I’ve gone over the financial benefits of being a stay at home mom or dad. They can sound pretty good, but they are not the full picture. There are also a number of financial hazards of being a stay at home mom or dad. It’s vital that you know them as well.
Loss Of Income
Obviously, you’re losing a lot of income when you stay at home and don’t work at home. While that loss may be offset by not having to spend money on childcare and such, this is not the complete picture.
There are also lost career opportunities when you’re a stay at home parent. Staying home with the kids for five years means you’re missing out on five years of raises and chances for promotions. It’s five years that you might not be keeping up with your industry well enough to return to the same position as you had before.
This is why it is important for stay at home moms and dads to keep up with their industries or work to improve their educations. Another option is to work at home, whether you telecommute from your old job, find something else that can be done from home or start your own online business, such as a blog.
It can be more difficult to find a job as you get older too, especially if you haven’t worked for a while. Age discrimination is a thing, and it’s very hard to prove.
Working at home part time doesn’t entirely resolve these issues, but it’s a start. Some moms will be fortunate enough to find something that brings in enough money to replace a full time outside the home job, but many others will not. It’s something to consider.
Decreased Savings For Retirement
Few stay at home parents save for retirement, yet it’s just important for them as it is for a parent who works outside the home. It’s hard to save the money when things may be tight already. But the younger you start saving for retirement, the more benefit you will gain from each dollar saved. Vanguard has a great chart on this on their site.
Loss Of Network
Your network of friends and professional contacts can make a huge difference in your career path. When you take a break from working to raise a family, your professional network usually shrinks dramatically. It’s hard to keep in contact with people on a professional level when your lives are in such different places. Plus, you aren’t showing yourself to them as a professional; when they see you, it’s as a parent.
Financial Dependence On Someone Else
You love and trust your spouse, or so I assume. You believe that they will be able to provide for you and your family. That’s a part of why you’re at home with the kids and they’re working.
I touched upon this in the work at home section of the financial advantages of staying at home post yesterday. I reiterate this today – there is a lot of risk in being financially dependent on someone else.
Not because they’re unreliable. Not because they’re untrustworthy. But because you never know what life is going to bring you. Unemployment, disability, divorce and death can all happen, and you won’t always see it coming.
You need to have a plan in place to handle a financial crisis, whatever the cause may be. Shit happens. Take some time with your spouse and make sure that you and your family will be taken care of, no matter what happens.
That includes if something happens to you. Stay at home moms and dads provide a valuable service to their families. What would your family do without you? Your financial emergency plans should include something for if you can’t continue to care for your family for whatever reason. Life insurance for both parents is a good start. It doesn’t hurt to have small policies for the kids too. You know you would both be wrecks if something happened to one of your kids, right?
Get into the “what ifs.” They aren’t fun… in fact, they can be downright scary to consider. But they are important. Plan for them before you have a problem. They shouldn’t rule your lives, but they should be acknowledged.
Having One Parent Manage All The Finances
Even when both parents work, it’s not that uncommon for one to handle most or all of the finances. One usually has more interest in the subject or more time for it. That doesn’t make this an ideal situation.
Make sure both parents know what your financial situation is. The parent who works outside the home should not be the only one to know how your finances are doing. The same goes for the stay at home parent.
Both parents need to know what the bills are, when and how they get paid, what your income is, and what’s in savings. Take some time and talk about these things regularly, regardless of who handles the finances for the most part.
Offsetting The Financial Hazards Of Being A Stay At Home Mom Or Dad
There are some things you can do to offset the hazards of being a stay at home mom or dad. You need a safety net, for your own sake and the sake of your family. I mentioned working at home and improving your education in the benefits of being a stay at home mom or dad article. Those are the two big things you can do to minimize the risks.
Finding the right work at home opportunity is quite challenging. The scams are numerous and much easier to find than the legitimate opportunities. The skills you already have may or may not be suited to working at home and you may have to pick up an entirely new skill set. If you can make it happen, however, it can be well worth it.
Many parents plan on going back to working outside the home, at least part time, once the kids are in school. These jobs are generally easier to find than work at home jobs, but a part time job that makes the most of your skills can be very hard to find.
Taking classes at night at a college or online when the kids make it possible is always an option. Improving your education is a great choice if your career wasn’t where you wanted it to be before you became a stay at home parent. There are so many options now, although paying for it can be a challenge if your budget is tight.
Whatever you do as a stay at home parent, consider your financial future. Don’t leave it as some vague thing to be handled when the kids get older. Plan now so that you can make the most of your time as a stay at home parent and still have a good career later. You will thank yourself later for thinking of your financial future now.