Stay-home economics

The last quiz category is food. Theoretically, a parent who stays at home will save on eating out. If you buy lunch every day at work, this is probably true. But if you take your lunch, as I did, your costs remain the same. If the kid(s) eat lunch and snacks at day care, your grocery costs will increase when they start eating at home. If you, as I did, take lunch to work a few days each week, eat out a few days, then quit working and start eating lunch with friends just to get out of the house, it's a wash.

Cutting back on take-out and restaurants might save a little money. What harried two-career couple doesn't order pizza or Chinese food at least one night a week? But then again, what harried stay-home parent doesn't long for a night off from cook duty? For us, eating out is also a wash.

OK, now that we've looked at the "savings," let's look at the increased expenses when one spouse quits working -- costs that employers pay now but you will have to when unemployed, such as medical care. If the working spouse has insurance coverage, no problem. But what about health, disability and life insurance on the non-working spouse? The risk of losing the primary caregiver is certainly one worth insuring against. Also consider increased utility bills once someone is in the house from 9-5, using water and electricity. Factor in a little extra for more toys, once the children won't be using the day-care center's paints, crayons and climbing structure. And add more for groceries, if food and diaper expenses are included in the day-care bill.

The last areas to examine are impossible to define with numbers. There's the increased risk of a ruinous work layoff, since only one spouse is employed, and the stress on a spouse who can't quit a hated job. There's the difficulty of saving for college or retirement, based on one of my favorite little accounting principles, called "present value of money." It simply means that $100 in your pocket today is worth more than $100 a year later. That's because money invested today starts earning interest right away, so in a year the $100 might be worth $130. Two parents earning can save more than just one; that money grows much faster (as the interest combines with the principal and earns even more interest) than money put away years later. So even if you tell yourself that you'll rejoin the job market in five years, that's five years of lost principle and interest.

A parent who quits working for any significant time loses immeasurable value in job skills and potential earnings. Say you earn $48,000 as a human resource specialist. Five years later, who do you think will get a better job offer: you, or the applicant who spent those five years managing a staff? Not only have you lost years of income, but you're probably pulling down $12,000 less than you would have if you'd worked during that time.

I'm not saying to keep working -- that's up to you. Maybe your spouse makes an outrageous amount of money and your income potential is so pitifully low that you'd rather not bother. Maybe your spouse works insane hours and you need to stay home to provide stability. Maybe you just feel strongly that it's worth the financial trade-off to spend all day with your children. But just be aware that it's exactly that -- a trade-off. The money you give up today may cost you once those kids grow up.

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