This Is How Much Stay-at-Home Parents Could Be Saving

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The thought of quitting work is sobering. However, keep reading to learn the financial impact of a stay-at-home parent. [[{“value”:”

As a young mother, I wanted nothing more than to be home with my boys. I knew I would want a career one day, but while the children were young, I wanted to be there. Some of my friends felt differently. They couldn’t imagine being with their kids all day or postponing their careers to stay home and change diapers — and that’s fine. All of our children grew up to be awesome human beings.

There are challenges to being a stay-at-home parent. They include having to get by on one income, having less money to save and invest, and occasionally, a sense that the world is passing you by.

There’s also an upside associated with being a stay-at-home parent (SAHP), including the opportunity to save money. Although they won’t have as much money coming into their checking account, here’s how much a household with two small children can save.

Child care: $33,384 annual savings

The average weekly cost of daycare in the U.S. is $321. Let’s say both children are in daycare. By having one parent at home to look after the kids, the family would save $33,384 annually.

Work attire: $638 annual savings

The average American spends $161 per month on clothing. If a person works in a professional setting, it may be more, but let’s use the $161 average. $161 monthly equals $1,932 spent annually on clothing. Naturally, the SAHP won’t want to walk around showing all their bits and pieces, so they’ll still need to buy clothes. There’s no need to traumatize the FedEx delivery person.

What if they cut their clothing budget by a third? That would lead to an annual savings of $638. Comparison shopping and using cash back apps could help the household save even more.

Morning drink: $520 annual savings

Despite stories to the contrary, Drive Research found that only 8% of Americans stop by a coffee shop daily on their way to work. New parents are among the frequent flyers, with 67% of them saying you’re sure to find them at a coffee shop once a week and 49% admitting they spend money in a coffee shop more than once a week.

For the sake of this illustration, let’s say a parent with a young child (or children) spends $5 a week at a coffee shop, but switches to making their own brew once they become a stay-at-home parent. That’s a savings of $520 annually.

Convenience meals: $1,800 annual savings

Let’s face it: We’re more likely to hit our favorite dining spot or order delivery when we’re tired from a long day at work. While it’s certainly not the case every day, ideally, a parent who stays at home will have more time (and perhaps energy) to prepare home-cooked meals.

The average American family spends about $300 per month eating out. That’s a whopping $3,600 annually. Since mom or dad has more time to cook, let’s imagine that they eat away from home half as often. That would give them an extra $1,800 to put in a high-yield savings account or help offset the SAHP’s loss of salary.

Transportation costs: $1,023 annual savings

According to the Institute for Transportation & Development Policy (ITDP), the amount of money spent on transportation in the U.S. is typically higher than that of other industrialized countries, mostly because Americans are more dependent on their cars than on public transportation.

As of 2023, car owners spent an average of $12,295 each year on their vehicles. Of that, $3,100 is spent on gasoline (or other fuels) and motor oil. We can’t assume that a SAHP will give up driving, but it’s safe to say that they may not be driving as far as they once did, especially if their previous job found them spending a great deal of time behind the wheel.

Even if a stay-at-home parent cuts their driving expenses by one-third, that’s a savings of approximately $1,023 per year. I say “approximately,” because less time on the road also means less wear and tear on the car and less frequent vehicle maintenance.

Income taxes: Depends on several factors

How much a household with a SAHP can save on income taxes depends on several factors, including how much the couple earned when they both worked and how much their annual income decreased after one parent left the job.

Let’s say that when both parents worked, they had an adjusted gross income of $127,700. The couple files their taxes jointly and doesn’t itemize their tax deductions. Instead, in 2023, they took the standard deduction for married couples of $27,700. Once the standard deduction was subtracted from their income, the couple was left with $100,000 of taxable income, putting them in the 22% tax bracket.

Again, for the sake of illustration, we’ll say that the parent who chose to stay home with the children earned $40,000 annually. That means that the household income fell from $127,700 to $87,700. Once the couple takes the standard deduction, they’re left with a taxable income of $60,000, putting them in the 12% tax bracket.

Their income dropped, but so did their tax burden.

I know that your personal finance situation is unique. You may have one child at home or five. And unlike this scenario, the SAHP may have once been the primary breadwinner. Still, the family described above would save a total of $37,365 annually, plus the amount their income taxes are reduced by.

There are strong feelings on both sides of the SAHP debate, but ultimately, you must do what’s best for you and your family. As long as you’re happy and can make ends meet, you’re doing pretty well.

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