One of the biggest and important considerations when a parent decides to stay at home is regarding finance. Is one income enough to support the whole family? Are there any other sources of income or passive income besides the salary from one working parent. What about money for the future like the kids’ education and also for retirement?
With all these financial concerns, it is not surprising that a stay-at-home parent eventually returns to the workforce after a certain period. To make preparations for the switch to a one-income household, below are some suggestions to help you in making the transition:
• Make a budget base on the one income that covers your expenses. The entire family may have to make sacrifices, for instance no cable TV or less dining out, in order for the budget to work.
• Before you even make the switch, learn or practice to live on one income for a few months.
• Put away or reserve more money in your emergency fund as a safety net.
• Ensure that you and your partner have sufficient insurance coverage especially the income-earner.
• Settle outstanding debts as soon as possible and stop accumulating new ones.
• When the family has successfully learn to live on one income, only then take the plunge. If not, hold off your plans until the problem is solved.
One of the biggest mistakes a family can make is to use their credit cards or home equity loan or refinancing loan to live on to replace the lost income. This family will end up being in debt.
An important word of advice is that both partners must mutually agree on the idea for one parent to stay at home. It takes the work of two people to make the idea successful and to avoid finger-pointing on one partner in the future when problem arises.
Have you faced the above situation before? What is your advice to couples who wish to make the move?
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Thanks for your contribution to The Work at Home Family Carnival. My readers will appreciate this sound advice.
Hi Helene, it was my pleasure.