One Income or Two?

The decision about whether or not both parents should work after they begin having kids is a lot more complicated than most people realize. There is more than just the extra income to consider. You also have to consider many other pros and cons, including commuting expenses; benefits received in addition to income, such as insurance or a 401(k) plan; the cost of day care; and the amount of taxes you pay on that income.

For people who basically have free day care, such as a grandparent or other family member who can watch the baby during the day, or for parents who are both very committed to their careers, choosing to continue in a two-income lifestyle may be a very easy decision to make.

Likewise, if a family plans to have one parent stay home, and one parent makes much more money than the other and has better benefits or a stronger future at the job, they also will have an easy decision to make. But it becomes harder to make this decision when you're not sure how to downsize your spending to fit one income, or when one parent makes much less money but is the only source of health insurance or a company retirement plan. Consider using a day-care cost calculator on the Internet or talking to a financial advisor if you are having a hard time deciding whether it makes more economic sense for both parents to work or for one to stay home.

When considering the expenses of putting a child in day care versus keeping her home, you should consider that your child is much more likely to get sick when in day care. Be sure to factor in the cost of doctor visits, medications, and your own time off work because of the increased number of sick days.

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