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Here’s what you need to consider before quitting your job to become a stay-at-home parent

A 2023 study from LendingTree found that the nationwide average cost of raising a child is about $21,681 per year.
PUBLISHED JUL 4, 2024
Cover image source: Childcare costs are pushing many parents to leave their jobs (representative image) | Unsplash | Photo by Alexander Dummer
Cover image source: Childcare costs are pushing many parents to leave their jobs (representative image) | Unsplash | Photo by Alexander Dummer

The cost of childcare has risen sharply through the years adding to the financial burden of Americans. According to a KPMG analysis, the cost of childcare has gone up by 263% from 1990 to this year. Another 2023 study from LendingTree found that the nationwide average cost of raising a child is about $21,681 per year.  Thus, it may seem logical and economical for the lower-earning parent to stay at home if their salary is at par with the cost of childcare they would otherwise have to pay. However, the day-to-day costs of childcare aren’t the only thing to consider before quitting a job. There are several long-term impacts of taking a break from work, which parents need to consider.

Representative image | Unsplash | Photo by Picsea
Representative image | Unsplash | Photo by Picsea

A resume gap is an immediate and imperative complication for a stay-at-home parent. While career breaks are becoming more acceptable, several companies still see it as a red flag, Emily Green, head of wealth management for Ellevest, told CNBC Make It.

Representative image | Unsplash | Photo by Van Tay Media
Representative image | Unsplash | Photo by Van Tay Media

Thus, when the parent decides to return to the workforce, they may find it difficult to find a job that they deserve. Even for mothers who don’t necessarily take a break from work, it may be more difficult for them to get a promotion at work, according to a study by Harvard Kennedy School.

In many cases, the burden of becoming a stay-at-home parent falls on the mother since men typically earn more than women. While the share of stay-at-home fathers has increased, the majority, or 82% of such parents are still mothers, Pew Research found. According to Green, in many households, mothers quit their jobs simply because their salary doesn’t cover the costs of childcare.

Representative Image | Unsplash | Photo by Hillshire Farm
Representative Image | Unsplash | Photo by Hillshire Farm

Green added, "In households where there's a little more financial wiggle room, women often don't think about what they may give up in the long term, say in 5-10 years by leaving their jobs now.”

Salaried workers typically get a modest raise of about 2% to 3% each year. While it may not seem much, it does add up in the long term. Thus, people who stop working or take a break, miss out on the raises and benefits.

Representative Image | Unsplash | Photo by Jp Valery
Representative Image | Unsplash | Photo by Jp Valery

Furthermore, since the burden of becoming a stay-at-home parent mostly falls on mothers, it is likely they will start from where they stopped. Mothers already face challenges in the workforce due to the widening gender pay gap. According to a Bankrate analysis of the Census Bureau's Current Population Survey data, mothers earned 31% less than fathers in 2023.

When people choose to quit their jobs, they don’t just lose their immediate income but also the potential of the compounding growth of that income, as well as future retirement savings. In a CNET report, finance expert Farnoosh Torabi illustrates an example of a  32-year-old woman earning $60,000 a year. If she stops working for five years to take care of her children, she will lose about $300,000 in net wages. However, she will lose another $400,000 in wage growth and retirement benefits, which brings the total cost to about $700,000. For those who are looking to calculate the long-term term costs of full-time caregiving, the calculator from the Center for American Progress may come in handy.

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