Here's a question that seems to come up again and again: is it worth it for both parents to work or are they better off financially (not to mention emotionally, etc.) if one stays home? I've written about this topic a few times already. For background, see these posts:
In the end, it all boils down to the following cost versus benefit comparison as summarized by Money magazine:
When considering whether two paychecks are worth it, figure out how much of the lower earner's salary will be eaten by expenses incurred if both parents work.
In other words, if the lower earner earns $30,000 a year, but between taxes, child care, transportation, clothing and other costs the additional expenses are $25,000, you have to ask yourself if all the added frustration and hecticness is worth $5k a year. Then again, there may be great fulfillment in a job (or you may be working with the promise/hope of a future, larger payoff). In these cases, you can't put a firm number on many of the qualitative benefits, but you'll need to try to at least estimate their value.
In addition, you need to consider the costs of staying at home such as the (obvious) pay cut, potential loss of (additional cost of) benefits (retirement, medical, insurance), and even foregoing tuition discounts. The retirement benefits can be especially big if you lose access to a 401k where the employer matches part of your contribution. As Money says:
Compounded over time, those lost savings opportunities can equal tens, if not hundreds of thousands of dollars.
In the end, there's really no right answer -- every family will need to decide for themselves based on their values. But here's Money's attempt at giving some guidance:
If you're living paycheck to paycheck, that second salary is likely to be critical no matter how little is left over.
But if you have some cushion, don't just look at the numbers. They may support one decision over another, but they may not square with what your heart and mind are telling you. After all, life is expensive, the well-being of kids is paramount and a parent's career is important not only for the money but often for a sense of identity and satisfaction.
One other perspective: just because one parent stays home doesn't mean they stop earning money. You can do many creative things to create cash such as turning a hobby into an income. For more thoughts on this, see the Free Money Finance Guide to Making More Money.
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