Should I become a stay-at-home parent and what do I need to be aware of?

Q I’m thinking of stopping work as I feel it’s just not worth it after I pay for childcare, etc. My husband earns a good salary and I think we’d be better off. Is there anything I should be aware of other than the obvious loss of income?

Deciding to give up work and become a stay-at-home parent should be more than just a matter of crunching the impact of tax and childcare costs. It’s a dilemma many parents wrestle with. The question inevitably comes after calculating how much the lower earning partner would make after tax and the cost of putting kids into childcare, not to mention the emotional tax of early morning tantrums loading kids into the car. It can be easy to ask yourself if it’s all worth the hassle.

In family budget terms, it often makes sense to have the lower earning partner leave the workforce instead of sending the children off to be minded at excessive cost by strangers. The money saved stays in the family plus the tax advantages stay-at-home spouses create for their partners makes it all seem like an easy decision.

But while it might benefit the family on paper for you to stay home in terms of taxes, childcare, budget, and lifestyle, does it actually benefit you? Don’t just look at the costs, look at what you may be missing out on.

First, you are taking the entire childcare fees out of your salary rather than splitting it across both parents’ incomes. Second, it doesn’t take into account other benefits that your job may offer. It’s not all about the salary so look at all parts of remuneration. Things like healthcare, a company car, a pension, stock options, personal growth, and career advancement.

Then there’s another thing no one wants to consider – what happens to a stay-at-home partner if a relationship dissolves? This needs careful thought and clearly needs to go beyond the bottom line.

When it comes to pensions, women are already at a disadvantage even if they don’t take a career break. A pension fund can be the second-largest financial asset after the family home and can be crucial in mitigating poverty in retirement. Taking time out for child-rearing obligations while your partner continues to work full-time, accumulating pension contributions could seriously affect your own financial independence in the future. There is not enough awareness in Ireland of these orders or the impact of divorce on pension savings.

You need to know how open you’ll be in terms of financial planning if something changes like, your husband stops working, gets sick or a divorce happens. Maintaining PRSI contributions so that you aren’t worse off when it comes to retirement and aren’t left dependent on your husband.

Stay-at-home partners also need to realise that their ability to apply for credit cards or things like car loans in their own right may go out the window when their income stops. Every application will need to be a joint one, which can take away their financial freedom especially if the worst was to happen. A joint bank account may work well in helping you as a stay-at-home parent to feel in control of money matters. But I still recommend that you keep a little separate cash, controlled just by you, for “the famous runaway fund.”

You never know what might happen in life and staying home to care for children shouldn’t leave you unprepared to face it.​

This article aims to give information, not advice. Always do your own research and/or seek out advice from a Financial Broker before acting on anything contained in this article.

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