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Young families: Considerations for staying at home versus working

Having a child changes everything about a family. And it’s exciting to think about all the new life experiences you’ll have with your little one in tow.

That new bundle of joy — who is sure to enrich your life — also comes with a very hefty price tag. New parents have many financial decisions to make right from the start. One thing to consider includes whether a parent should stay at home or return to work after a child is born.

The average cost of raising a child (from birth to age 18) is $310,605. That amount fluctuates depending on the number of children you have — families with three children are likely to pay less with each additional child.1

A big cost of raising children is child care.

The cost of child care

Everyone knows that child care isn’t cheap. And day care prices continue to rise post-pandemic. According to a recent survey, over the past year the cost of child care is more expensive for 63 percent of parents. And nearly 60 percent of parents are more concerned about the cost of quality child care than in past years. That might be because many families spend more than $10,000 annually on child care. (To put things into perspective, tuition for an in-state college education averages $9,349.)2

After doing a cost/benefit comparison of the income earned to the cost of child care, some mothers and fathers decide to stay at home to care for their children. The U.S. government defines affordable child care as being no more than 7 percent of a family’s household income. However, most Americans pay more than that; in fact, 72 percent pay 10 percent or more — and some 51 percent of people in this group spend more than 20 percent than the recommended amount.2

Those who do opt to work outside the home may run into other challenges. Since the pandemic, some families are finding that there is a shortage of child care in their own neighborhoods. In fact, 43 percent of parents say it’s harder to find the care they need compared to just a year ago. That’s not surprising. Between 2019 and March 2021, almost 9,000 day cares closed in 37 states.2

The cost of staying at home

Being able to be the primary nurturing force in your child’s life is incredibly satisfying — for you and your child. The special moments will be forever etched into your heart and mind. Seeing them take their first steps, being there when they say their first words, and taking them to kid-friendly places midweek (minus the big crowds) are experiences you’ll never forget.

That said, staying at home can have short- and long-term financial implications that might not immediately be obvious. In the short term, you’ll have to adjust to living on just one income. In the long term, the parent who’s giving up their paycheck may also be missing out on raises and employee benefits such as 401(k) employer contributions and retirement savings.

For example, let’s say a parent takes 12 months off of work to stay at home with their baby. Not only are they out a year’s salary, they’re also out cumulative wage growth and retirement assets and benefits that compound over time. Their total monetary loss for one year of not working amounts to more than just their annual salary.

Also, when you’re caring for little ones at home, it’s easy to put your retirement planning on the backburner. (It seems light-years away, right?) However, even though it may not be top of mind, it’s something you need to address now. If your spouse is the one with the paying job that doesn’t mean you should be relying on just him or her to sock away savings for retirement. In fact, your spouse can open a spousal IRA for you. For 2023, if you’re under 50 years old, your spouse can contribute up to $6,500 annually to the IRA. It increases to $7,500 if you’re older than 50. That means couples who consist of one spouse who works can contribute up to $13,000 or $15,000 annually.3

Returning to work

Let’s say you and your spouse decide that you’ll return to your job — or one like it — after your little one(s) starts school. Maybe that is going to happen now or farther down the road. Whatever the case, you’ll be in good company. During the pandemic, taking a career break became more common — especially for women with the majority taking off for parental and medical leave.4

However, it’s still a challenge to return to the workplace after a break. Thankfully, there are things you can do to help with the transition. Here are a few:

  • Be sure to contemplate what you want most in a job. Is it flexibility or working with a team? Make a list. This will help you hone your vision and narrow down the jobs you apply for.
  • Think about jobs you’ve liked (or disliked) and why. Be sure to let that knowledge steer you in the right direction.
  • Don’t be afraid to apply your skills to a new field — one that might give you more joy and satisfaction than the one you were in before having your child.
  • Explain the gap in your resumé. In your cover letter or interview, tell your potential employer that you’ve been home taking care of your young child. Then, focus on your accomplishments and work history.4

Keep in mind that it can be a challenge — for both men and women — to re-enter the workforce after being absent from it for a number of years. In the four or five years you’ve been gone, new systems and operating models, technologies, and people have replaced the old. So it can be difficult to return to the same job at the same level as when you left. (This might be the nudge you need to try your hand in a different field.)

On top of that, there can be an implicit bias toward parents who are trying to return to work. Some employers are worried that a candidate will leave work again or have a hard time making the transition back to work. More than 40 percent of workers think non-mothers are more devoted than mothers to their work and nearly 40 percent of workers negatively judge mothers for needing more flexible work schedules.5

Motherhood should be seen as enhancing a person’s skill sets. Potty training a toddler (especially during a pandemic), managing disputes among siblings, and running a household’s schedule and budget are all experiences that can translate into the skills needed for the workplace.5

To help ease a person’s transition back into the working world, some companies offer returnships, in which individuals are hired by an organization that offers mentoring and training for a set amount of time. This helps the candidate gain skills, confidence, and connections while allowing the employer to evaluate his or her performance.

Thanks to the Great Resignation in which employees quit their jobs en masse during the pandemic, returnships are experiencing a resurgence. After taking time off to explore life, change sectors, or gain new skills, some of these same people are easing back into the 9-to-5 routine, with help from returnships.

Stay-at-home parents who want to ease back into the working world can also benefit from returnships, which are usually paid. This can boost their confidence levels. Whether or not the returnship results in a full-time gig, you will have gained more experience, sharpened skills, and filled a gap in your resume.6

A hybrid approach

Due to the pandemic, many employers have discovered their employees can successfully work from home. Parents who want to work from home can use this to their advantage.

Like all working parents, millennial moms value the option of working from home — those who have child-care needs are 32 percent less likely to leave their job if they’re allowed to work from home. In a recent survey, 77 percent of millennial women like working remotely because there’s no commute time and 53 percent appreciate the efficiency of it. The time and energy you save can be spent with your little one(s).7

Take full advantage of employer benefits

Be sure you take full advantage of the benefits an employer may offer you. Thankfully, the pandemic spurred on more employers to offer child care benefits. Does your or your spouse’s employer offer them? The answer may surprise you. More than 60 percent of employers say they plan to increase their current child care benefits.2 Some benefits might include discounted child care, nanny networks, and affordable tutoring, among many others.

In addition, a Dependent Care Account is a flexible spending account (FSA) that lets you set aside up to $5,000 in pre-tax dollars to pay for dependent care expenses. This could save you around $2,000 in taxes.2

If you’re on the fence as to whether to return to work (either at an off-site or home office) or take an extended time off, be sure to count all the costs. You want to be sure this new transition works for you and your family — now and in the long run. 

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1. Bhattarai, Abha; Hays, Stephanie; Keating, Dan. “What does it cost to raise a child?”, October 13, 2022.

2. Editorial staff. “This is how much child care costs in 2022,”, June 15, 2022.

3. Birken, Emily Guy; Curry, Benjamin. “How married couples can save for retirement with a spousal IRA,”, October 24, 2022.

4. Castrillon, Caroline. “How to return to work after a career break,”, March 13, 2022.

5. Libin, Katya. “Working moms face employment bias. Combat it head-on by putting ‘mother’ on your résumé,”, May 17, 2021.

6. McDermott, Kirstie. “Just what are ‘returnships’ and why are they trending right now?”, December 6, 2022.

7. Connley, Courtney. “Millennial women want remote work, but many fear they’ll miss opportunities if not in office, according to report,”, August 23, 2021.

DOFU 1-2023