One of the most cited drawbacks of a having a spouse at home is the loss of a second income. It appears every family today operates on two incomes and in turn are better able to keep up with the Jones'.
The structure of your family unit and need for income is deeply personal and what’s right for some might not be right for others. While the parent at home might not be bringing in an income, there are a plethora of advantages that this arrangement can deliver.
Money is spent more efficiently
Time otherwise spent working can be used to comparison shop. Food, clothes, vehicles, appliances, and many other costs can be dramatically reduced. Everything can’t be had on sale, but even 5-10 percent overall savings on these expenses can add up to a large amount of money.
Less reliance on fast food
This is a deceivingly expensive and incredibly unhealthy habit. Cooking for the family and keeping them on the straight and narrow can do wonders for the budget and the family’s health. Not to mention, this could prevent the family from paying for obesity related health issues.
Spend more time with children or aging parents
When looking back on one’s life it’s not common to wish more time were spent at work. Spend time with the people who matter to you. Whether or not staying home is an option, this is important life advice.
Childcare or Assisted Living Expenses
Anyone who has employed childcare services or paid for assisted living understands how expensive it can be. Childcare services can cost over $1000 per month for a single child depending on age, location, and several other factors. The same can be said for assisted living expenses. It’s expensive, especially without long term care insurance or another similar solution. Home care costs, on average, $51,480 according to the 2019 Genworth Cost of Care Survey conducted by Carescout. The same study asserts that a private room at an assisted living facility is far more expensive, at an average of $105,850 per year in the United States. It very well may be more expensive to keep working than it is to stop.
It can’t be said enough that the structure of your family and the way your living is earned is deeply personal. While one option might be perfect for some it might not be for many others.
There are several necessary steps to insure your family’s financial health should you decide taking some time off from employment is the best option.
1. Life Insurance for the parent at home
It’s a common misconception that only those who earn income require life insurance, but this simply is not true. Consider expenses like baby sitting or assisted living which are paid for through the spouse’s time. As well as the savings they net the family through the means of better controlling expenses. In addition, if they were expecting to return to work their future income would not be protected if they had no life insurance, leaving their family exposed.
2. Develop a budget first
Ensure the transition would be feasible financially. While the decision can be based on the desire of things outside of earnings like the ability to spend time with family, it must be feasible. Making a major change such as this without proper planning can have consequences.
3. Speak with a financial advisor
Such a change in the family’s income should warrant a conversation with a trusted advisor. They can help find a way to optimize this change through tax advantages and otherwise. A conversation would help address barriers such as funding retirement along with many others.
If you are considering making the change, reentering the work force, or are interested obtaining the proper amount of life insurance speak with Michael Romanello for a complementary consultation.