When couples ask themselves if one of them should stay home with their newborn baby or young children, many financial and emotional questions arise.

When pondering over the question of staying at home, the woman is usually the candidate for giving up her job.  However, this tendency is changing, especially in European countries. In Norway, for example, financial incentives are given to fathers, by the government, if they take an active part in raising their children (which means physically being with them!).  In either case, there are many issues that need to be addressed when making this decision.

Financial Considerations for a Stay-at-Home Parent

Many couples are very worried about the loss of a second income.  It may seem impossible to suddenly live on almost half the income, with the added expense of a baby.  But staying at home does save on childcare, which can amount to quite a sum.  The cost varies greatly in different parts of the country, from around $4,000 per year in some places to more than $8,000 per year in others, for childcare out of the house.  In any case, you are looking at a minimum expense of $4,000-$5,000 per year.   

One method, which helps get the idea of how it would be to live on a single income, is to try and live on just that income during the months of pregnancy.  Besides giving you the feel of it, you also get to save the monthly income you are considering to give up, in preparation for the expenses of having a baby.

Every case is different, depending upon the income you are used to and the balance between the two incomes.  You'll just have to sit down and work out the numbers. Before giving up one of the incomes, spend a couple of months calculating all of your expenses (everything!).  This way you can see how much you spend and where you can cut back. 

Staying at home can save some money, but in the long run, giving up a full salary for a number of years, or even a lifetime, makes a big difference to your overall financial standing. Once you make the calculations you need, it should be easier to have a clear view on the financial consequences of staying at home.  Add your conclusions on this subject to the emotional and intellectual considerations to reach a decision.

When you are considering the option of staying at home with your baby as a first time parent, what will be the emotional and intellectual impact of this choice?