At Home Security Stay-at-home moms (and dads) donít have to sacrifice financial security to live well. BY P.J. DINUZZO
If you want to stay-at-home, you'll have to have a financial plan.
I'm thinking about getting out of the workforce to spend more time with our kids, but my husband and I arenít sure if we can afford it. Do you have any standard advice?
Back in the "good old days," society expected women to stay at home and raise the children, while their husbands earned a living. That began changing in recent decades as a growing number of college-educated women demanded a role in the workforce. And as society grew more materialistic and more expensiveó$5 cup of coffee, anyone?¨óeconomics required both parents to work just to make ends meet.
But many families began to question whether the disconnection with their children was worth it. Itís good to get ahead economically, but is the cost of having latchkey childrenóor kids raised by strangersóworth it?
Many families are now considering scenarios where one parent once again stays at home. Of course, one main concern keeps popping up: "I feel strongly about staying at home during my childís formative years in lieu of working, but I am concerned that my lack of retirement savings and income during those years will make difficult, if not impossible, for me to retire at my desired retirement date."
While all situations vary and nothing is guaranteed, having a stay at home parent can work out financially, particularly if a familyís willing to modify its lifestyle a bit. Itís underrated, but keeping a positive attitude really helps. With a well-developed plan and flexibility you can make it work and help ease the mental trauma.
That brings us to flexibility. Change is going to be a certainty; youíre simply going to have to adapt from time to time. Even the best-laid plans need to be updated because of unforeseen future events. Perhaps the single-most important piece of the plan comes next.
Pay yourself first.
The working spouse should max out their company-sponsored plan at work, whether itís a 401(k), a 403(b) or something else. Given that most companies offer some sort of match, thatís free money. And, if you put the money away before you ever see it, youíre less likely to miss it.
Meantime, the stay at home spouse should fund a Roth IRA. Up to $4,000 a year can go into a Roth IRA, even if the nonworking parent doesnít have any earned income. Thatís because tax laws have changed, allowing those contributions so long as the other spouse has the income to qualify.
Finally, consider modesty. Itís fine to enjoy oneself, but there are plenty of ways to stretch a dollar. Drive that used car another year or two. Buy clothes off season. Stock up on items at a place like Costco. Paint a room in your house yourself instead of hiring a painter.
Itís a bit of a balancing act, but done right, families with stay-at-home parents can have their cake and eat it tooóeven if the slice of cake might be a bit thinner.
P.J. DiNuzzo, CPA/PFS, MBA, MSTx, is founder, president and chief investment officer of DiNuzzo Investment Advisors of Beaver, PA. He may be reached at firstname.lastname@example.org or 724-728-6564