“Handling Anxiety Following the Decision to Remain Home With the Children”

Several months back, we inquired about which financial queries were preoccupying you. We received close to a thousand responses, and a recurring topic was the financial complexity of being a stay-at-home parent. Today, we consulted CPA Ariel LaFond to address one reader’s question concerning how to preserve security and independence as the non-earning spouse…

CoJ reader: I’ve been at home with my children for eight years, since my first was born. This was my choice; my husband has consistently been 100% supportive of any decision I make about this. Although this arrangement continues to feel optimal for our family, I’m now fully reliant on his income — and I’m clueless about what I’d do if anything happened to him. I dislike this feeling but I’m uncertain how to alleviate it. I’m the main parent — in charge of school runs, child care during illness, managing sports practices, homework, playdates, and bearing the majority of the household work and mental load. These duties scarcely leave me room for a job that would earn more than ‘fun money.’ Did I make the wrong decision? Help!

Ariel: There’s really no ‘wrong’ move here. For numerous families — and for various reasons — having one parent stay at home is sensible. Depending on your respective earnings, it’s often the most economical option. However, you do need to consider it for the long term, which frequently entails contemplating the uncomfortable “what if” scenarios. Ideally, all potential parents would sort out these details before having children. In reality, no one wants to delve into that stuff!

Basically, you’re not alone at all. Many stay-at-home-parents find these concerns surfacing several years in. The same goes for many working spouses — this is a family issue, and both partners must be engaged. When couples seek my guidance, here’s my advice on where to begin:

Step One: Have a discussion. Both partners, whether working or not, should clearly understand the family’s financial situation. If you don’t, there’s no need to approach with anxiety (even if that’s what you’re feeling). Rather, lead with curiosity. It’s tax season — an ideal time to ask, “Hey, how did we fare last year? I’d like to have a clearer understanding of things.” Knowing what you have collectively is an excellent first step. Be candid about your concerns: “I want to be more involved. Some individuals lose their spouses and are left unprepared. I want us to feel secure.” Monetary discussions can be stressful, but they’re a fact of life — and marriage. Tackle it with a team-oriented mindset, because that’s what you are: a team, working towards the same goals.

Step Two: Have a checking and savings account solely in your name. If you’re the non-earning partner, or you plan to be, you should also plan to have some funds in an account accessible only to you. There are multiple reasons for this, as there are various ways money — even in a joint account — might be temporarily inaccessible. You don’t need to delve into every possible scenario (medical incapacitation, desert-island shipwrecks — are you terrified yet?). Just ensure you can pay the bills if something happens to the person whose name is on the paychecks. It’ll help both of you sleep better!

Step Three: Ensure full visibility, and establish a routine to maintain it. On that note, ascertain you know how to pay the bills. Many individuals tell me they don’t actually know how the mortgage or rent is covered. Both partners should clearly comprehend the family’s day-to-day expenses and income. I recommend a monthly meeting, just to review bank statements, bills, etc. Know the logins and what account pays what bills. Understand your partner’s salary, as well as any potential changes. At the risk of stating the obvious: Just because you’re the non-earning partner currently doesn’t mean you have no responsibility regarding family finances. Do not relinquish that role.

Step Four: Have life insurance and/or disability insurance. This is another daunting task no one wishes to tackle, but you should definitely have life and/or disability insurance. A policy covering both the earning and non-earning spouse would be perfect (families often require urgent childcare following a primary parent’s death or injury), but each situation varies. If you can’t afford to insure both partners, I usually suggest focusing on the earning spouse. Many employers offer life insurance, but not all policies are equally created. Scrutinize the fine print, and consider whether or not you need an additional policy to ensure comprehensive coverage. Again, no one’s favorite chore, but trust me, you’ll breathe MUCH more easily once it’s done!

Step Five: Organize a retirement plan (for you!). Once you’re out of the workforce, it’s easy to neglect retirement savings, but the positive news is it’s also straightforward to restart, and it’s a smart financial decision for your entire family (team spirit, right?). Spousal IRAs allow the working partner to contribute to the non-working partner’s retirement account. I understand the concept of being “paid” by your spouse may feel awkward for some. However, contributing to your retirement account means more tax-free dollars in the family pot. And if the ultimate goal is a comfortable joint retirement, this truly is an all-around win.

Lastly, if I were to propose one optional Step Six, it would be: Do not dismiss the “fun money” job. It’s not so much about the salary, but the potential benefits of staying partially engaged. And by the way, you may find you don’t even have the bandwidth for that at the moment, and if so, that’s entirely acceptable. Let’s be honest: The full-time parent often has a tougher job than the employed one, especially in certain parenting phases. But if you have the energy and willingness to reengage in the workforce in some minimal capacity — whether it’s maintaining a credential, undertaking a short-term project, or simply having coffee with an old colleague — it could enhance the sense of independence you’re missing. Additionally, it’ll mean one less barrier should you choose to work full-time outside the home later.

This doesn’t mean you must, or that you won’t have other opportunities in the future. It’s merely another option to evaluate. The primary takeaway from all this advice: You have choices. You didn’t make the wrong decision — you made a decision. And you get to make more now.

Ariel LaFond is a CPA, fractional CFO, and tax planning expert, advising both businesses and individuals on financial enhancement. She also authors the newsletter dumb rich, providing advice and explanations on financial matters. She resides in New York with her husband and rescue pup, Lucy.

Thanks a lot, Ariel! Do you have a financial query you’d like assistance with? Feel free to share it in the comments.

P.S. The 30-second habit that aided me in sticking to my budget, and do you discuss your salary with your coworkers?

(Photo by Alina Hvostikova/Stocksy.)