Welcoming a new child brings excitement, love, and big changes, especially to your budget if one parent decides to stay home.
Transitioning from two paychecks to one can be difficult, but with careful preparation and discipline before and after your little one’s arrival, you can make the change much easier on your family’s finances.
Planning to become a stay-at-home parent
During the planning stage, consider luxuries you can live without, such as store-bought lattes and expensive gym memberships. Becky Mansfield, author of the e-book “You Can Be a Stay at Home Mom on One Income,” recommends buying only what you need for a month, so you can see which expenses you can cut to stretch a single paycheck further.
Staying home as soon as the baby arrives
When you have a child, you may find yourself deciding whether you or your spouse will stay at home or you’ll both return to work. If you decide to stay at home, formulate a new family budget and practice living off it before the baby arrives. Many new parents underestimate the cost of raising a child, which can add up immediately with diapers and other baby essentials. You may also want to have money saved for unforeseen costs, such as medical costs.
“We lived off of just one income for a full year before moving to one income,” Mansfield says. “We put all of the extra income into a separate bank account to keep for a ‘just in case’ fund.”
Making the decision to stay home later in your child’s life
Even if you choose to stay home after being a working parent, you can apply these tips to help you transition to a single-income household. If you make a family budget ahead of time and practice living off of that budget before you have to, you’ll be much more prepared for the change.
If you decide to stay home once your child is a little bit older or after the birth of a second child, you may want to factor in additional expenses that you didn’t have with your newborn. With a toddler, you’ll want to offer your child socializing opportunities. If you want to send your child to a part-time daycare, Mansfield recommends asking about volunteer opportunities to offset the cost of tuition. If a part-time daycare isn’t in your budget, then join local parent groups, where your children can regularly play with other kids.
Going back to work
Just because you left your full-time role doesn’t mean there aren’t opportunities to make money. Once you’re ready to take on extra responsibilities, make a list of your abilities and your passions. If you like to network and meet people, consider companies that allow you to sell their products from home. If you have a creative hobby, consider opening an online shop and selling your creations. If you’re a writer, look for freelance writing opportunities for online trade magazines, websites and blogs. Talk to other parents, who may be able to offer additional ideas and resources for alternative income opportunities.
There are a lot of decisions that come with growing a family, so take the time to weigh the cost of staying home and understand the impact it will have on your budget and lifestyle. Whether you decide to stay at home immediately or once your child is older, planning ahead and learning to live on a new budget will help you transition smoothly into this new phase.
