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Welcoming a child into the world brings a lot of changes, both personal and financial. Here’s how to find out if you can afford to stay at home with them. 

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There are a lot of financial decisions you have to make when welcoming a child into the world. One of the most important is how you’ll handle child care once the baby is born. Staying at home means you don’t have to pay for daycare and you’ll have a lot more time to bond with your kid. But it can be really tough to forego that paycheck, especially if you were earning a high salary before.

The right call for your family is a highly personal decision, and there’s more than just personal finance factors to consider. But if you’re not sure whether your family can afford it, here’s how to figure it out.

Which is more affordable: staying at home or returning to work?

Deciding whether you can afford to stay at home with your kids is easier if you play out both scenarios. It’s pretty easy to figure out how being a stay-at-home parent will affect your household financially. You know how much money you make in a year, so you just have to ask yourself if you’d be able to get by without that income coming into your checking account.

Don’t forget to think about other benefits your job provides you, like health insurance, when making this decision. If your family currently relies upon your health insurance and you quit your job to remain at home, you’ll have to pay for new insurance, and this could be considerably more expensive. If you’re thinking about going this route, be sure to price out new health insurance plans before making a final decision.

Going back to work brings its own expenses. Putting one child in a daycare center costs about $340 per week on average, according to Illumine, and if you hire a nanny instead, you’re looking at about $612 per week. The company also found that more than half of parents surveyed reported spending more than 20% of their income on daycare costs.

Price out daycare options in your area to determine how much you might pay. It could be more or less than the averages above. Once you know how much this would cost, you can compare this to the cost of staying at home with your child to figure out which is more feasible for your family.

What if neither option is affordable?

Unfortunately, there’s not always a clear-cut answer as to which is the better option for your family. So you may have to try a hybrid approach. Perhaps you drop to part-time work and stay home with your children a few days a week, so you don’t have to pay for daycare every day. Or maybe you have a family member or friend willing to watch your children while you work a couple of days per week.

If your employer enables you to work remotely, you might be able to work and watch your children at the same time. But this depends a lot on your position. If you’re required to be working or attending meetings during specific times, it might be too challenging to also juggle the needs of young children.

You could also look into child care financial assistance options to ease the costs of returning to work. Your state or local government may offer subsidies for low-income families or free pre-kindergarten to older toddlers to help reduce your costs. Some providers also offer discounts for families with multiple children. Look into these and see what kind of a difference they can make for your family’s finances.

After you’ve done the research, it’s important to sit down and discuss your findings with your partner or anyone else who has a hand in helping to pay your bills. Make sure everyone is on the same page and comfortable with the budget changes your family will have to make.

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