Money Rehab with Nicole Lapin - Can You Afford to Be a Stay-At-Home Parent?

Episode Date: July 26, 2022

The phrase “working mother” is redundant. Being a mother might be the toughest job you will ever have. But, thinking about how you’ll balance your career before the stork arrives can make taking on the job as mom go more smoothly. And as soon as you do, you’ll encounter the question: to work or not to work?

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are you ready for some money rehab? And should I have a 401k? You don't do it? No, I never do it. You think the whole world revolves around you and your money. Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand.

Nicole Lappin. The phrase working mother is redundant. I've always thought that. Same with being a strong woman. Being a mother might be the toughest job you will ever have. But thinking about how you'll balance your career before the stork arrives can make taking on the job as a mom go more smoothly. And as soon as you do, you'll encounter the question, to work or not to work? The choice of whether to go back to your pre-baby job or focus on your new full-time position as a mommy is such a personal one, and it's obviously a financial one too. Former Yahoo CEO Marissa Mayer kicked off an international debate on parental leave when she opted for a brief maternity leave of two weeks after she gave birth to her twin daughters in 2015, giving her employees a heads up that she would be working throughout her absence. Other women opt for full maternity leave if offered by their employer. Some women choose to leave the workforce until their kids enter the K-12 system, choosing to be at home with them

until they are at school all day long. Some take the leap to work from home, either negotiating this agreement with their employer or going into business for themselves. And still others leave the workforce and take on another full-time job, being a mom, permanently. Don't wait until you're expecting your mini, though, to ask yourself these two questions that will help narrow it down to which options might be best for you, your family, your finances, and your career. Number one, what's our household cost-benefit analysis for each form of child care? Number two, what's the shelf life of my skill set? These questions are best taken together as they inform each other and your career moves post-baby. The first one can really be simplified as how much money do we as a household have coming in

versus how much money would we have going out for each child care option? And the second one is a question of which skills are available to you now and how on top of your game will you be after stepping out of the workforce for 1, 3, 5, 10 years, maybe more? Let me share two examples of different friends who have taken slightly different routes in this regard. My friend Abby lives in San Francisco and has worked for years as a teacher at a private school. Her husband is an advertising executive and they own their home. All of this to say, hey, they're doing pretty well. When they had their first child, Abby took the full 12 weeks off. It was summer vacation, so it turned out to be perfect timing. And then

started the school year back at work full time. Because nannies in San Francisco are so expensive, they opted for a nanny share with three other families in their neighborhood. But the money they were spending on child care quickly outpaced the money that Abby was bringing home from work, and soon they were underwater. After the first school year, Abby decided to leave her job and care for her daughter full-time, a move that actually saved her family a lot of money. With another child now on the way, it makes even more sense for Abby to stay at home rather than shelling out for daycare times two. However, she plans to go back to work once both

kids are in the K-12 system. And as a teacher with years of experience, not to mention tons of time spent around kids every single day, she feels confident that she'll be able to jump back into the classroom, maybe a bit rusty, but still on top of her game. So that's Abby. Now let's look at another friend, Emily. Emily and her husband are both high-powered accountants making a great living in Chicago. When they had their first kid, Emily took her full 12 weeks off too, and then, knowing that child care would be expensive and also planning on having another kid right away, decided to leave the workforce temporarily. However, as an accountant, Emily has to get recertified regularly,

stay on top of new policies, and interface with clients. After two full years out of the workforce, she felt herself falling years behind. And she and her husband agreed that the amount of money they were saving by having her at home to watch the kids wasn't worth her taking 10 steps back in her career, only to jump back into the workforce down the road at a lower pay grade. So they opted for a regular nanny so that she could go back to work full time, albeit now working from home on Fridays, which she successfully negotiated with her employer. Now back in the swing of things, she recently got another promotion, which will allow her to cover the nanny and also allow them to save her baby number two. To decide whether you're opting for the Abby path or the Emily path, you have to ask yourself these two golden questions. And again, they are

number one, what's our household cost benefit analysis for each form of childcare? Number two, what's the shelf life of my skill set? For today's tip, you can take straight to the bank. Family planning does not and should not occur in a vacuum. You need to take the long view, leaving extra time as a buffer for things to go wrong, which inevitably they will. Want to have three kids? Well, it can be difficult to get pregnant the first time, and if you have to repeat the process three times over, you could be looking at a decade-long process of building out your family. The same goes for child care, of course. Don't just think about the next year, although, hey, when we're talking about having a newborn at home, I do not blame you for thinking about one day at a time. I will say it

again, though, this should be more of a long-term strategy. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team, Michelle Lanz for her development work, Catherine Law for her production and writing magic,

and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.