July 19, 2018
July 19, 2018
This question is becoming increasingly important in an economy where both spouses work. But once a child comes along, hard decisions may need to be made. It may be that the cost of daycare and other expenses practically require that one spouse stay home. But if that’s the case, which spouse should be?
Historically, the conventional wisdom has been that the woman should stay home and raise the children. But this is largely based on the fact that men have traditionally earned more income than women. Today, however, it’s not unusual to find couples where the wife earns more than the husband.
But it’s also important to realize that the answer to this question isn’t always the spouse who earns more money. Sure, that’s the most obvious one. But there are other factors as well. Let’s take a look at each.
For the survival of the family, it makes abundant sense for the higher earning spouse to continue working, while the lower-earning spouse becomes the stay-at-home parent. That’s certainly the most obvious immediate situation. But that’s hardly the only consideration.
What if one spouse is earning more income now, but the other has the potential to earn even more in the future?
If that’s the case, then the spouse with the greater income potential should probably continue working. The family will just have to find a way to make ends meet until the higher income begins rolling in.
With the ridiculously high cost of health insurance today, benefits could be the deciding factor. If one spouse has a more attractive package of employer paid benefits, then that spouse might be the one who needs to continue working. It’s almost impossible to underestimate the value of a good health insurance plan, a health savings account, and other benefits that reduce the need for actual income.
What makes this point even more important is that the cost of purchasing similar benefits in the private market can be prohibitive. Giving up a job, and then having to take a health insurance plan for $1,500 per month could be crippling to the family.
For that reason, the spouse who has the better benefits package might be the one who needs to continue working. Under certain circumstances, this could even be more important than a higher salary.
Let’s throw out some numbers here to demonstrate the point. Let’s say that both spouses work, and each earns $25 per hour. But one spouse could reduce his or her position to part-time, and continue earning $25 per hour. The other may only be capable of earning the minimum wage from a part-time job.
The fact is, certain skill sets convert more easily and profitably from full-time to part-time status. In certain fields, the only way to earn a high income is to work full-time.
The spouse who has a higher potential part-time earnings may be the logical choice to stay home. While the other spouse continues to earn a full-time salary, that spouse could take a part-time job, earning a very healthy hourly income, while devoting most of his or her time to being the stay-at-home parent.
Both spouses currently hold full-time jobs, but it’s clear that one spouse has more of an entrepreneurial orientation than the other. It may be better for the family if the more entrepreneurial spouse becomes the stay-at-home parent.
That’s because while the other spouse continues holding a full-time job, the stay-at-home parent could parlay that situation into an at-home business.
The business may not take off right away, but it could start small, and eventually grow into a full-time income equivalent. But in the meantime, the business might provide at least some badly needed income to the household.
It’s often true that one spouse has a stronger career orientation than the other. If that’s the case, then that’s the spouse who should continue working. The one who is less committed to his or her career, or sees less future potential, would probably work out better as the stay-at-home parent.
Some people are on a career path, but others have no serious interest in it. Having the career-oriented spouse continuing to work full-time, and the other coming to the home front, could accommodate both personal directions.
Of course, we’re only considering the career and income potential of the spouses in this analysis. There may be other factors as well, such as which spouse has more patience or is more likely to better nurture the children. Still, finances can never be ignored, and that’s why an analysis like this is necessary.