How Can I Afford to Stay Home With My Child?
If you’re thinking about staying home with your child, it’s important to be financially prepared. That means creating a budget and cutting expenses that aren’t necessary. It also means making sure that you have an emergency fund and a retirement account to cover your financial needs in the future.
Start by figuring out how much money you’ll need to make in order to afford to stay home with your child, and then figure out how you can save that income to help you reach your goal. This can include saving up a lump sum, or even investing some of your extra income in a savings account.
Use a calculator to help you work out how much you’ll need to earn each month in order to meet your family’s basic needs (rent, utilities, food, etc). Then, add the amount of money you can save in the form of savings and other income streams.
You may need to cut back on some of the perks you currently enjoy as a working mom, such as lunches out or trips to the amusement park. But you should be able to come up with alternatives that won’t take a lot of your time or energy.
Invest in an emergency fund
If you haven’t done so already, it’s important to build up a substantial emergency fund before you leave your job. This can be in the form of a traditional savings account or a high-yield certificate of deposit.
Ideally, you’ll be able to pay off your debts and increase the size of your emergency fund before you decide to give up your job. But if you’re not able to, then start chipping away at your debts while you’re still employed so that you won’t have as much stress when you do quit your job.
It’s also a good idea to start saving for retirement, and to save for other goals you have. That can include saving up for a trip to the beach, getting a new car or taking your kids on a summer vacation.
Keep in mind that it will take a while to build up your emergency fund and retirement savings, so be patient and be conservative. But if you do the hard work, you’ll be able to afford your dream of staying at home with your kids!
Get rid of your debt
Before you stop working, be sure to pay off any outstanding credit card bills and other debts that you have. This will give you a jumpstart on your financial future and will also help you avoid the burden of debt as you transition to being a stay-at-home parent.
Create a budget
Before you leave your job, sit down with your finances and create a realistic budget. You’ll need to look at your bare minimum expenses, as well as your savings for things like taxes and car repairs.
Then, look at your other expenses and see where you can trim them down so that you can afford to live on one income alone. This could mean limiting your dining out to once a week and cooking most of your meals at home.
