Calculating the Cost to Stay Home

Do you want to be a stay at home mom?  We live in encouraging times, where many families are opting to have one parent stay at home with the children.  Even homeschooling is on the rise.  There are many benefits to staying home with your baby – most importantly the relationship that you will be able to develop!  But not every family is able to manage a stay at home parent, and the main reason is finances.  Before you make a decision to stay home, consider the cost to stay home.

Nobody wants to put a price on a relationship, especially one as important as a parent with their baby.  However, we also want to act responsibly – to be able to provide for our families, save up for emergencies, and maybe put a little extra away for fun things like trips or retirement.  So it’s important to calculate the cost to stay home before you or your spouse quits your job.

I worked for 11 years as an accountant, so when it came time for me to calculate the cost of staying home, the math was easy.  But I know that most people don’t like to create spreadsheets and calculations for fun.  Looking into finances can be stressful for some.  So let’s go step by step through the biggest costs to stay home.

Lost Salary

The biggest cost to stay home is your lost salary.  You may confidently hand in your two weeks notice and hug your coworkers goodbye on your last day of work.  But soon after that, the payroll checks stop coming through, and you’re on your own.  Are you ready?  The easiest way to think about your lost salary is not so much in how much you will lose but in how much your spouse brings home.  Look at his take home pay and build a family budget using only one income.  Can you make it work?

Childcare Considerations

If you would like to remain at work, consider how much you will be paying in daycare costs.  Sometimes, this is a make or break decision for whether a parent can work or would rather stay home.  Even if you are planning to stay home, do a calculation of potential daycare costs.  This will show you how much you are “getting back” by choosing to stay home.  This can be an emotional boost when you feel overwhelmed by the loss of income from staying home.

While there are a wide variety of daycare options, here are few examples of how to calculate or consider the cost of daycare:

Daycare Center – Salary Based Calculation

You may sign your baby up for a daycare center that charges a flat fee to watch your child.  However, the fee will likely cover a shortened work day – perhaps from 8:00 to 5:00.  If you work those same hours, you will also need to arrange for daycare during your commute or alternate schedules with your spouse to arrange for pickups and drop offs.  A daycare center may cost $1,000 – $2,500 a month depending on the hours you require and the perceived quality of the program.

So you would be paying $12,000 – $30,000 a year to this daycare while you work.  However, you also pay taxes on the income you are making.  Some businesses offer their employees an option to pay dependent care with pre-tax dollars.  Even with this benefit, you are going to be obligated to pay your payroll taxes of 7.45%.  So at a minimum your salary would have to be $13,000 – $32,500 to cover the daycare costs.  And at this point you would be working just to pay for someone to watch your baby so you could work.

In-Home Daycare – Hourly Based Calculation

Another option might be to hire a nanny or use an in-home daycare.  You may expect to pay $10-15 per hour for childcare.  Let’s assume that you are able to stagger your shifts with your spouse so that you don’t have to pay for daycare during your commute.  You would need to earn $10-15 an hour yourself to pay for the nanny, right?  Well, once again, you have to cover your payroll taxes, so you have to earn a little more than that.  But if you hire a nanny to come work in your home, you would have to cover her payroll taxes as an employer as well!  (You will also have additional paperwork to fill out during tax season, so you would want to budget for professional tax advice).  In other words, you would need to make 14.9% more than what you pay your nanny, or $11.50 – $17.25 per hour just to cover childcare costs.

What Are You Worth?

Depending on how much you make, considering the cost of childcare may point you toward staying home with your baby – even if you hadn’t planned to before.  Not only do you want to cover childcare costs, but you want to make income and feel like you are being paid for your time.  How would you like to pay someone $15 an hour to watch your child and then only “earn” $5 an hour yourself?  What used to feel like a respectable salary before children may suddenly feel like unfairly low wages.

Decide for yourself what you would like to take home for your efforts.  If you still want to or need to work, consider childcare alternatives such as working separate shifts from your husband or having a relative watch your baby.  Find out if your work will offer a flexible schedule where you can work longer hours 3-4 days a week and save on childcare the other days.

However, when you look at how much salary you are losing by staying home, also keep these high childcare costs in mind.  In other words, if you think you are walking away from a $55,000 salary, remember that – after the baby comes – you are really only walking away from $30,000.  Of course that’s still a lot of money!  But if money is an obstacle, causing you to fear staying home with your baby, remember there are also financial benefits to your choice.

Lost Benefits

If you are considering staying home with your baby, also consider the benefits you get from your job that you will be losing.  These benefits include:


Health, Dental, Vision, Life

These can be huge costs for families.  If your working spouse does not have access to these benefits through work, you will need to budget to purchase these benefits for your family.  In addition, consider if your working spouse has as good a health plan as you.  If not, you will need to budget for the extra health costs once you go to one salary.

On the other hand, some companies penalize their workers for signing up for “family plans” if their spouse already has access to a health plan.  Once you leave the work force, you will no longer have to be penalized if you are on your spouse’s plan.

When you examine your spouse’s take home pay, calculate any extra premiums you will have to pay to cover yourself and the baby and make sure to subtract that from what’s available to cover costs.

401K Program

If your company matches contributions to your 401K, you can consider that as good as free money or a bonus.  Even if your current employer doesn’t offer a 401K match, having the opportunity to contribute through work is a great benefit towards your retirement.  Once you leave the work force, consider contributing to an IRA and maxing out your contribution of $5,500 each year.


Some companies offer annual bonuses in addition to regular pay.  These may take the form of a relatively small dollar amount paid out around Christmas, or it may be a large percentage of your annual pay, paid out only upon the achievement of company goals.  It’s smart not to depend on these bonuses when making a family budget.  However, remember that you will not be getting these again, so plan accordingly.

Professional Development

Many parents who leave to stay home with their children intend to return to the workforce.  Whether you plan to return in one year, five, or twenty, you may want to hold on to your professional licenses.  For instance, as a CPA I need to renew my license every three years at a cost of several hundred dollars.  In addition, I must take continuing education classes.  While there are some free options, there are never enough of these to cover all the hours I need.  In the course of a three year licensing period I might pay anywhere from $600 to $2,000 for continuing education courses and fees.  All these costs were formerly covered by my employer, and I now have to find a way to cover these costs.  Last winter I worked from home a few hours a week and earned just enough to get my license renewed.  Find out more about the benefits and difficulties of trying to work from home as a new mom.

Gym Memberships

There’s an increased look at fitness these days, and so many large companies are offering discounted or free gym memberships.  If you are a heavy user of the gym, you are going to have to add back the cost of a new gym membership for after the baby comes.  However, many gyms offer free childcare, so at least you have that to look forward to!  Try incorporating free fitness activities into your routine before you quit your job – just to test the waters.  Walk or run outside or on a treadmill at home.  Watch online yoga videos or rent them from the library.

Miscellaneous Benefits

Whether it’s a nice dinner, a free turkey at Thanksgiving, a company picnic or baseball game, or multiple luncheons each year, your job likely offers you some perks that you are going to have to live without or pay for yourself.

Cost Savings

Quitting your job to stay home is not all financially detrimental.  There are some cost savings to consider.


Probably the most expensive cost of working is the cost of your commute, unless you work close to home.  Many people are not so lucky.  You may have a long commute in traffic – add up the miles each way and multiply by $0.545.  This is a rough estimate of the mileage cost – gas plus wear and tear on your car.  Make sure to multiply that number by two for your return home and then by 250 – the approximate number of days you are going to work each year.

Some people have to take public transportation or pay for parking.  Make sure to add that up.  After childcare, saving on commuting costs may be the largest financial benefit of staying home!  Also consider the non-financial benefit of giving up your commute – all the extra time you will save!

Wardrobe Costs

Whether your work in an office or a hospital or do manual work, you are likely to spend a lot of money on your wardrobe.  An office wardrobe may cost hundreds of dollars every year as you purchase suits, heels, and generally try to keep up with the trend.  Many jobs that require you to wear a uniform provide a minimum number of uniforms and then force you to purchase additional uniforms.  And if you wear casual clothes to work but engage in a lot of manual labor, you are likely to wear out your jeans and shoes at a fast pace.

(Are you looking to save on your wardrobe while still looking stylish?  Try Stitch Fix to get your personal style delivered right to your door, no more worrying about what to wear!  Note – I am a proud affiliate of Stitch Fix.)

As a stay at home mom, you can be stylish while also spending less on your wardrobe.  You can be true to yourself.  On days you don’t leave the house, wear something comfortable like yoga pants.  On days you are out and about, feel confident in what you wear!  Either way, you won’t be required to be purchasing just the right clothes all the time anymore.  (If you are planning on nursing your baby, consider some qualities you should look for in good nursing clothes).

Lunch and Coffee

Office culture can make a huge dent in your pocket book.  You may work with a team of individuals who like to go out to eat lunch together every day.  And you’re expected to join them to be polite.  You may be paying $10 a day in some scenarios.  Even if you take your lunch to work, you may pay more for easily transportable freezer meals than what you could pay at home.

In addition, you may be on the run to and from work every day.  Your crazy schedule may cause you to purchase expensive coffees and breakfast or dinner on the go.  Once you are home with your baby, you can make your own coffee, breakfast, lunch, and dinner, saving tons of money compared to eating out.  (Find out some great ways to save money and score incredibly cheap meals using fast food apps!)


Once you go to one income, your family’s tax rate may decrease.  In addition, you will be able to take advantage of more deductions and will not be as likely to be subject to caps and phase outs.  I’m not going to list every tax break that could possibly affect you.  However, here are some steps you can take to figure out what the impact of going to one income will have on your taxes:

  • If you have a CPA prepare your taxes each year, simply ask what changes you can expect when you move to one income.
  • Review the current tax rate tables and compare the bracket you are currently in to the bracket you will be in once you go to one income.  For instance, say you and your spouse make $110,000 per year, your federal tax rate is 22% and would be calculated at $16,079.  On the other hand, if you go down to one salary of $55,000, your tax rate is only 12% and would be calculated at $6,219.
  • Review your taxes from last year and look at any deductions you take that may have been capped because of your dual income.  They may not be limited when you only have one income.

This is not tax advice nor is it meant to be interpreted as tax advice.  Consult a CPA or other professional tax advisor for a detailed description of the tax impact of any financial decision you undertake.

Other Considerations

Of course, the choice to stay home with your child should not be all about financial considerations.  Come up with a list of pros and cons that don’t include finances.  For instance, a pro would be bonding time with your baby.  A con would be less socialization for your child.  When making your list, consider the impact to your future career as well.

To Get You Started

I’ve made the work simple.  To get you started, I have created a Stay-at-Home Calculator to help you calculate the costs.

Whether you work or stay at home after the baby is born, remember to enjoy these good old days with your new family!

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