Jordan went to the place of forecasting, guessing, planning, and 'what ifs' and I went to the - I want to work with facts place.
weird.
That is so opposite to most of our conversations.
After we realized what happened, it was an eye opener in understanding how the other thinks/operates most of the time - which was great - but that learning is not really what this post is about.
The conversation was what our financial picture would like like after babies (no, I'm not pregnant - but yes, we plan on a family one day). Jordan and I both support the idea of one of us staying at home, and while I really want that person to be me, financially I never thought that it was realistic.
Jordan is actually really keen on the idea of being a stay at home dad and while that sounds great, there are some perceived risks associated with that too. Someone brought it to my attention that while financially it doesn't make sense, it might be harder for Jordan to re-enter the workforce after taking a few years off to raise children. There could be a perception that he stayed at home because he 'couldn't' find work - or some other BS.
All that aside, we looked at some theory and some facts and of course - I put all of that into a spreadsheet...
I showed off my spreadsheets to Jordan tonight, and he asked me to share them with all of you. He really wants to know 'how you do it?' - how do you have kids and maintain a household at the same time.
So here it is - first the mat leave budget (including EI (but not my salary top up) - for the first 15 weeks i'll get my Employment Insurance topped up to 70% of my base salary from work). Beside that, you'll see our 'back to work' budget. We don't have family available for child care - so we called around and took an average price on what seems to be child care options in our city/neighborhood.
We kept our variable spending in our chequing account the same as it is now because we figured while we'll spend less on some things (alcohol) we'll spend more on others (diapers). While it would be tight - super tight - I'm actually re-assured knowing that if I did get pregnant, we could still pay all the bills.
We also talked about saving up to have a 'baby bank' to top up our income when I'm on leave - using savings on a monthly basis to 'top up' our own salaries.
Here is the 'stay at home' scenarios:
We obviously can't consider either of these scenarios unless one of us gets a HUGE raise, we pay off the Escape, and get a side job on top if it.
So there it all is - what do you think? How do your family's do it?
For us, we aren't actually planning on one of us staying home at all. At best, one of would work full time while the other works part time. but for both of us, our industries are the type where you need to stay in the game.
ReplyDeleteI work in a government job (Australia), so I am well paid, but with the cost of our mortgage, we would need to cut the principal down quite a lot over the next few years to consider not working full time. I finally have a permanent job, so I will be able to get maternity leave. I can either take 6 months at full pay, or 1 year at half pay. After that I will definitely be going back to work. It's just not an option to consider anything else. The majority of young people I work with do the same. I would love for there to be another option, but it just doesn't exist.
Wow! That is an amazing leave benefit!!
DeleteGood idea running the budget, I am currently pregnant with our first child. When we ran the numbers and we decided that I will stay home for the year with Mat Leave but go back once it is over.
ReplyDeletePlease note that as a single parent your take home will be slightly higher because of the zero income of your spouse and taxes. I know one year when my husband was in school he had a grant that wasn't taxed so I got to claim him and it lead to a pretty nice tax refund. Also you will get some money the Child Tax credit etc. I am planning on directing the $100 monthly to the RESP so it doesn't come out of 'general revenue'
I also chose to work a second job prior to getting pregnant so we have zero debt and a good emergency fund before we start Mat leave and any baby expenses.
Cheers
Kyla
I forgot about the child tax credit - thts a great way to fund their RESP! Thanks for reminding me :)
DeleteThank you so much for your comments so far! Jordan is really looking forward to reading through them this evening.
ReplyDeleteFor the leave/back to work scenario, would you look at splitting the parental leave portion? It would give you each a chance to try out the stay at home thing, and see how it works for you.
ReplyDeleteWe haven't decided 100% - but I'm thinking maybe me 9 months and Jordan 3 or something... We would have to think about it but I defn. Want Jordan to have that chance as well.
DeleteInteresting post...we've also looked at the finances a little bit for when we have a kid. Daycare is a similar cost in our area---it sucks that it would eat up such a large chunk of our budget!
ReplyDeleteI think you need to make sure to have a much larger emergency fund in case the working partner gets laid off/fired/injured.
We bought our house knowing that we could stretch it and make it work but we'd have to go SUPER FRUGAL to allow me to stay home right now. I don't know that we're willing to do that, so I'm pretty sure I'll go back full time after the first kid. After the second kid, I hope that my husband will make enough (he's in sales, so at least we have a good earning potential!) so that I can work part time. I think I'd go stir crazy as a stay at home mom all the time :)
Good for you guys for looking at the numbers...another thing to mention, you will need to save some money to cover taxes. EI does not take enough taxes off, especially if you are in the position where you are receiving too up. What I did was bought back my pension for the year I was on most leave, approx. $6000 and then it zeroed out, therefore I didn't have to pay taxes. Many people are very shocked at how much they owe in taxes. Also, the child tax benefit, is handy, but taxable income. I have three kids, age 15, 6, and 2. My two yer old costs aprox. 700-800 per month, and the six year old is 440 per month, as we need before and after school care each day for her. Both my ex and I work full time jobs, and since we have split up it would not be sensible to work less than full time, although I would love to. Good luck with your decision making!
DeleteYou are 100% right with regards to taxes - continuin to contribute to RRSPs would be vital to avoiding a tax bill bc o my top up. Another strategy would be to request my employer to take additional taxes off in the year leadin up to the new baby or the year baby is born depending on when the top up occurs in the tax year.
DeleteWe've made it work by both of us working. I only took 6 weeks off from work after my little girl was born. I can't imagine taking a year off. Canadian benefits are so much different.
ReplyDeletewow! Only six weeks??
DeleteDid you have family to care for your baby or external child care?
Employment Insurance in Canada gives new moms 17 weeks of job protected leave of absence and then paternal leave is again job protected and eligible for EI and an be taken by either mom or dad.
I could go down to 22.5 hrs a week or three days and maintain my benefits - so that would give me two days at home. It's possible that Jordan might be able to work from home a day a week but he hasn't really explored what that would look like.
ReplyDeleteI don't think I could ever do one parent SAH. I'm more comfortable with two incomes plus I think too many problems would come up by both of us not bringing home income. That's just us though. My mom was a SAHM and I loved it.
ReplyDeleteI was planning to go back when our first was born 26 years ago. We had both a daycare and a dayhome picked out. And then she was born and my world changed. I took my mat leave then submitted my resignation and opened a dayhome. Stayed home for 20 years, raised all our kids and went back to work 6 years ago into a career that pays better, in a management position right off the bat. My dh came home for 6 years so our youngest kids still had a parent at home. And went back to his career just last year. He's also in management and both of us were granted healthy raises in January. It can be done and often it comes down to not what you make but how you spend it. Loved my dayhome because I got to pick the kids my kids played with and I got to set my hours so I could still be there for my kids too. Worked for us!
ReplyDeleteGood luck with all your planning!
I think when a lot of people get into the situation, they really can't afford it but they make it work somehow. Sometimes, they both end up working because one income isn't enough, sometimes one stays home and they find ways to cut back significantly.
ReplyDeleteI can't speak from experience like some of the other people who commented and I know probably everyone has a different situation to you, but I think the most important thing about getting a child is to spend time with them. They are ways to make money, they aren't ways to spend time.
I also think the SAHD is awesome. I'm actually considering it myself in the future. I don't buy that crap about not being able to reenter the work force.
I've written a ton of stuff in my blog about choosing to stay home. I just made the decision myself! I'd be happy to share my experiences and thoughts with you. If you want more scoop check out my blog (search for stay-at-home) or email me. There are a LOT of factors to consider!
ReplyDeleteThis is essentially what my blog is about - I have a 10 week old at home now. :) It is actually easier than I had expected it to be while preggers, mainly because so far my lifestyle has completely changed. We don't end up going out very much at this point and so far the costs haven't been increased that much. What I'm not so sure would be doable for us would be for me to not go back to work at the end of the year. It may be a different story once we have more kids (the cost of daycare would be more than what I make!) but we'll see once I come to that!
ReplyDelete