Friday, December 01, 2006

Stay Home with the Kid or Work…Or Do Both?

Two years ago I became a parent about ten weeks earlier than I should have. After five air ambulance transfers, four hospitals, and two rounds of neurosurgery and sixty seven days later we got our baby home. Needless to say, my wife had a very strong desire to stay home with our baby to ensure his development was progressing normally for the next several years. I agreed, but we needed to make it work with the budget after the maturity leave money ran out.

I worked it out that we could exist on my income alone, but there would be no extras (ie: no vacation money, Boxing Day shopping, or us covering the bill at a family supper out). So I gave the wife the news and offered her a challenge. “You have to earn some kind of an income while you stay home. I don’t care how much it is, just something.”

So she went to work during her maturity leave and got a home based daycare up and running in our house. The cash flow is tiny, but when you consider the cost savings on work clothes, commuting, paying for daycare and the tax write off of a home based business it does make sense for us.

Here’s a brief example:

After tax and expenses daycare income to house $240/month
Work clothes savings $50/month
Commuting savings $57/month (bus pass)
Daycare savings $600/month (local child care rate)
Daycare portion of house bills $150/month

Total savings/income to the house $1097/month

Strangely enough that was about what she was taking home prior to going on maturity leave. So I suggest that if your one of you is earning less than $30K/year and have at least one child that you look into the idea of one of staying home with a small business. You might just find that you can have your cake and eat it too.

This post is now part of Carnival of Personal Finance #77 over at Money and Values.


Andrea >> Become a Consultant Blog said...

If you live in a big city, where daycare is more expensive, or you have a nanny, staying home is more like earning $50k or $70k a year. You need to consider that you're paying with your after tax dollars for those things and that, when you stay at home, you have a lower tax burden. If you earn just $300 Canadian a month, it's much like earning a salary above the Canadian median. See my post on stay at home moms who work.

I know moms who earn more like $20k while at home, so they're more on track with what they would have made as lawyers or engineers or even family doctors, in some cases.

Canadian Dream said...


Yes that would be true. Local market conditions can increase the value of a work at home parent to even higher levels than my example.

Thanks for your link. I liked the post.