Putting your career on hold to be a stay-at-home parent can be rewarding, but this decision may come with significant lifestyle and financial changes. It’s important to review your family’s spending patterns and to set goals when transitioning from two household incomes to one. Here are five tips for parents undergoing this change:
1. Estimate your timeframe. Look into the future to decide if this change might be permanent and create your financial plans accordingly. If you plan to go back to work, establish the amount of time you expect to be at home and ensure that you’re still able to maintain your financial goals during this period. If there is a gap, you may want to explore other employment options like working part-time or contracting work. It’s also a good idea to stay in contact with your professional network in case you do decide—or need—to go back to work.
2. Make sure you’re insured. Examine your spouse’s insurance benefits and make sure that you and your children are still adequately covered in the absence of your benefits. If possible, plan to have life and long term care coverage for yourself and disability insurance for your spouse in the event that something would happen to either of you and you’re no longer able to work or care for your children.
3. Understand your value. A single-income family doesn’t mean that only one spouse is contributing financially. As a stay-at-home parent, you save your family many costs associated with working-parent households like daycare, cleaning services and other expensive convenience products and services. You may even find that in your new role you have more time to devote to money-saving activities like comparison shopping and cooking rather than dining out.
4. Keep your goals on track. Your household budget may need to be adjusted with your decision to become a single-income family, but don’t neglect your long-term goals. Consider working with a financial advisor who can help plan a family budget, prepare for the retirement of both spouses and to set realistic financial goals based on one household income.
5. Communicate with your spouse. It’s important to communicate your plans, desires and financial concerns with your spouse. Together, acknowledge the benefits and challenges that will accompany the decision to become a stay-at-home parent. Make sure you are aware of any possible career or salary changes that may arise in the near future for your spouse before you commit to staying at home.
William “Drew” Watson CFP® is a Financial Advisor and Private Wealth Advisor with Ameriprise Financial Services, Inc. in Owensboro, KY. He specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years. To contact us by phone, please call 270-684-8424 or by mail at 111 West 3rd St., Owensboro, KY 42303. You may also visit our website at www.williamawatson.com.