Can You Afford to Stay Home With the Kids?

May 9  -- Today, families face a myriad of financial concerns. One of the most important is whether or not mom or dad should forego a paycheck and stay home with the kids.

Although familial roles are constantly changing, providing adequately for your family while also creating a comfortable nest egg for retirement remains constant.

Because of that, there are a variety of issues to consider before deciding whether or not to stay home.

While women are still behind their male counterparts when it comes to equal wages, earning just 78 cents for every dollar earned by a male, they are continuing to move toward equality. In fact, one in three wives now out-earns her husband, and 20 percent more women than men are graduating from college.

According to a recent story in Newsweek, women made up 34 percent of high paying executive/management jobs in 1983, whereas in 2001, they accounted for almost 50 percent of these positions. Likewise, 60 percent of newly minted female MBAs earn 60 percent more than their husbands.

Does It Pay?

Although women are clearly making progress in the professional world, statistics from the 2000 Census indicate that more and more mothers are choosing to stay home, with the number of working mothers declining in 2000 for the first time since 1976.

Many parents struggle to decide whether one of them should stay home with the children, but the decision can be made easier with a few facts. Financial experts generally say that if the second income is less than $30,000 per year, it might make more sense for that parent to stay at home with the children. Here is the math to prove it:

Assume your federal income tax rate is 27 percent, meaning $8,100 of your $30,000 paycheck will go to the federal government. Then, factor in the following expenses:

Work clothes and dry cleaning: $1,200 ($100 per month) Meals out: $1,500 (three times per week at $10 per meal for 50 weeks) Daycare: $7,000 (According to the Children's Defense Fund, full-day childcare averages between $4,000 to $10,000 per year, and is generally higher in large metropolitan areas.)