How much money do you currently spend on morning lattes, transportation, lunches out and dinners with clients? Take note of these expenses and factor them in when you analyze your budget.
If you and your partner are on your health insurance plan and you quit your job, will you premiums rise considerably? Will you need to spend more money on transportation to get to your new care providers? Additionally, does your current job offer a matching 401(k) program?
Consider how a lack of retirement income may affect you in the future, or if your partner's retirement income will be enough to sustain you both in your later years. How much does daycare cost in your area? Daycare costs vary widely depending on where you live. Before you have your baby, research the costs of nannies and full-time daycare providers in your area. If you will actually end up losing money by working, it may be the right choice to stay home.
Flexible working arrangements are becoming more common. Ask your boss if they're open to the idea of more flexible working hours, or even allowing you to work from home a few days a week. If you're able to keep the extra income while also cutting costs and being available to help around the house, this could be a great solution for you and your family.
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