Free Ebook.

Enter your email address:

Delivered by FeedBurner

« Most Common Problems Identified by Home Inspections | Main | Is Your Cable Company Good at Customer Service? »

July 01, 2010


Feed You can follow this conversation by subscribing to the comment feed for this post.

Taxes, clothes, commuting, and so forth may take away 30 per cent, but 70 per cent of $50,000 is still better than nothing.

I agree with Richard, and I will add that it might not be too wise, especially in this economy, to put all the eggs in one basket.

Other than taxes which are unavoidable, child care is probably the biggest expense up there. It's not uncommon for one member of a couple's take home pay to be devoted to paying for child care.

When my son was little, we paid over half my gross salary just for child care. Since net is usually about 60% of gross, that meant we were spending almost all my take-home pay on child care, and that was before I had lunch and before we went out to dinner several nights a week because I was too exhausted to cook. Nor did it count the cost of the private grade-school he was attending.

Effectively, these expenses turned my job, which was the highest-paid work I'd had up to that time, into a hobby. Without my husband's income, my young son and I couldn't have begun to live on what I was earning.

I agree that 70% of something is better than 100% of nothing however there are intangibles to consider. My wife stays at home with our son and works part-time in the evening. This works out well for us as I can come home in the evening and watch our son. However, I only get a few hours a day with him...I can't imagine having him in day care while we both worked. I don't want someone else raising my child, and don't want him only seeing both his parents a few hours a day.

The income potential for my wife is not insignificant as she could easily earn in the upper 5 to lower 6 digits with her degree and experience. The fact is we planned ahead as best we could to have her at home with our children. Our next step is not having her work at all once we have a second.

Richard, Jessica, and PMT --

1. I don't think it's 70% -- I think you have a lot less than that left over if you really add up the costs. That's the point of this post.

2. If childcare is part of the equation, you're certainly WELL below 70%.

One other cost that is not listed is lost opportunity in the time taken up by getting to and from work.

For my current job, there is absolutely no reason why I have to commute into the city to do it. I pay $186 a month to ride a train ($4 a day to park), 2 hours a day, to go to an office where I log into a portal via the web to do my work.

So when calculating cost of working, income should be averaged out over not just time worked but time lost because of work.

Right, lose about 70% of your gross pay. I had an offer to work full-time (in 'traffic' at a small graphic design/advertising) agency when I had two children under 5 (and just before our third was on the way). When I considered the pay rate and the costs of daycare and expenses, I was easily working simply to place my children in the care of another. Unfortunately, my mom was still working as a nurse and lived 45 min. away, so having her watch the children was not an option for us.

Although I did miss out on a good opportunity, I wouldn't trade my decision to stay at home. In fact, I miss those days!

I was lucky that my husband had, and has, a decent-paying job w/great benefits.

After all is said and done, and before childcare expenses, i think i probably take home about 60% of my gross pay. that figures in taxes, commuting, car expenses, and all the other things listed above. I cant even imagine where i would with child care expenses on top of all of these!
Preferred Financial Services

The costs of working include what you are investing in your future career. Thus, it is false to just consider income vs spending.

Continuing to work is similar to college--it may be expensive especially at first, but it pays off big later.

This is especially important for women to keep in mind: childcare costs now are an "investment" in your future career and earning ability. Women who stop working lose big when they try to start working again 10 or 20 years later.

It's extremely short sighted to only consider your current costs vs expenses when you think about your career.

I think these calculations are exaggerations.

Work clothes: Yes you need them, but once you already have a couple suits and some blouses, you can wear them every day for the next 5 years and no one will notice at all. You can also get your suits and blouses at a thrift or consignment store or a discount store like Target--you don't need designer clothes. Plus if you wear work clothes most of the time you don't need to buy as many casual clothes so that offsets the cost. Also, casual clothing costs just about the same as work clothing. (the cost of a pair of jeans = the cost of khakis or black work pants from the Limited).

Eating out: huh? I certainly don't eat out more if I am working than if I stay home. Since I work, I have to run to the daycare to get my kids after work, and then we go home and cook and eat there. Who has time to go out and wait in line at a restaurant?

Fast food breakfasts and lunches? Nope. I eat breakfast at home. I buy lunch at the employee cafeteria (very cheap) or bring it from home. I would note that SAHM's often go out for lunch or breakfast with friends--if you are at home you have to do stuff to get out of the house or you'll go insane. I don't see how eating lunch out is something that only working people do or that working people do more than SAHMs.

Gifts for coworkers: ????? I don't think I've had to kick in for a gift for a coworker *ever* in the past 5 years.

Yes I sometimes buy donuts for my work group. That's $10 every couple of months--not a lot.

Nicer car? Unless you're a real estate agent, I really doubt anyone buys a nice car just to impress at their job. On the other hand, some working people get to drive a company car--but of course you can't save that way if you don't work!

Childcare: as I mentioned in my earlier post, childcare is an investment in your career. It's also temporary as your kid won't need it past 12 years old.

Convenience foods at home: nope. I cook every night, actual real food. Frying some chicken and steaming rice & veggies is quick and not that hard, you know?

Taxes: This is ridiculous. Yes, if you make money you have to pay more taxes. But if you don't work you don't get anything.

Car/mileage/gas: of course it depends on how close you live to where you work. During the week I only drive back and forth to work (5 miles from my house) and the daycare (10 miles). But if I stayed home, I'd be driving more because I'd be taking the kids to outings and shopping more and I'd be driving around to different stores chasing those coupons.

Car license: Sorry, I bet you'd pay this even if you stayed home all day. I can't believe any mom would stay home with her kids without having a car. How are you supposed to take the kids to their library/swimming/piano lessons/boy scouts/doctor appointments without a car? And how would you drive all over to get those coupons at the different stores? And you'd need a car big enough for your kids & maybe their friends too, and something safe that won't break down--so, no you wouldn't be content driving a junker. In fact, you might have to buy something larger/nicer if you stayed home most of the time.

Housekeeping help: Yup, I pay for this now. It's a luxury, though. I used to do it myself even though I work 60+hrs/week and have 2 kids and no husband. No way does working "require" you to pay for housekeeping help.

There are significant tax breaks you can take on childcare costs if you are also working full time, which are not available to you if you aren't.

1) the childcare tax credit,
2) most companies also provide for a flexible spending account for dependent care so you can use pre-tax dollars to pay for your childcare.

I use the FSA and therefore I save 37% on my childcare costs. Almost as good as that mortgage interest deduction!

@ MC:

These are good points, for sure, but dependent upon what type of work you do. Obviously, if you are a teacher, or in healthcare, you develop a 'uniforn'. But I know many professional women who pay a small FORTUNE in clothing, shoes, hair care, manicures, just to keep up impressions. This does seem to be skewed toward females, in my opinion.

I know that when I was an art teacher, it was part-time, no benefits (so no FSA), and cost me a small fortune in gas and supplementing the program w/my own money. Of course I couldn't deduct any work-related teaching expenses since I did not work the required minimum # of hours.

It all depends...I have just been asked to work for an orthodontist as an assistant and they will provide all training...and I haven't worked in years; a lot has to do with who you know and being in the right place at the right time, unfortunately. And I do have a 4-yr. degree as well.

@ MC:

And, obviously, I believe an investment in my children pays back a TON!!!

Even after the rebuttals I still agree with MC. Put a banana in your pocketbook and eat it on the way to work. Do your own nails (trust me I love pedicures, but at $40 a pop, that is way out of my price range).

Buy clothes on eBay or at Marshall's (I buy expensive Anthropologie clothes on eBay). Same for jewelry, or shop Overstock or Urban Outfitters or thrift stores. A week's worth of PB&J costs about $10, for lunches, and just because you have a job doesn't mean you can't cook. Learn how to cook quickly and save money doing it... it's MUCH healthier than buying processed crap. Gifts for co-workers? Maybe once a year, but I can't imagine why people would be buying one another things all the time.

As for a car, that may be a consequence of having a job, or it may not be, unless you want to not have a job and be in your house all day long with no way to get anywhere. I understand childcare and some of the other items but I think this budget is a bit wasteful. The ultimate point may be correct but I just think some of the items listed are exaggerations.

@ Jessica2:

Agreed but remember time comes with a cost. Not too many people can work full-time, be that resourceful, and have some downtime w/their family. It can become a rat race (or the dog chasing its tail). I see that with many family members...their marriages suffer and sometimes their health from the stress. It's all about what you want out of life.

Of course, if you have to work and you really need to watch how you spend because you are on a strict budget, it can and will be done. I know, for me, it wouldn't be fun! I guess that's why it's called work! LOL

@ Holly: I invest in my kids, too. I just don't think they need my undivided attention 24 hrs a day.

I think my kids benefited a lot from the high quality daycare they've received. They are appropriately social and well-adjusted and doing very well in school. They are starting their teen years now and both children are reading 5 grades above their actual grade level and are in advanced math programs, etc. Their prior experiences in daycare (ie preschool) certainly made their start in kindergarten a breeze--I was glad I didn't have to deal with tantrums like the SAHM's did.

Also, if I didn't work, I'm not sure what we'd live on. Air?

this post has perfect timing. i just bought a bus pass the other day and will be taking public transportation. my savings right off the bat will be $60 in parking, $20 in gas and $3 in insurance. that's $83 dollars over a year if i can pull it off will be $996 :)

MC, I think the post is really meant to be about 2 income families really, even though it doesn't seem to say so. You're a single parent so your situation is quite different.

Jim --

Yes, you are correct.

It's an issue I have seen often. A couple wants one parent to stay home but they "can't afford it." But when you look at the numbers, it's usually a breakeven for the lower-earning parent to work versus not to work.

Determining the costs of working is also very useful when planning for retirement. In addition, I didn't see a few things on their list of job expenses:

- Social Security + Medicare = 7.652% of most people's income
- Union Dues (based on my income) was 1.4%
- My employer's "suggested" amount of United Way donations was 5%,deducted from our paychecks.

Back in 2002, when determining if I could afford to retire, I figured my actual costs for working was more than 45% of my salary. This didn't include meals (all my food and beverages were prepared at home), nor 401k contributions. My actual living expenses totaled just 15% of my total income. Of course, my mortage was paid in full.

A lot of these expenses will vary from one person to another. As some commenters have mentioned, some people buy extremely nice clothes because they feel like they need to fit in or "look the part." But then other items like eating out and whatnot - those are choices. I do not think working makes me eat out more than I already do (which is not much).

I think a big factor with all of the items mentioned is they type of job you have. As someone else mentioned, some people have uniforms so they may not even have expenses for work appropriate clothing.

I think working from home is the best of both worlds. That would eliminate almost all of the expenses (except taxes) but you would still have income coming in. You might even be able to keep your kids at home if you have them, however I cannot speak from experience since I do not yet have kids.

I've often said, for all the wailing about how the middle class has been under attack for the last 30 or 40 years in this country, the only thing that a look at the numbers really reveals is that mom has gone to work and household expenses have gone up as a result (for many of the reasons mentioned in the blog entry). Not much else has changed all that much.

The costs of working have gone up a great deal since my working and child rearing days 1956 - 1992, particularly where one's children are concerned.

Childcare .... My cost was $0.00 since I had a stay at home Mom, as did everyone, without exception, in our street - it was the general custom.
Babysitting .. Neighbor's daughters charged $0.50/hour for looking after 3 children.
Children ...... They didn't have personal cell phones - they hadn't been invented yet.
.................... They also didn't have computers and Internet access for the same reason.
.................... If they called friends outside of our area code they received a bill every month.
.................... They didn't need pocket money - all three had jobs - pizza places, newspapers, car washes, drug stores, housework, mowing lawns etc.
.................... They walked or biked to school - parent chauffeurs were not the custom.
.................... Later on when they were old enough to drive I gave them a 0% interest loan to buy a used car which they faithfully paid back every month.
Other stay at home Mom benefits
.................... No eating out back then.
.................... No need for convenience foods at home.
.................... Never any need for home housekeeping help.
.................... We only had one car for many years and gas was about 25c/gallon.

We were able to save very well on one income. Later on when my wife got a job I continued to pay all household expenses, her whole salary was her own and she saved most of it in her own account, which wasn't merged until well after retirement when we moved our assets into a Living Trust.

personally i'm trying to reduce the expences or working. I don't buy work clothes, I buy clothes. I don't buy meals out, I bring all my food from home. I cut my hair myself. I don't have any special professional fees. And I'm going to promise to start riding my bike again so I'll get rid of the expense (and lets face it grind) of commuting.

FMF's point that some who say they can't afford to stay home probably could may be true, but I agree with MC that beyond childcare costs the list of points seems a bit out there and unpersuasive. There are a number of women with kids in my office - a professional situation in which we all make good money - and I'm a childless woman also. Not a one of us has a fancy car to impress clients/colleagues or fancy clothing we don't wear outside the office. Most of us (male or female!) got our "large eating out budget" out of our systems before we had mortgages and evening responsibilities. Wouldn't gifts for coworkers (if you buy them, I don't) be swapped out with "gifts for friends from daytime child-related events"?

Old Limey's post about kids having their own jobs and not needing chauffer-driving everywhere is a good 'un though!

I feel the biggest factor hasn't been discussed much here yet, how about the cost of health insurance?? My husband is self employed, so the benefit of health insurance through my employer is the deal breaker for us.

No one has mentioned tithing as an added expense (if you believe in tithing or giving a % of you income). Whether looking at tithing as an expense is appropriate or not is another question. My wife is staying home now. Doing a rough calculation, after taxes, child care, union dues, social security, and tithing she would be left with 20% of her gross salary. For us, we just don't think it is worth it.


I totally agree with you on the health care cost issue. I worry a lot about our country going bankrupt trying to pay for our overpriced and inefficient health care system.

I do, however, think part of the problem with health care costs is that we have so many households with 2 parents working. When mom isn't home, the kids are more likely to sit at home watching TV or playing video games. The chances of people eating healthier, home cooked meals goes down, too, contributing to obesity. Add in the general stress of 2 parents working (or worse, yet, of more single parent households where one person has to do it all), and it's no surprise we have so many overweight and obese people who think they need more and more pills and surgeries to keep things going.

I'm not suggesting the scenario above is the only thing contributing to heatlh care costs. They are many others. But I think there is a strong tendency to underestimate the true costs of a 2 income household...although, fortunately, I think that is changing.

Speaking of childcare and two-income families:

1) It's really expensive unless you have family or close friends who can watch your children, ESPECIALLY for infants and toddlers.

2) If both parents work traditional 9-5 hours plus a commute, you're talking about 9 hours or more of someone else raising your children, every day. With a young child, that means that their daycare provider spends twice as much (awake) time with them than you, their parent, do, during the work week. Investing in your career is great, but don't you want to invest in your child?

Personally, I know my career is taking a big hit. I will be staying home nearly full-time for 8 years (from the birth of our first child until our second child is in school full-time). I don't know where my career will stand at that point. It's not for everyone, but it is worth it for me to know exactly how my children are being raised.

Child care - Manageable (as mentioned, use pre tax dollars, and tax credits)

Taxes (local, federal, state) - Manageable, but a big chunk of it is everyone's responsibility

Commuting fees (tolls, parking, etc.) - Manageable - leave early and take the road that does not have toll. park further away from the office and pay a lesser fee. this obviously will consume more of your time - so factor the value of your time

Gasoline and mileage - car pool, move closer if you are renting

Car insurance (extra car, nicer car for the job, higher mileage, etc.) - nice car is debatable. not every job might require it. even if you were sitting at home, wouldn't you need a car to go places? we live in america

Clothes (new clothes, accessories, etc.) - again, manageable as already stated

Gifts for co-workers - recycle what you have. dad just bought a brand new gift set from Kohls at a garage sale for 30 cents. these deals are everywhere. stack up on these and keep at home

Fast-food lunches and breakfasts out - cheaper than restaurants. we all have to eat.

Convenience foods at home - debatable/manageable

Extra eating out - same as above

Occasional housekeeping help - take a couple hours on the weekends and do it

agreed that working isn't free - but i agree with the first comment - x % of y is still better than 0. also, again this is america - so give the grand parents a buzz (if possible) and get yourself free baby sitters

The list seems to be significantly exaggerated just to try to make a point.

Child care, commuting fees, and gas/mileage are the only legit expenses that I see on that list. Taxes are not an expense. An extra car? Why is that listed only under insurance and not as a separate purchase? Most two-adult families have two cars anyway. Does the author really believe that people go out and buy a new car every time they get a new job?

Assuming that the woman in question is going into the same field or a related field as what she worked in pre-children, a new wardrobe is not necessary. She might *want* one or put pressure on herself to get one, but in most cases, new clothes aren't needed.

All of the food-related items are just silly. Why would working automatically equate to fast food breakfast, lunch, convenience food at home and extra eating out?

Gifts for co-workers? Why? Is "gifts for moms of playdate kids" on the list of expenses for staying at home?

Occasional housekeeping help is an automatic expense with a job?

I would be much more impressed with the figures they came up with if they didn't ridiculously inflate it to try to make their point.

The key is all in what you place the most value in. There are lots of intangibles that can be factored in to the equation on either side. And of course, expenses are going to vary from person to person. For example, I wear jeans and t-shirts with little make-up most of the time I'm not working, but I wear nicer clothing (and my experiences have been that cheaper clothing has to be replaced more often than more expensive clothing) and make-up when working. Still, I don't assume that every person in every job is going to spend money the same way I do. I don't think the person who came up with the figures on expenses was saying that either. You have to figure out your expenses (and all the intangibles) and determine whether or not you feel it's "worth it" to have both parents working out of the home or not. It absolutely SHOULD NOT be a judgment call on people who choose differently, because we are all individuals with different circumstances, talents, etc.

Right now, I'm dealing with the flip side... the cost of NOT working. The original numbers don't take into account the fact that the working partner has to save enough for both partners during retirement and has to pay health costs or health insurance for two. I'm preparing to go on maternity leave, and I have to find a way to pay for these things that usually come off my paycheck. Our utilities will also increase since I'll be home all day (a significant difference during our cold winters).

For me, there isn't much on the original list where I would see any significant savings by staying home. In fact, I usually share a ride to work with my husband and it's going to be difficult to get by on one car when one of us stays home.

In general I think that unless the person has a low-paying job it's usually a better financial decision to work, whatever the percentage being eaten by expenses.

That's not to say that it's a bad idea to stay home. I just think that while finances is an important factor, the decision should be based on the family's situation and values. I find exaggerated estimates like this try to discourage women from working when it's really a much more complex issue.

I make $30k a year as a college graduate. My husband makes about twice that amount. If I factor in marginal tax rates (including state and local) as well as the fact that we tithe on our gross income, that alone adds up to 43%. Daycare costs about $185 a week for one child (infant). $30k-$9,620(daycare)-12,900 (taxes/tithe) = $7,480. That does NOT take into consideration any additional expenses of working (I figure it will pretty well balance out with the cost of adding myself to my husband's health plan).

Would it be worth my time to work 40 hours a week for $620 a month? Not for me, but then I've always wanted to be stay at home mom as well. Some people have always wanted to work and climb the corporate ladder, and to those people I say go for it. I went from a $48k/yr job to $36k, to $30k, because I wanted to be doing something fulfilling (currently working for a non-profit). We planned our lifestyle on my husband's income, so we won't have any major life changes to me staying home. I do plan on working at least part-time to keep enough credits in Social Security, but other than that, I don't see the financial benefits of working full-time being able to outweight the costs. I personally think a child is much better off with a parent who can provide full-time attention than being stuck in a room all day with 6-10 other kids so I can have a few extra hundred dollars a month (for what purpose? a nicer car maybe?) Throw 2 kids into the bargain in daycare, and there is really no way to make it work financially.

Somehow (actually by careful planning and having lots of self-control and contentment), we cut our income in half when I stopped working and now are saving and investing almost $1k more per month (that's on a $72k salary in New England).
Here are the major things that help us:
* No vehicle debt (special savings account for a new car later on)
* Drive older cars that don't depreciate as much and have lower annual fees and taxes
* No expensive cell phone plan (just $10/mo prepaid)
* Limited kid's activities (instead we play outside, with friends, do church stuff, do our own music lessons, etc)
* Used clothing only for the kids ($50/mo total budget for all 6 of us)
* Plan out everything in the budget - short term and long term
* Hardly any eating out and strict grocery budget. We learn even more about contentment when we don't run to the store whenever we "feel" like it.
Nothing beats me staying home with the kids.

Question - When one parent decides to stay at home, does the other double how much they are contributing to retirement?

I'm more in the line of MC here:

Child Care - yes, that is the main expense

Taxes - I think its easier if you look at net instead of gross, but it may drop you into a lower bracket, so its fair to say that the taxes you save are off the highest percentage

Commuting Fees - I don't have any, as I don't work in a major city

Gas & Mileage - The reimbursed amount at my work covers both the cost of gas + wear on the car. The drive to/from work isn't very much.

Car insurance - In cases where there is one car, does the SAHP drive the other too/from work? If not, how do you do doctor appointments, outings, etc? If you are driving the other spouse to/from work, then that would negate the gas & mileage, as you would be making double the trips each time.

Clothes - I'm not sure how often people replenish their work wardrobe, but I don't buy new items that often. My work apparel tends to consist of gray/black pants, and different colors of button down shirts, and khakis for dress-down days.

Gifts - I've never had to buy a gift for a coworker other than chipping money in for flowers for a funeral or something. Unless you live in a bubble when not at work, I would imagine that you have gifts that you give then also?

Fast Food & Breakfasts - I think its fair to say that if you are going to eat fast food for lunch while working, you will probably do the same while at home? Packing a lunch is pretty normal for most work environments.

Convenience food at home - Most "convenience foods" take just as much work as whipping up a meal. They seem more like convenience if you don't know how to cook, but they aren't really time savers.

extra eating out - we don't really eat out except for special occasions

housekeeping help - we don't have housekeeping help

If you are talking purely on a monetary basis, then you have to factor in a 3% (give or take) raise that the stay-at-home-parent is probably forgoing for the time period that they stay home (6 years until the child is in school full time?).

Say childcare is 250/week - 2 weeks of vacation - that is 50 weeks of school. That is 12500/year. 5000 of that is tax deductible if filing taxes jointly, so we are talking about $7500/year that you are paying taxes on. Other than childcare & taxes, the other "costs" seem to be the difference between living frugally and not living frugally, which don't have to do with whether parent's are working or not.

If you can live on one salary you can probably retire with one 401k or pension. So we don't have plans to increase my current contribution of 17% of my income once you include the employer match. Whether that 401k contribution is enough is certainly debatable. It appears to be based on different calculators that I have looked at but obviously it depends on the rate of return. Any thoughts on whether 17% is enough? We plan on my wife going back to work once the youngest hits kindergarten to supplement our retirement. Since my wife is a teacher this is do-able. I realize this wouldn't work for many people who need to climb the corporate ladder.

* Child care - no kids
* Taxes (local, federal, state) - only federal and unavoidable
* Commuting fees (tolls, parking, etc.) - free metro in Miami
* Gasoline and mileage - public transit
* Car insurance (extra car, nicer car for the job, higher mileage, etc.) - public transit
* Clothes (new clothes, accessories, etc.) - wear out the old clothes, haven't gone shopping in years
* Gifts for co-workers - none so far
* Fast-food lunches and breakfasts out - always pack my lunch
* Convenience foods at home - always cook
* Extra eating out - eat out only when friends are in town
* Occasional housekeeping help - do my own housework, saves me from buying a gym membership as well

So extra cost of working = 0

The comments to this entry are closed.

Start a Blog


  • Any information shared on Free Money Finance does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. All posts are © 2005-2012, Free Money Finance.