Making financial sense of parenthood: weighing up the costs of placing a child in daycare (and working) vs staying at home
With all of the many financial decisions you will have to make over the years, perhaps one of them will be associated with the childcare options you have as a parent of a young child. One of the big decisions that parents make early on in their child’s life is whether or not to go back to work and place their child in childcare or to stay home with them.
When all is said and done this is of course a highly personal decision – one that you will I’m sure want to weigh the costs of on both sides to determine which is the better course of action for you and your family.
Here is a breakdown of the potential costs associated with factoring in childcare fees over staying home to help you as you make up your mind about what is the best financial move.
Going Back to Work vs Staying Home
As a parent, if you are opting to go back to work as opposed to staying home, this may be a financial decision based on needing to earn a salary to contribute to your family’s income. Regardless of the reasons however, there is a potential for high costs associated with this course of action.
Going Back to Work
Costs of Childcare
The amount of money that you will likely have to pay towards childcare alone, will certainly add up over the year. Aside from being able to rely on a family member to provide free-child care, in many cases it is a paid child care service that will be a requirement for many families.
Daycare fees: while daycare fees do vary from province to province, in Ontario for example it has been reported that this childcare option can account for up to more than one-third of a your income. If you have more than one child, then of course this rate is likely to be even higher. In fact, in some Toronto neighbourhoods, daycare can cost an average of $1,700 per month.
Nannies: if instead, you choose to opt for a nanny for your child or children – while you may find this to be more convenient in certain situation, such as coming to your home to watch your children, it is likely to still cost you a lot of money per month. With the average hourly rate of pay for a live-in or live-out nanny sometimes being an average of $15 -20 or higher, this can prove to be another expensive side to childcare.
Costs of Commuting
If you are going back to work after having a child, then you will also want to factor in the expenses associated with your work commute. While in some cases, working near by your house allows you to walk or bike to your job – in many instances it will require instead that you drive or take public transportation to get there. If for example, you are buying a monthly transit pass – how much will this cost? Perhaps anywhere in the ball park of $100 or more each month and this can also add up. Alternatively, if you will be driving your own vehicle it is not only the costs of purchasing and maintaining a car – it is also the amount it will cost you to re-fuel your vehicle, pay for parking, and even having to pay road tolls both ways. The cost of fuel alone can be quite high depending on the length of your commute and the type of vehicle you drive and with the other expenses, these will also quickly eat into your income.
All-in-all, you will want to compare how much going back to work will take away from your take home salary, after you have taken into account both childcare, commuting, and other expenses.
If you are in the position to stay home with your child, while this may be a relief in a lot ways, you may still worry to a certain extent about what if will mean to not have your income. With that being said, there are actually some aspects you can save on by not going back – however only you and you family can no for sure if it is more financially-sound to choose either alternative.
As mentioned, by staying home you will first and foremost save on the huge expense associated with childcare and commuting and here are a couple of other areas where you may also cut back and that can help to offset the lack of income you will receive.
Save on Work Clothing
If you are not having to go into a professional work environment for example, you may just find you can save on buying these types of clothes as well as not having to pay for dry-cleaning bills. Here you could be saying quite a bit of each month as wardrobe expenses can also quickly add up – sometimes to a couple of hundred dollars a month, even.
Save on Work Lunches/Eating Out
Since you are staying home and not going out to work each day, you can also reduce the amount of extra money you spend on outside meals. By staying home with your child you are likely to have a bit more time to cook and prepare meals and save on daily visits to take out/restaurant locations. Perhaps you can even cook at home meals for less than half of what a takeout or restaurant meal would cost you.
While staying home with your child may at first be worrisome since you will be going down to one income – and you won’t have your own income. This may cause you to believe that staying home is not an option – however if you can save on some extra working lifestyle expenses then perhaps this can be a doable scenario for you and your family after all.
So with that being said . . which is the right financial move for you?
Of course there is not one right answer for everyone. Each scenario may be right for each family based on their own needs and circumstances. Furthermore, sometimes what may be a viable option for you with one child, may not be achievable when you add a second or even a third child to that equation. In this case, you may need to reassess your decision – as the costs of childcare are quite likely to shoot up as the size of your family grows.
Do the expenses of childcare and commuting make it too expensive for you to continue working outside of the house? Are you able to stay home and afford to live comfortably? Can you reduce your costs while staying at home and make this more affordable to live on one income? These are all questions you and your partner will need to discuss, by examining and weighing the costs of each side of this important choice – and with the knowledge at hand,together you can make the best decision possible.