The Financial Price Of Being A Stay At Home Mom

by Vered DeLeeuw · 190 comments


I stayed home with my young children, putting my career on the back burner, for five years.  Financially speaking, it was a bad move. Economists say that the stay-at-home parent who gives up a career may lose about $1 million over the years. While I didn’t lose $1 million, I have lost 5 years of wages, of 401(k) contributions (and growth) and of accumulating social security benefits.

Looking back, I wouldn’t change a thing. I loved being there for my kids when they were little, devoting myself 100% to them and forgetting about everything else. But I was lucky: my five-year stint as a stay at home mom took place while the economy was strong; my husband was employed and earning well throughout those five years; he didn’t leave me for another woman (happens more often than you’d like to think); and I am now back to working almost full time, from home, this time for my own growing business.

Despite my successful experience dropping out of the workforce for a few years, I believe I took a risk. I know for sure that I didn’t plan it fully. I believe that many of us choose to stay home with our kids because of strong maternal instincts that make us forget other considerations. Ideally, a woman should weigh all her options and make this decision very carefully.

Slave Labor?

Patricia left an interesting comment on a previous post, Money Mistakes Women Make, that sparked the idea for this post (Thank you Patricia!) In her comment, Patricia says, “I think the biggest mistake that women make is ‘staying home to raise the children.’ The US economic system penalizes you on every front and it is very hard to get sufficient quarters of Social Security in to get medicare or any return. It is essentially SLAVE Labor, which no one in our country can truly afford to pay for. We don’t notice it because it seems like it has always been so. We need to redefine work and benefits.”

I agree with Patricia that the US economic system penalizes stay at home moms. It also penalizes working moms, by the way, as we’ll discuss later. But as long as this is the system and we need to work with what we’ve got, is there a way to stay at home and protect yourself financially, or is staying home always a mistake?

Leave The Door Open

“I quit my job and never looked back” sounds freeing, but you shouldn’t do it. When you quit, do it professionally, giving your employer plenty of time. Do everything you can to leave on good terms, and stay in touch with your former employee, coworkers and colleagues via emails, visits and taking the occasional professional seminar. As much as it would be great to just forget about work for a few years, a safer way to go about it is to keep your skills fresh and stay in touch with the people who could be your ticket back into the workforce.

Protect Yourself Financially

I used to be an attorney, and specialized in Family Law. My advice to women in general: If you can help it at all, do not sign a prenup. And if you must sign one, hire an attorney to make sure the prenup is fair. A standard prenuptial agreement typically protects the wealthier side of the relationship, but a fair agreement needs to address the possibility of you staying home with the kids. In this case, any future settlement should compensate you for loss of wages and benefits. Splitting everything in half upon divorcing may seem fair, but if you gave up $150,000 a year in salary to take care of him and the kids for 10 years, is it really fair to split everything in half when that portion might just be worth $100,000?

Consider Sequencing

Staying home doesn’t have to be an “all or nothing” type decision. Many women around me, myself included, have chosen to build a career, have two kids just 1-2 years apart, enabling us to stay home with both of them for around five years, then go back to the workforce. Staying home for five years is easier, in terms of going back to the workforce, than staying home for 10, 15, or 20 years.

Start A Business

Despite attempts at changing this culture, Corporate America still expects employees to have no life outside work and punishes working mothers in the form of paying them less (20% less than women who are not mothers according to some sources) for doing the same work.

Many mothers find that being a mother in Corporate America is simply too hard, and opt instead to start their own business. I recently read about a woman who quit her job to start a cupcake baking business. While others like myself started a freelance writing business. It can be done, and you can make good money. Be prepared to work very hard, but you’ll be doing something you love, and working at your own time and on your own terms.

Ditch The Guilt

Mothers have worked throughout history. Ignore the headlines reporting studies that tell you you’re damaging your kids when you work outside the home. There are countless other studies who show your kids are just fine. The privileged upper middle class mom who stays home with her kids and takes them to the playground each day is a relatively new phenomenon. Mothers have always worked, taking their kids with them when they could, or leaving them to be cared for by the extended family when they couldn’t.

You can also think about it this way: Being a working mother is not something selfish that you do for yourself and to the detriment of your children. When you keep working, your family is stronger. If something were to happen to your husband’s job, or to your marriage, you won’t lose everything. You’ll be able to land on your feet and keep going.

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{ 190 comments… read them below or add one }

M November 11, 2014 at 7:06 pm

I am very confused if to sign prenup, I am worried, I will end up worse off but my partner is saying 50/50 is fair, I do not feel the same If I stay home and look after him, his children and potentially ours. If we have more children, is the prenup cancelled?

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