Parents can expect to spend around $23,000 per year, or $414,000 through age 18, raising a child, according to recent research.¹

New parents have important financial decisions to make right from the start. One of the biggest considerations is whether a parent should stay at home or return to work after a child is born.

Child care is one of the biggest costs

New data on the cost of child care from the 13th annual Care.com 2026 Cost of Care Report reveals that the average weekly day care cost is $332 (about $17,000 annually).² This high cost cuts into household income and savings, with the average parent spending 20% or more of annual income on child care, and 31% are dipping into savings to cover the expense.²

After making a cost/benefit comparison of the income earned to the cost of childcare, some parents decide to stay at home to care for their children.

Those who opt to work outside the home may run into other challenges though, including a shortage of child care providers. In a recent survey, 40% of families seeking a day care slot found themselves on a waiting list with an average wait time of six months.³

The cost of staying at home

Being the primary nurturing force in your child’s life is incredibly satisfying — for you and your child. Seeing them take their first steps, being there when they say their first words, and taking them to kid-friendly places are experiences you’ll never forget.

That said, staying at home can have short- and long-term financial implications. 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 will be missing raises and employee benefits such as 401(k) employer contributions and retirement savings.

For example, let’s say a parent takes 12 months off work to stay at home with their baby. Not only are they out a year’s salary, they’re also out of 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. Even though it may not be top of mind, it’s something you need to address. If your spouse is the one with the paying job that doesn’t mean you should be relying on them to sock away savings for retirement.

In fact, your spouse can open a spousal IRA for you. For 2026, if you’re under 50 years old, your spouse can contribute up to $7,500 annually to the IRA. That means couples consisting of one spouse who works can contribute up to $15,000 annually.⁴

Returning to work

Let’s say you and your spouse decide that you’ll return to your job — or one like it — after a few years or when your child starts school. Whatever the case, you’ll be in good company. Taking a career break has become more common — especially for women with the majority taking off for parental and medical leave.

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:

• Be sure to contemplate what you want most in a job. Is it flexibility or working with a team? Make a list to help you hone your vision and 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.
• Keep in mind that it can be a challenge to re-enter the workforce after being away for a few years. In the time you’ve been gone, systems and technologies have changed.
• 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. 

Parenting should be seen as enhancing a person's skill sets. From managing multiple schedules and balancing budgets to coordinating with other caregivers and supporting their children's educational and developmental needs, a stay-at-home parent's skills could help boost a résumé.

The hybrid approach

After the pandemic, many employers discovered their employees can successfully work from home some or part of the time. Parents who want to work from home can use this to their advantage.

One of the most significant advantages of working from home as a parent is flexibility. Remote work allows parents to customize their schedules to better align with their family’s needs.

Take advantage of employer benefits

Be sure you take full advantage of your employer’s benefits. Benefits might include discounted child care, onsite daycare, and child care subsidies and reimbursements.

Dependent care flexible spending accounts (FSAs) allow you to set aside up to $7,500 per household in pre-tax dollars to pay dependent care expenses, which will save you money in taxes.⁵

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.