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Becoming a Stay-at-Home Parent: Navigating the Pros, Cons and Financial Implications

Making the decision to leave your job and stay home with your kids may not be an easy one. Whether it’s only temporary until your children are old enough for school, or whether it’s a permanent change, there are so many factors that go into making the right decision for your family. And, of course, you’ll want to be sure to understand the financial implications as well. Can your family afford it? How will it impact your financial future?

Let’s take a look at some of the pros and cons of having a stay-at-home parent in the family.

READ: Navigating the Post-Pandemic Workplace — Struggles, Solutions and the Return to Office Culture

Pros of having a stay-at-home parent

If you have a stay-at-home parent in your household, you don’t have to worry about one of the most stressful — and costly — parts of raising a child: finding childcare. Stay-at-home parents could save their families $9,000 to $18,000 per year on childcare alone, just for one child. The more children you have, the more a stay-at-home parent could help you save.

Additionally, your family can benefit from having a stay-at-home parent when it comes to involvement in your children’s everyday lives. Having the opportunity to meet their friends, drive them to and from extracurricular activities, and being available when they need you can build a strong relationship and provide lifelong benefits.

And while working parents may deal with feelings of guilt regarding the time spent with their children or struggle to maintain a good work-life balance, it’s not a concern for stay-at-home parents.

Cons of having a stay-at-home parent

One of the biggest disadvantages of having a stay-at-home parent in the family is the impact on your finances. Typically, the biggest expense category for families is housing, and unfortunately, this isn’t an area where you can simply choose to scale back on your spending.

Not only can it be more difficult to pay the mortgage or the rent when your family’s income decreases, but you may have to reconsider your lifestyle. You may not be able to continue taking a family vacation each summer, for example. If those types of expenses are important to you, you’ll have to take a hard look at your new budget and make cuts in other areas.

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Another potential downside of having a stay-at-home parent is simply the fact that many people find purpose, connection and meaning in their professional lives. Even a parent who is excited to stay at home with the kids may occasionally feel isolated or unfulfilled. More reluctant stay-at-home parents may struggle with these feelings even more.

Besides these pros and cons, there are several other considerations from a financial perspective that families need to keep in mind before making the decision to become a stay-at-home parent.

The impact on retirement planning

Even if you modify your budget to align more closely to your new income, that’s really only taking the present and the near future into account. But the financial implications of a stay-at-home parent can last decades.

For example, in 2023, individuals are able to contribute a maximum of $22,500 per year to their 401(k) retirement accounts. With two working parents, a couple could contribute an annual maximum of $45,000. However, when one parent leaves the workforce, only the working parent is able to contribute their $22,500 — a decrease of 50%. 

And as a result of becoming a single-income household, families may decide to contribute less money to retirement so they can spend on other things. Instead of the working parent maxing out their contributions, they may choose to put a smaller percentage of their salary toward retirement. 

In both of the above scenarios, not only is there less money being contributed to the family’s retirement fund, but it also impacts the amount of interest that is able to compound over the years until retirement.

READ: Mapping Out Financial Success with Retirement Planning

How becoming a stay-at-home parent could save you money

While the shift to a single-income household could make finances a little tighter, you may be able to save more money than you think when one parent stays at home. Not only is there the issue of childcare costs, as mentioned earlier, but there are other expenses often associated with work that can add up. 

The cost of gas or public transportation going to and from the office is one major expense — and besides that, the amount of time you spend during that commute. By cutting those expenses (and yes, time is an expense), as well as other work-related costs such as dry-cleaning, office lunches and more, a stay-at-home parent could help you save in ways you didn’t expect.

Consider part-time or work-from-home jobs

With all the ways the world has changed in the last several decades — and especially the past few years — there are plenty of opportunities for families to benefit from a second income even with a stay-at-home parent. 

Whether you choose to pick up a gig job, such as driving for a rideshare app, work part-time on the weekends or find a position that is fully remote, the additional income could help cushion your family’s finances. And at the same time, you’ll be able to keep all of the advantages of having a stay-at-home parent.

While these are just some of the financial concerns to keep in mind before you decide whether a stay-at-home parent is right for your family, there are many other factors that you’ll want to consider. Before making any big changes, it can be a good idea to enlist the help of a financial team who can work with you as your family’s needs evolve.


Zach Nicol Umb PhotoZach Nicol serves as senior vice president, regional manager of UMB Private Bank. Zach leads a team responsible for the acquisition, growth, and support of new and existing customer relationships.