Xcited as we are on the birth of our child, it comes with many tough challenges and choices that needs to be made. One of that is the decision of one parent to quit the job and stay at home to take care of the child.
If you already have children or expecting a baby, the thought of one parent being at home will cross your mind. But switching from two earning members in the family to one and cutting the income into half has its own sets of adjustments and considerations that need to be made as the big question remains; in today’s economy and time, can this be possible?
Identify your expenses: To know if you are ready for this shift, you should first look at your expenses. List down your fixed expenses which will remain unchanged and then look at the variable and new expenses which will increase with the switch.
. Rent or EMI
. Utility bills
. Gas and car loan /EMI
. Medical bills
. Investments and Insurance premiums
. Clothes and other stuff for new child
. Date nights / family nights
. Family holidays
. Birthdays and special days gifts and parties
Identify the expenses which will go away for a stay at home parent: As one person stops going to work, of course there are going to be change in expenses as well. Firstly, you save on travel cost. Traveling makes the major chunk in this list as a public or private transport, you have to spend daily on it to commute for work. Lunch with colleagues and office wear shopping are some other expenses you save upon.
Plan your decision in advance: The decision to quit work for one parent when planned and well prepared for, helps to cope with the change more efficiently. When you are in the 1st or 2nd trimester, think about this option if you have to, start saving more and spending wisely only on what you need. The 6- or 3-months’ time will give you a chance to build up on money and provide you with cushion while you adjust to the change in lifestyle.
Budget: The new change is going to disturb the existing budget and you will have to redesign a new one to accommodate these changes. Drop in the income will call for change in lifestyle and a new baby will call for new expenses. Investment will see a shuffle as need to invest for child’s future and education will come in forefront while you still have to continue with your retirement and emergency fund. EMI or rent eats away a great portion of your income, so you may want to consider reducing this by either shifting to a less expensive locality or paying a chunk of your loan before you have one parent staying at home.
Medical Policy: When you quit, you lose your medical policy and other benefits that you earlier enjoyed as perks from your employer. Medical expenses are going to incur as life proceeds so will have to plan for it.
While these are some of the ways you can gauge your affordability and viability of the idea of one stay at home parent, you can make it possible by:
Alternate income for stay at home parent: Once the decision has been made, you have to think about alternate ways to make money while staying at home. Start taking tuitions or other activity classes at home, or convert your hobby into business like baking and taking party order for food. If you are good with words and writing excites you, you can take up content writing.
Lifestyle Change: A new baby means many new expenses and to accommodate them and the change in income, one has to bring small or big lifestyle changes. A latte on your way to office can be skipped. Weekly dinner dates can now be fortnightly. Cut down on your shopping and stick to what is needed and not go after all your wants.
Grow in your existing job: The parent who is working will have to give more than 100% in office to make sure that the promotion and bonus comes in on time. You don’t want to miss an opportunity to get more money coming home.
Sudden dip in the income can be scary. To know if you can afford it and how are you going to sustain it is important. You also have to continue with your investments and future savings. Hence, planning your financials plays a crucial part.
In my next blog I will talk about “Money talks you should have with your parents”. Stay around
Till next time
Stay Strong and Pray for our Country
This blog is a part of Blogchatter’s #blogchatterA2Z challenge.