Got a bundle of joy or two? Interested in exploring a career opportunity as a SAHM or SAHD?
Deciding whether a parent should work or stay home to care for children is a deeply personal and complex choice with significant financial and non-financial implications. This calculator focuses primarily on the financial aspects, comparing net income from working against the savings and costs of staying home. Remember to weigh these financial outputs against the important non-financial factors relevant to your family's well-being and goals. Consider impacts on child development, parental well-being, and career trajectories.
Financials are just one part. Consider:
- Career: Working maintains career momentum and skills relevance, but means missing some moments. Staying home allows full presence but can make re-entry harder and impact long-term earnings (the 'motherhood penalty' is real).
- Child Development: Both paths offer benefits. Working parents model independence; stay-at-home parents offer consistent one-on-one time. Quality of interaction matters most.
- Parental Well-being: Working parents juggle more, risking burnout; stay-at-home parents risk isolation. Find balance and self-care regardless.
- Retirement: Career breaks impact retirement savings accumulation. Consider spousal IRAs or other strategies if staying home. Explore resources on financial implications of breaks and non-financial pros/cons.
First, let's look at the income you'd earn and the direct costs associated with working.
Childcare is often the largest single expense determining the financial viability of working. Costs vary significantly by location and type of care. The US national average price was supposedly $11,582 annually in 2023, but could be higher (e.g., $827/week for a nanny).
Staying home eliminates childcare and work expenses, but may slightly increase household costs.
Working parents paying for childcare may be eligible for the Child and Dependent Care Credit. Eligibility depends on having earned income and paying for care to work or look for work. The credit amount depends on your expenses and Adjusted Gross Income (AGI). For 2024, you can claim 20-35% of expenses up to $3,000 (1 child) or $6,000 (2+ children). The percentage decreases as AGI increases, hitting 20% for AGI over $43,000. See IRS FAQs and TurboTax details for specifics. This calculator uses a simplified 20% rate.
Estimated annual Child and Dependent Care Credit
Beyond the immediate year, consider the long-term financial trajectory. Taking a career break can impact future earnings potential, wage growth, and retirement savings significantly. One analysis suggested a 5-year break could cost over $700k in lost wages, growth, and retirement benefits. Conversely, the non-financial benefits of being home during formative years are invaluable to many. This section estimates the purely financial opportunity cost or gain over several years, assuming the annual difference is invested.
🏁 Recommendation
Based purely on the short-term annual finances calculated above.
Net annual financial result from working
Net annual financial result from staying home
Annual financial advantage
Financial Recommendation (Annual)
Weak Work
Disclaimer: This content and any calculations provided are for informational purposes only. The views, calculations, and methodologies expressed are those of the author and do not necessarily reflect those of this platform. Not financial advice. Users are solely responsible for any decisions made based on this information.