Living on one income

2 August 2007

Can a family do it?

There is a common understanding in contemporary Australia that it’s financially wise for both husband and wife to work. While I believe that is true when there are no children in the marriage, I don’t believe that’s necessarily true for all couples with young children. When you add up the actual cost of having both parents in the workforce, when child care costs are in the equation, and often when they are not, it’s often financially sound to have one parent at home. And when I say “parent” I mean either the mother or the father. The partner who can earn the most money, for the least expense and the shortest time away from home, should be the one who goes out to work.

The actual costs of earning a living are those that might be hidden or forgotten about. Some things to consider are whether you will go into a higher tax bracket, day care or babysitting costs, transportation, fuel costs or running a second car, clothing for the new job, equipment needed or tools of the trade, cleaning costs for clothes, grooming in the form of haircuts and cosmetics necessary for your level of work, lunch at work, all those lattes and espressos, magazines to read en route to work and at lunchtime, bottles of water and the added cost of food at home when you start buying convenience and pre-packaged foods. When you calculate all those factors in, many people find that they are working for less than the basic wage.

You should factor in related matters too - those factors that will lessen the impact of one parent not working. When one parent is at home with the children, their job is to look after the day-to-day needs of the children and to save money in the home. When one parent is home they can shop for grocery bargains to make the most of the food budget, food can be cooked from scratch and they can bake bread – this is the healthiest way to cook and it’s also the cheapest. When one parent is at home they can grow vegetables and have chickens for eggs. If there is surplus in the garden they can preserve the excess for eating later in the year - again saving money. Clothes can be sewn and knitted and in general, there will be time to look after the things you already own.

When one parent stays at home with the children, you can read to them, teach them how to write their name, tie a knot, how to count and identify colours. You could teach them to garden, bake cookies and boil eggs and you could show them, by example, what a joy simple living can be. You can be there when they come home from school, or homeschool them, and you can watch them grow to their true potential. Value comes from many things apart from those with a dollar sign attached.

This is one of those decisions you need to make with your partner before have children. It's better to go into your big life changes having already discussed them together and knowing what each other wants. I think the ideal, which is not always possible, is that you both work hard when you first marry to save for the deposit on a home and then to pay off as much as you can on your mortgage. When your babies come along, you can start on this next stage of your life - raising your children within a strong and loving family where both mum and dad have a good balance between family and work.

So if you're thinking about taking on a job sit down and work out if it will really be worth it. For instance, if your new job will pay $500 a week you might pay $150 of that in taxes, making your take home pay $350. You have to get to work so you spend $50 a week on public transport or running the car. Your $350 is now $300. Child care costs $100 a week, so now your income is $200. Take off the amount you need to spend on clothes and grooming, your coffees and lunches and you’ll soon realise that working when you have to pay childcare is sometimes a no-go zone.

As you can see, it's not straight forward and you need to think about what you get from working as well as what you'll give away. There is no doubt that working together to pay off the mortgage is a good thing to do, but your first priority as parents is to your children and you may find there is more value in having one parent be with the children to guide them through childhood. No matter which way you go, when you think about it and talk to your partner and then make your decision, make sure you do everything to make that decision work for your family as a whole. And if you're sure that your decision is the best for your family, work towards your goals together with no guilt and no regrets.

Tomorrow I will continue this theme with - Transitioning to a single income.

As always, I'm interested in your opinions and comments. If you've had experience with this one way or the other, please let me know how you coped.