The financial implications of my wife becoming a stay-at-home mom

By Brian Page

The cost of balancing child care and career decisions follows parents for the rest of their lives

We didn't understand the compounding consequences of my wife exiting the workforce, and underestimated the financial reality of children.

I was in my personal finance classroom with an unbearable stomach pain, sweating profusely from the agony. The nausea became unbearable. I grabbed a trash can, left the room, running toward the bathroom, vomiting blood.

I was barely in my 30s, and I had a bleeding ulcer.

That was not what I envisioned for my life or my career journey. Like countless other husbands and fathers, I did what I thought was best for my family. But it wasn't. It wasn't best for my wife, my kids, or me. As we would learn years later, this one choice wound up hurting my wife's financial prospects and my physical and mental health.

At least half of fathers reported being moderately stressed in a report from Parents and Verywell Mind on fathers and mental health. There are a lot of us.

It didn't happen all at once, but the problem originated from one choice that seemed sensible and non-threatening. I decided to tackle the hours and pay of two full-time jobs so my wife could stay home with our first child. It made financial sense at that time, but let's look at the bigger picture.

A 2022 Brookings Institution analysis of data from the Agriculture Department found that a middle-class family with two children and two parents will spend about $310,605 between the day their baby is born and the day they turn 18, which does not include the cost of college.

Since that time, the cost of childcare has skyrocketed.

According to a study released by Care.com in January, half of families spent at least $18,000 or more on child care in 2023. As many as 1 in 5 parents spend more than $1,000 monthly on child care per child. Nationally, the average is $631 spent per child per month. Consequently, many parents are forced to choose between leaving the workforce or spending close to 30% of their income on child care.

After the birth of our first child, we could have made the costs work. My wife could have continued to work outside the home, and we could have afforded child care. It would have been tight, but we could've done it.

So why did I spend almost 15 years working 80 hours a week? The original problem we faced, the trade-off of my wife working and paying for child care or her leaving the workforce to avoid the cost of child care, that problem only deepened. While my pay increased, my wife lost earning power from staying home. When our second child arrived, we couldn't afford for her to return to work and for me to quit my second full-time job.

We didn't understand the compounding consequences of my wife exiting the workforce, and underestimated the financial reality of children.

"We see the skyrocketing cost of child care pushing even more parents temporarily out of the workforce right at a time their career tends to accelerate," says Mel Faxon. chief operating officer and co-founder of Mirza, a company dedicated to understanding and activating the fragmented, administratively burdened, and varied childcare markets across the U.S.

Adds Faxon: "It takes quite a lot of time to put a childcare plan in place. So when couples don't do the research ahead of time, they can be unknowingly hit with a child care expense they can't afford to pay, nudging them to leave the workforce."

I am real-life evidence of Faxon's warning, and there are millions of us.

The cost of balancing child care and career decisions follows parents for the rest of their lives. On average, parents lose half of their annual salary when they leave the workforce. With potential wage growth and retirement savings lost over time, a parent leaving the workforce could lose up to four times their annual salary.

The cost of kids is not just a challenge in the pre-kindergarten years; it's a challenge throughout their childhood. I recently did a deep dive into the latest costs of raising a child, looking beyond providing a minimum standard of care and looking more closely into the ongoing costs of additional opportunities for children parents face. Extracurricular activities, saving for college, and school sports are all expenses that have grown unaffordable for many.

'Families can thrive when both partners are actively engaged in caregiving.'Paige Turner

We see social media influencers such as Paige Turner, a mother of four, whose raw and real clips about the costs of raising children have blown up because millions of parents feel her agony. The agony I felt.

"It can be incredibly difficult to manage the cost of childcare in a home with two working parents who both want to continue working. However, families can thrive when both partners are actively engaged in caregiving," Turner says.

She adds: "Men participating in caretaking and taking paid leave is so impactful and isn't just about fairness - it's about building stronger families. By sharing responsibilities a home and in the workplace, parents create a balanced partnership that benefits everyone involved and allows both men and women to excel in their careers and at home."

Managing better

Easy-to-use resources are available for couples to analyze the financial implications of having a child - resources I wish I would have had access to 20 years ago.

The Center for American Progress, for example, released a financial calculator designed to highlight the impact on American families caused by U.S. fiscal policy failing to adequately address the cost of child care. The calculator's more poignant and practical value is its illustration of the financial implications of temporarily leaving the workforce.

The calculator uses 2016 numbers. Since that time, inflation has increased by about 18%. A more true picture is to add 18% when you calculate the financial implications of leaving the workforce temporarily. Use the calculator to understand the lifetime cost of lost retirement assets, benefits, wage growth, and wages per year out of the workforce.

The U.S. Bureau of Labor and Statistics maintains the Occupational Outlook Handbook Home, which provides median pay and projections of new jobs in each career field. Combined with the Center for American Progress calculator, couples can calculate whose lifetime income suffers most from temporarily leaving the workforce.

"We need to think about salaries as a collective household income. You know, we're a team player doing this together. It shouldn't be an isolation of one or another," Faxon says.

The decision my wife and I made to have me work two full-time jobs while she stayed home was short-sighted. Over the long run it will likely cost us a fortune in lifetime household income.

So when planning for children, consider the bigger picture. Calculate the long-term financial implications of either spouse staying home. You can't do the right thing without first getting the right information.

Brian Page is co-host of the Modern Husbands Podcast and founder of Modern Husbands, which helps couples manage their money and their home.

April is National Financial Literacy Month. To mark the occasion, MarketWatch is publishing a series of "Financial Fitness" articles to help readers improve their fiscal health, and offer advice on how to save, invest and spend their money wisely. Read more here.

More: My teenagers filed taxes for the first time, and they weren't happy about it

Plus: They thought a degree would change their life. Instead, it left them trapped in school and in debt for years.

-Brian Page

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

04-23-24 1308ET

Copyright (c) 2024 Dow Jones & Company, Inc.