Can Becky Afford to Stay Home With Her Baby?

I am so thrilled that Jake and his crew agreed to create a Sketch Video for this post that I wrote:

Can Becky Afford to Stay Home With Her Baby?

 

Big thanks to the guys at Becomingyourownbank.com for this cool video.

Before you watch the 2 minute video, here are some details about Becky and Jack and their financial situation.

Introducing Becky and Jack

Becky and Jack met in college and instantly became inseparable. Jack was studying to be an Engineer and Becky was studying to be a nurse.  In between classes and studying they spent a lot of time together and they were married shortly after graduation.

They were both fortunate to find jobs quite quickly.

They purchased and moved into a 2 bedroom townhouse.

They also purchased 2 nice cars since they each worked in opposite directions of where they lived.

Their college tuition was paid via scholarships, personal savings, and with some help from their parents, so they don’t have any student loans to worry about.

Fast forward 3 years later.

Becky wakes up one morning and doesn’t feel very good. After arriving at work she shares how she feels with one of the doctors on staff and after taking a test, she discovers that she is pregnant.

After sharing the good news with Jack and learning that she is due in 8 months she begins to think about what their life will be like when they become parents.

How will they manage financially?

Is their current home big enough?

From as far back as Becky can remember her dream was to one day be a stay at home Mom.

Both of her parents worked in high profile careers while Becky was growing up. And they didn’t just work 40 hours a week, they worked 60 to 70 hours a week, which meant that Becky rarely saw them.

During her lonely times at home as a kid she vowed to herself that when she one day became a Mom she would find a way to stay home and be there for her children everyday.

She wanted to watch them take their first steps and be there when they said their first words.

She wanted to be able to look after them when they were ill, comfort them when they were upset, and play with them and make them laugh. All the things she felt she missed out on as a kid.

But becoming a nurse was important to her as well. She knew she would be able to find a good job, she knew that she enjoyed taking care of people, and she wanted a job that paid well.

But Becky decided that staying home with her new baby would be the right thing to do.

However, the big question is - Can Becky afford to stay home with her baby?

Jack was onboard with Becky staying home but he worried about whether they could truly afford it.

Instead of just winging it, they realized that the smart thing to do was to come up with a plan now as to how all of this would work.

After the baby arrives Becky would be allowed a 1 year maternity leave and would receive roughly half of her current pay cheque through unemployment insurance during that time.

Jack and Becky began making a number of lists.

They listed all of the items that they would need for their new baby.

They listed all of their current expenses including the mortgage on their townhouse of $380,000 and the outstanding loan on one of their cars which is $10,000 ($250 per month).

They have an emergency fund of $2,000.

Their current combined monthly income after all deductions is $6,100. Jack’s share is $3,200 and Becky’s share is $2,900.

Their current combined monthly expenses are $5,800, which will obviously increase once their baby is born.

For comparison sake they also did a separate calculation to determine exactly what it currently cost them on a monthly basis for Becky to go to work. How much she paid in gas, car maintenance, food, clothing, and so on. They added to that the cost of full-time childcare if she did return to work. 

The average cost per month for daycare for a baby is approximately $1140.00.

If Becky goes back to work they now have an additional expense of $1140 a month.

If Becky stays home they lose $2,900 a month.

Without going into all of the annual tax write-offs associated with each option, they are essentially out $2,900 a month if Becky stays home with her baby.

What changes can Becky and Jack start making right away so that they can cover the loss of Becky’s income of $2,900 as well as cover the additional costs that they will incur for everything that their baby will need?

Becky and Jack’s Financial Plan

Create a budget and slash expenses, so that they can add more money to their savings account now.

Focus on paying off their car loan within the next 8 months.

See if they can refinance their current mortgage if it is feasible to do so.

Sell any household items that they can live without.

Have a strict no-spend policy on anything that is outside of their new budget.

Shop for baby items at garage sales, moving sales and online. Shop wisely for big ticket items that have certain safety requirements such as the crib, car seat and stroller.

Keep in mind that once Becky is no longer working she will no longer be paying for any monthly expenses, such as work clothes, gas, food, and so on.

Look for ways to make extra money. Based on their extensive education, both of them should look at becoming an online Tutor, as a side hustle, starting immediately.

Becky currently works shift-work with several days off in a row. On her days off she needs to look at other ways to make money both during the next 8 months, and after her baby is born.

Her options are huge and could include sewing or doing crafts and selling her items on Etsy, doing freelance work, baking, bookkeeping, photography, selling Avon, teaching music lessons, or whatever she is skilled at and passionate about.

By paying off their car loan, sticking to their budget, and finding ways to make money from home, Becky and Jack agree that Becky will be able to stay home with her baby.

Do you think they can afford for Becky to be a stay at home mom?

 


Comments

    • DC @ Young Adult Money

      DC @ Young Adult Money 03/01/2013 5:19 a.m. #

      I'm going to have to read this post in-depth and get back to you...I hope for Becky's sake she can stay home!

      • Sicorra

        Sicorra 03/01/2013 11:37 a.m. #

        Hope you get a chance to take a second look. Have a great weekend!

    • Laurie @thefrugalfarmer

      Laurie @thefrugalfarmer 03/01/2013 5:38 a.m. #

      I think Becky can definitely afford to stay home provided they stick with their plan and control their spending. We're learning quickly that families can live on a lot less than they think they can. Great post, Sicorra!

      • Sicorra

        Sicorra 03/01/2013 11:20 a.m. #

        Thanks Laurie! You are right, people can learn to adjust and live on less as things change in their lives.

    • CarolB

      CarolB 03/01/2013 6:13 a.m. #

      Hi Sicorra. Great insight into the trade-offs to staying at home. I didn't initially plan to stay at home for many reasons - but ended up "dropping out" for a year before my oldest started school. I prepared for that year by cutting back our expenses, with full intentions of returning to work once he started school. That was derailed when he was diagnosed with a life-threatening illness. Didn't plan for that one! But hey, life throws you curve-balls!

      And you are so right - planning and preparing for such a major life change can help ease the transition. My son is now out of the woods, I have somewhat adjusted to being at home, and am now "re-inventing" myself and searching for other ways to add to the income stream. Therefore, I blog!lol

      Happy Friday!

      • Sicorra

        Sicorra 03/01/2013 11:23 a.m. #

        Oh Carol, so sorry to hear about your son. That must have been very difficult. Good that things are working out better for him though.

        Your blog is awesome and I bet you are doing very well working from home. Happy Friday!!

        • CarolB

          CarolB 03/04/2013 11:38 a.m. #

          Thanks for the kind words! I am learning so much from yours too. That's the beauty of blogging, I guess. We all have something to share, and we all have something to learn from others.

          Still working on increasing that home-based income stream - got another trip I want to go on!

    • Justin @ The Family Finances

      Justin @ The Family Finances 03/01/2013 8:29 a.m. #

      I think that a lot of people can make things work on a single income if they really make it a priority. My wife is a stay-at-home mom, and we can attest to that.

      Granted, everyone's situation is different and has to be adjusted in different ways. Money certainly becomes tighter when you're accustomed to two incomes and suddenly lose one. I'm glad you went into some detail about the true costs and benefits. Many would just say this couple is out the $2,900 and stop there. But things like work clothes, gas and vehicle maintenance costs and eating out at lunch are all expenses that you'll no longer have.

      In the end, it comes to priorities. If staying at home is really important to you, then as long as the earning spouse makes a certain level of income, you can make it work.

      • Sicorra

        Sicorra 03/01/2013 11:29 a.m. #

        Thanks very much Justin! It is difficult for a couple to lose half their income but I so agree with you in that it is about making adjustments based on your priorities.

    • Jake

      Jake 03/01/2013 8:50 a.m. #

      Great post Sicorra! Thanks for the shoutout and for letting us help out with the video!

      • Sicorra

        Sicorra 03/01/2013 11:30 a.m. #

        Thanks for all of your help Jake!

    • krantcents

      krantcents 03/01/2013 10:21 a.m. #

      I think she could stay home, but I might suggest a compromise that worked for us. My wife is a nurse and she stayed home with our children, but worked part time on weekends or evenings. It was a good way of earning extra money and maintaining her license. Either my wife or I was always with the children.

      • Sicorra

        Sicorra 03/01/2013 11:31 a.m. #

        Thanks for bringing that up KC! That would be a very good option, esp. as you said, to help her maintain her license should she ever wish to return full-time.

    • Shannon @ The Heavy Purse

      Shannon @ The Heavy Purse 03/01/2013 10:57 a.m. #

      Great post and I love the video! Very cool! Going from a two-income to a one-income family isn't always easy, but I found when people have a good reason to make change (such as staying home with their children) they are willing to adapt to a new lifestyle. Krantcents make a great point about working part-time as a nurse, this might be a really smart option if she plans to eventually return to nursing full-time. She'll still have her licenses and can probably shift from part-time to full-time with relative ease. Fun post!

      • Sicorra

        Sicorra 03/01/2013 11:36 a.m. #

        Thanks very much Shannon! I think by being proactive with the changes, that you are correct, people can adapt. Their priorities shift and they work with that. And yes, you guys are correct, it is important for a nurse to maintain her licenses esp. after working so hard to obtain her nursing degree. Have a great weekend!!

    • Corina Ramos

      Corina Ramos 03/01/2013 12:39 p.m. #

      Loved the video Sicorra! I think if they stick to their plan it'll work out just fine.

      If she's looking for ideas to make money from home I have seen some work from home careers in nursing so when she's ready to go back to nursing I'm sure she'll find some opportunities.

      Best of luck to them and this is a great post Lady. You did an awesome job of breaking it all down for us!

      • Sicorra

        Sicorra 03/01/2013 2:57 p.m. #

        Thanks very much Corina! Glad you enjoyed it!!

        It is good to know that there are work from home careers in nursing. I was trying to think of options but I wasn't sure.

        I think these days it is easier for a mom to work from home so that the family doesn't feel too stressed over the loss of the second income.

    • Mackenzie

      Mackenzie 03/01/2013 5:46 p.m. #

      Really great post! I am a stay-at-home mom and I left my full time job to be home with my daughter. Even though there are months where it can be financially tight, it still is the best decision, and I am glad I did it :)

      • Sicorra

        Sicorra 03/02/2013 4:53 p.m. #

        Thanks Mackenzie! Great to hear from someone that has been able to make changes both work wise and money wise, so that you could stay home with your daughter.

    • KK @ Student Debt Survivor

      KK @ Student Debt Survivor 03/03/2013 7:51 a.m. #

      I think if Becky staying at home is their top priority and they're willing to make sacrifices they can make it work. What if Becky worked a couple of overnight shifts while her husband was at home with the baby? The beauty of nursing is that there are per diem shifts in almost every time slot. Or maybe Becky could watch another couples' baby at the same time to make a little extra money on the side? Great example and something bf and I have talked about for when we start thinking about kids.

      • Sicorra

        Sicorra 03/03/2013 11:19 a.m. #

        Thanks KK! Those are great suggestions on how Becky could continue to bring in at least some extra money. Any extra money makes life easier, right?

    • Thrifty Dad

      Thrifty Dad 03/03/2013 7:08 p.m. #

      Great post! It'll be tight, but I think they can pull through if they stick to their plan and plan to take on some extra work esp. after her benefits run out.

      When we had our daughter, I considered taking a month of parental leave myself to help my wife out. But since my wife works from home, she wasn't entitled to any maternity benefits either. While it was certainly possible, it would've been very tight. Fast forward 2 years later, my wife still works from home, but at a much reduced rate, trying to squeeze in a bit of client time during daughter nap time (if and when). So while it's been a bit of an adjustment, it's all about your priorities. My daughter's now getting plenty of good quality mommy time during the day and daddy time at night and I wouldn't do it any differently.

      • Sicorra

        Sicorra 03/04/2013 4:04 p.m. #

        It is really great that your wife can work from home on a flexible schedule and that the two of you were able to make whatever adjustments necessary to make it all work out well.

    • Kim@Eyesonthedollar

      Kim@Eyesonthedollar 03/03/2013 8:56 p.m. #

      If you are motivated enough, I think anything is possible. There are always things you can cut or avoid as far as expenses. If her dream is to stay home, I'd go for it. I am still in awe of getting 12 months of maternity leave. The US is well behind the curve on that one.

      • Sicorra

        Sicorra 03/04/2013 4:05 p.m. #

        Yes, 12 months mat leave is very nice. It definitely gives the mother a good period of time to adjust to everything.

Comments are closed.