This story is part of So Money, an online community dedicated to financial empowerment and advice, led by CNET Editor at Large and So Money podcast host Farnoosh Torabi.
Welcome to So Money Hot Mic, a weekly column on my latest financial musings.
I’m new to TikTok and the algorithm is still figuring me out. Case in point, it keeps feeding me stay-at-home mom content.
Right now, hashtag #stayathomemomlife is trending, with over 778 million views of content from full-time caregivers. Some parents share struggles like loneliness. Others show how they structure their days to include a workout.
Then there’s this TikTok from the husband of a stay-at-home mom, with a million “likes.” Waxing poetic about why wives should stay home to “handle business,” he says, “I don’t want her working.” And while acknowledging the huge responsibilities of being a “housewife,” he ends with a derogatory note that most women who stay at home are smart enough to “keep it quiet and let the man out there making all the dough think he’s running sh–.”
@farnooshsomoney#duet with @therealrealbradlea #stayathomemom♬ original sound – Brad Lea
Stay-at-home parenting, whether you choose to pursue it because of personal values, cultural pressure or due to the high cost of child care (or all of the above), is a real pull that I understand and respect. Without expansive programs for free preschool and paid parental leave, our current system does little to support working parents.
My husband and I have two young kids, and we occasionally talk about how life could be easier if one of us left our jobs and became the primary caregiver. It’s usually after a long week of no childcare, a sick child and a pile of dirty laundry.
But if you’ve followed my podcast, you know my viewpoint, which is not always popular: Stay-at-home parenting is a risky move and not one I like to recommend.
Why? At bottom, it’s because I care about financial independence. In many cases, the partner who doesn’t earn a paycheck (usually a woman) has little to no financial autonomy in the relationship. And, while I understand that not everybody can or wants to prioritize their financial freedom, I get nervous about any household model that leaves one adult financially defenseless and reliant.
I occasionally receive emails from my audience with questions like these:
- I think staying home is the best move for my family both personally and financially, but will I be making the right decision for myself?
- What happens if my spouse gets sick and I’m suddenly responsible for paying the bills?
- What if we get divorced and because I’ve been deferring all the finances to my working spouse, I’m lost and stuck?
Recently, I got a message from Sabrina, a 50-year-old mom of three from California. She was splitting from her husband, but hadn’t made her own money during the marriage. “I’ve primarily been a stay-at-home mom, which for such cliche reasons crippled me financially. I’m in the process of divorce. My ex’s career is soaring, while I feel like a 1950’s housewife … in the dark and starting from scratch,” she wrote.
About 11 million people, or 1 in 5 US parents, are stay-at-home parents, according to a 2016 Pew Research study. In the last few years, especially given the work-life constraints of the pandemic, stay-at-home parenting is on the rise. If you’re in this camp — or leaning toward taking on this role — here are some important considerations for your financial health.
1. Know the financial power you bring to the family
Stay-at-home parenting is a tireless job that involves myriad responsibilities and, according to at least one 2019 study, amounts to a six-figure salary. The Mom Salary Survey estimated the average annual value of a stay-at-home parent as $178,201.
Attaching a financial value to your household contributions as a primary caregiver is important. Prescribing to the adage that “money is power” can oftentimes leave a spouse, who is not earning a paycheck, feel they can’t (or shouldn’t) have an equal vote in household financial matters.
As I wrote in my most recent book When She Makes More, the partner making less (or no money) deserves a central and active seat at the table. They should have a say in how household money gets spent, saved and invested. Any resistance to this from the primary wage-earner is a red flag in my book.
You can stay financially active through other means, too. Have routine budgeting meetings with your spouse. Review monthly bank statements and credit reports. Consult with financial planners and accountants and review all tax documents.
2. Understand the financial trade-offs
Is stay-at-home parenting a move you’re willing to afford? As a financial advocate, I always tell people to run the numbers. When you’re not earning a paycheck, you’re not just losing income — you’re losing out on the compounding growth of that income, as well as future retirement savings. For example, a 32-year-old woman earning $60,000 a year who stops working for five years to be a stay-at-home mom will lose $300,000 in wages, as well as another $400,000 in lost wage growth and retirement benefits, for a total of over $700,000. This calculator from the Center for American Progress helps parents understand the long-term costs of full-time caregiving.
For some, the math will make them stop and reconsider. For others, it will make no difference. My insistence on weighing these long-term financial implications has rubbed some people the wrong way. This summer, I received an angry email from a stay-at-home mom who had listened to my podcast on the subject. “I choose to sacrifice for my kids, not sacrifice at the altar of financial success,” she wrote.
To be clear, my argument is not that money is more important than kids. My main point is that our choices have trade-offs. Like with any financial decision, it’s important to be clear on the costs and proceed with eyes wide open.
3. Have your own financial profile
Banking your own money — either through a part-time job or by taking an allocation from your spouse’s income and depositing it in your own account — can ensure some financial independence as stay-at-home parents, experts say.
According to Tracy Coenen, a forensic accountant who has worked on many divorce cases, it’s crucial to have your own money during a marriage and in the event of a divorce. “You need to be able to make some autonomous spending decisions,” she said recently on my podcast. “It’s also important because, if the marriage ever goes south, you need to have a source of money to pay an attorney to get the divorce filed, to potentially go get an apartment of your own, and feed yourself.”
One of the most heartbreaking things Coenen sees during a divorce is when the wage-earning spouse cuts off the stay-at-home parent. No one should feel trapped in a marriage because they don’t have the resources to survive on their own, she said.
Along those lines, having a personal credit card ensures that if the couple breaks up, the nonworking partner has access to their own line of credit for emergencies. And it’s better to apply right away, said Coenen, “while you have the earnings of your spouse that help you qualify for that credit card.”
4. Have a plan to re-enter the workforce
If you’re a stay-at-home parent, it’s a good idea to prepare for re-entry in the job market somewhere down the road. In her book Off Ramps and On Ramps, author Sylvia Ann Hewlett found in her research that a vast majority of women who leave the workforce eventually want to get back to their jobs and careers.
Regardless of why you want to get back into the workforce — whether it’s because you change your mind or your kids are all grown — one of the best ways to get ready is by investing in your education and skills. That way, you increase your odds of meeting qualifications and getting hired. You can learn on your own time through free online programs and courses, and you can stay connected in your field through networking, social media and LinkedIn.
Or, you can do what Sabrina, my podcast listener, did. She invested time and money in pursuing a master’s degree in mental health during her marriage, which took her seven years to complete while attending to responsibilities at home. Now, she’s able to exit her relationship with some professional momentum, and with the hopes of building a practice and getting a return on the investment.
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