Worksheet: Relative Cost of Parent of Newborn Staying at Home Versus Going to Work

Many couples are surprised to find that once all the costs are counted, they are not much better off financially if both parents return to work. This may or may not be true in your case. The only way to know is to sit down and do the calculations.

A simple process that will give you a rough estimate is as follows:

Start with the income earned by the second parent if she or he returns to work.

Subtract:

1. Taxes (income tax, social security). Be sure to calculate proper tax rate. Additional income puts you in a higher tax bracket, which means that you will pay more taxes.
2. Cost of child care.
3. Cost of clothes required for work.
4. Cost of commuting (gas, insurance, repairs, public transportation).
5. Cost of food (lunches out, fast foods, or eating at restaurants because there is little time to cook at home).
6. Cost of additional help (housecleaning, etc.) that may be required.

Equals: Net gain from additional person working.

EXAMPLE: If a couple earns $35,000/year with one person working, and the second person goes to work part-time for $10,000/year:

 
     $10,000    Income 

     Minus -

     $2,000    Tax 
     $2,400    Child Care (1/2 day @ $10/day
                           240 days/yr) 
     $  500    Work Clothes 
     $  960    Commuting @ $1.40/day (20 miles/day @ 
               $.20/mile, 240 days/yr) 
     $  600    Convenience Foods/Eating Out 
     $  300    Additional Help 
     ------
     $ 6760

     $ 3240    Net Financial Gain of Going to Work