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Does it make sense financially for both me and my spouse to work after our child is born?

Following the birth of your child, you may feel that both you and your spouse need to work to meet household expenses and maintain your current lifestyle. However, you may discover that one of you can stay home without seriously affecting your net income. Though you would have to do without a second income, you need to factor in what you'd save:

  • Child-care costs: The cost per child for a day-care facility, nursery school, or nanny
  • Commuting costs: Gasoline, wear and tear on your car, tolls, and parking
  • Clothing: Work clothes and dry cleaning
  • Restaurant and take-out food: Prepared dinners you purchase because you have no time to cook
  • Lunches out: You have more time to prepare your own
  • House cleaning and gardening: Hired help to clean the house and mow the lawn
  • Taxes: With only one salary, you may move into a lower tax bracket

Now, consider the adverse effects of becoming a single-income household. The most obvious, of course, is a reduced family income. You should also consider what effect a leave of absence will have on the stay-at-home spouse's career and your family's retirement plans. You may both be at a point in your careers where you are earning high salaries. Leaving your job now may mean having to start over lower on the career ladder. And if one of you leaves work, you may miss the opportunity to fully fund your employer-sponsored retirement plan. Further, with only one income, you are more vulnerable in the event of an economic downturn. Finally, the stay-at-home spouse may lose the sense of accomplishment and community one gets from working outside the home.

You should balance all the issues, both pro and con. And remember, although it may make sense for both of you to continue working, some nonfinancial considerations, such as the opportunity to raise and supervise your child in your own home, may outweigh your financial concerns.