I still remember the excitement and nervousness surrounding my move to become a stay-at-home parent. It was kind of like starting a new job except my boss was someone much smaller than me and who I loved dearly.
However, the duties and responsibilities of the new role were not the only thing that made me nervous. It was also a huge financial change. I was going from a good job with a steady income and moving into the financial unknown. Therefore, my wife and I made some money moves before my position became official as well as once I’d made the transition.
Understanding budgets and expenses
Before leaving the safety and financial security of a full-time job to become an at-home parent, I found it important to have a strong grasp upon our financial situation. Not only was it critical to understanding how much income we’d be sacrificing with such a change, but the being prepared for the expenses that would remain and in what amounts.
To do this, we laid out all of our expenses in detail. Since I’d be at home, our expenses would be reduced or non-existent in areas like transportation, child care, clothing (since I would no longer need work clothes), and even food, since I’d be making more meals for us at home. Then we compared these reduced costs to our income as it would stand with me earning absolutely nothing, since my income as a self-employed individual was far from guaranteed. If anything, this helped us underestimate income compared to expenses and go in with a more level-headed approach to our finances with only one guaranteed income.
Looking for side income
While I was expecting to work at least part-time as a freelance writer while being the at-home parent, this didn’t mean that I was content to plan for the best when it came to this new source of income. As I’d never tried to sell anything I’d written up to that point, income from this source was far from guaranteed. Therefore, I also expanded my horizons. I began exploring other sources of side income such as online writing sites, area consignment and resale shops, as well on online resale opportunities through sites like eBay. This helped garner us a little side cash to bolster our reduced income.
With no guarantee of my earning any sort of substantial income through my at-home work, we needed to ensure that we had a comfortable financial cushion upon which to fall if necessary. Therefore, we sat down and reviewed not only our available cash savings, but any other assets upon which we could rely in a bind. Then, based upon the expense levels we’d already laid out, we determined that even with no income at all, we had enough of a reserve to last between one and two years. Therefore, we felt financially comfortable with my staying home.
Review and adjust as needed
Living and family situations can change over time. So even once I’d settled into my at-home role and started adjusting to our new financial situation, we still monitored our progress. We continued to track income and expenses, comparing the two to ensure we weren’t falling behind financially, and we made adjustments where needed as we did things like downsize by one vehicle, buy a home, and have a second child. Through it all, the moves we made before making the transition helped us make it a more comfortable and simpler process.
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The author is not a licensed financial, career or parenting professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.