Become an At-Home Parent in 2006

by Leslie Truex

Published on this site: January 10th, 2006 - See more articles from this month

It's true that Americans are struggling financially. Not only do they have two incomes but also some have three or four as parents take on second and third jobs. Elizabeth Warren and Amelai Tyagi in their book "The Two Income Trap" report that American two-income families earn 75 percent more than their single-income counterparts of a generation ago, but actually have less discretionary income. There are many reasons for this but one aspect that many families fail to recognize is that jobs, particularly second income jobs, cost money. Indeed there are families in which the expenses related to work exceed the amount that a second income brings in. In my case, when I worked full-time as a social worker, nearly 3/4ths of my income went to pay expenses so I could work. Instead of earning $28,000 per year, I was actually only contributing $7,900 per year once work-related expenses were paid.

Being able to stay home may not be as difficult as you think. And while you don't want to run out and quit your job right now, with some careful planning, you can become a stay-at-home parent in 2006. Here's how!

1. Step: How much does the second income cost? Working costs money. When you have a second income and children, the costs can be staggering. There are the obvious expenses such as childcare and a second car. Other expenses include higher taxes, work-related clothes, convenience foods like lunches out, vending machines and lattes, the "I-deserve-this-because-I-work- hard" items such as manicures or dinners out, and guilt items. Take a detailed look at your budget and find all the expenses you have related to working and add them up.
   
   
2. Step: How much do you need to survive? Even if you discover that you are paying more to work than you actually earn, don't quit your day job yet. Many families run out of money before they run out of month, so it's important to determine your actual living expenses. This exercise will show you two things;
   
   1. how short of cash, if any, you would be with one income and
   
   2. areas that you currently over-spend on which you can cut back. Do a budget covering all spending. Use your bank statements to be as accurate as possible. Don't forget to itemize cash spending as well.
   
   
3. Step: The results: Now you have an idea of what you will save by not working (step one) and what you need earn to survive (step two). Take the number from step two (your survival expenses) and subtract the primary income earner's take home pay. If you come up with a negative number ... yahoo ... you can afford to stay home (assuming your numbers are right). For example, if you need $1500 to survive and the primarily income earner brings home $2000, you have enough to stay home ($1500 - $2000 = -$500).
   
   However, if you come up with a positive number, you may still be able to stay home but need to make some changes and should move on to Step Four.
   
   Even if you have a little extra from the second income, you need to have enough to cover emergencies and unplanned expenses. So if there is less than a $200 cushion, proceed to Step Four.
   
   
4. Step: Cutting Back: If you are like my family, my husband's income wasn’t enough to cover all expenses. But when I did an itemized budget, I found many areas in which I could save. Go back through your budget (step two) and find areas you can save on your expenses. If you really want to stay home, you will find areas that you can cut back on without living like a hermit. For example, I cut about 20% off my grocery bill simply by meal planning and shopping with a list. Because I was going to be home, I stopped by prepackaged food and instead cooked from scratch (its easier than it seems). We cut down on dining out and my husband packed lunches (leftovers) to work.
   
   Here are a few other tips that can have you saving thousands per year on your expenses:
   
   * Don't waste your nickels and dimes on stuff you don't want or need. A few dollars here and few dollars there really do add up. Cut out coffee shop lattes, magazines, paperbacks, manicures, etc. Instead, make your own coffee, borrow magazines and books from the library or your friends, and do your own manicures or with a friend.
   
   *Don't carry cash. Its harder to spend if you don't have it.
   
   *Weather proof your home to save on utilities. Don't have more calling features than you need on your phone. Get basic cable and instead rent movies from the library.
   
   *If you don't work, you don't need a fancy car. We saved several hundreds of dollars in car payments, insurance, and personal property tax each month by buying me a reliable used car.
   
   For more details and ideas on how to cut your expenses easily and painlessly, download the free Afford to Stay Home ebook at http://www.clickaudit.com/goto/?19025
   
   Run the numbers again, adding up your expenses and subtracting the primary earner's income. For many families, even savvy shopping doesn't completely eliminate the need for extra cash to afford to stay home. This is particularly true when debt is involved. However, if you eliminate work-related expenses, cut unnecessary items from your budget, and learn easy ways save; the income you need to earn should be significantly less than you originally thought.
   
   In my case, I didn't have to replace a $2300 per month income. After I cut out work-expenses, sold my car for a less expensive model, and cut back on household expenses, I only needed to earn about $600 per month to stay home. If this is the case for you, proceed to step five
   
   
5. Step: Making up the difference: Earning income from home isn't hard if you go about it the right way. Do lots of research and heed the experts' warnings about envelope stuffing and other scams. Don't fall for "pay for a job" scams or sign-up-to-do-nothing schemes. Working at home is work no matter what the scammers and schemers would have you think.
   
   Evaluate your skills, experiences and interests. Take inventory of your resources such as computer, phone, software etc. Consider your current schedule and what sorts of work would best fit with being an at-home parent. For example, many people would like to telecommute but often work-at-home jobs are still run on a 9 am to 5 pm schedule, which isn't very conducive to parenting. Contract or freelance work would better in this case.
   
   Don't discount home business. In fact, a home business is a more secure choice in light of today's unstable job market. You can turn your current job or a hobby into a home business. There are many great work-at-home opportunities you can join as well but do your research. Find opportunities that are: affordable; offers a product people would buy even without the income option; allows for ongoing and repeat business such as consumable products; provides products with universal appeal (bigger potential market); and is easy to access and use. Avoid business opportunities that have been in business for less than 5 years as most businesses fail within that time. Make sure you understand the compensation plan (how you get paid) and read the refund policy carefully. Finally, be sure you can verify any claims such as Better Business Bureau membership or awards through an outside source (don't just take the company's word for it).
   
   Once you have determined that you can afford to stay home or that you need extra income in order to stay home, proceed to Step Six.
   
   
6. Step: Make a plan: If you do have to cut your budget and/or earn some income from home, set budget goals and research how you can reach them. Is there cheaper phone service? Can you refinance your mortgage to save on payments? Determine how much you would need to earn from home and research your options. When you select a work-at-home option, develop a plan for getting it up and running and earning the income you need so that you can quit your job. Stick to the plan no matter what. There will be obstacles and frustrations along the way. Just keep moving towards you goal and you will get there!

When I first wanted to work-at-home, I would have loved to have the information provided to you in this article. Because I didn't understand what my job cost at the time or that I could work-at-home and live better on less income, I ended up wasting time and money. If I had this information, I'm certain I could have left my job within months instead of the 3 years it took me. You can come home faster by following the six steps outlined above.

Leslie Truex is a work and stay-at-home mom who has been helping others do the same since 1998. Get her free Afford To Stay Home Workbook with worksheets to determine the cost of work and developing a budget plus 100's of ideas and tips on how to save money and afford to stay home
http://www.clickaudit.com/goto/?19025