How Much is a Second Income Worth, Really?

Most families these days assume it takes two incomes to survive. And many would be shocked if they just took the time to figure out the real hourly wage in that second paycheck.

Dear Mary: With two little boys, my husband and I are paying through the roof for daycare. It seems like almost all the money I earn goes to childcare, so I’ve been thinking of quitting my job and staying home with the kids. I’m excited at the thought of spending more time with them, but I also want to be sure my family will be okay financially. Is there an easy way to make sure the decision is right for us? Bethany

Dear Bethany: I think you’re on to something. But before you make any rash decisions, do this: Write down a figure that represents your monthly take-home (net) pay. Now deduct from that all of your work-related costs including daycare, transportation, clothes, lunches, gifts and office pools and anything else you can come up with that would go away if you stay at home. Divide that result by the number of hours you’re away from home to see what your real hourly wage. But wait, there’s more.

Consider all of the hidden expenses you have because you work, like more fast food, take-out and restaurant meals because you’re too tired to cook. Do you hire help for the yard work or housecleaning? If you are home there’s a good chance you can do those jobs and reduce your expenses even further.

You may be shocked to discover it’s actually costing you to hold down a job because you’re paying out more than you earn, while this job is putting you into a higher tax bracket.

Unless you make a whopping big salary, you may be better off financially by being at home with your kids where you can also cook, clean and garden, too.

Dear Mary: My son Jake graduated from college about a year ago. He has a job, but with student loans and a bit of credit-card debt, he is struggling a bit financially. I know with smarter choices he could pull himself out of this; however, Jake just asked his father and me for help. We want to be good parents and provide for him. At the same time, we also think that since he’s an adult, he needs to start taking care of himself. Is there any compromise? Suzanne

Dear Suzanne:  Since he has asked for help, this might be the perfect time to teach as well. Don’t just give him a handout. Help him set up a budget. It’s possible he like so many people has never learned how to manage money.

Because he has come to you asking for help it’s possible he’s open to receiving your guidance as well. He needs to be accountable, but not in a child/parent way. Think of this as more of a client/counselor relationship.

In the same way he would have to create and submit a business plan to get a business loan, have him create a personal finance plan for how he intends to use the money you lend to him, how he intends to manage his income each month and how he plans to pay you back.

It’s time for Jake to get real about his money, and this could be the perfect opportunity you need to teach him valuable lessons. Not sure how or where to start? Pick up a copy of my book, Debt-Proof Living (most libraries have it). I’ll teach you everything Jake needs to know!

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12 replies
  1. L. Palmer
    L. Palmer says:

    I enjoy your column and this is the first time I have felt compelled to respond to a post. I had a bachelor’s degree and a career, but chose to stay home with our five children. I hope this quick summary will encourage others to consider their options. Yes, we made tremendous sacrifices, but I used the last two decades to prepare for my future as well. During my time home with our children, I homeschooled each one, received an additional early childhood education degree, ran a home daycare, furthered my education by taking online classes, worked part-time at a post office (the required test was good for 7 years, ensuring I could work for a post office after my youngest graduated), and became an ordained minister. Our youngest graduated this year. All children have attended and paid for their own college and my husband and I are pastors. During my time home, I was blessed to care for our special needs child who passed away at the age of two. I am thankful for every moment we had with her. Every family must do what is right for them, but there are ways to stay home AND protect one’s future. As a pastor I have sat with many on their deathbeds and have yet to hear anyone say, “I wish I hadn’t spent so much time with my children.” I am thankful to live in a country where women are free to do what they feel is best for their families. If you choose to work outside the home, do it with joy. If you desire to stay home with your children, know that you have freedom to do that as well. Be blessed!

    Reply
  2. Sue Guderjohn
    Sue Guderjohn says:

    Truer words were never spoken: “… that the days are long, but the years are short.” and both my daughters –now in their thirties– are college educated, one is a “new” mother, becoming great cooks, and integrate with their friends and communities. They learned that during a time-out I had when they were in grade school. We would go volunteer, do projects together around home, visit older neighbors, and various other activities that we would have missed had I kept working FT during those years. Yes, I did go back and forth into FT work, but we always needed me or Dad to be around during those gone-before-you-know-it times. Being a Mom is a job unto itself: One of my best “job” gigs!

    Reply
  3. Robin Wagar
    Robin Wagar says:

    I believe the comment about the days are long and the years are short was right on the money. No one will love your little one as much as their Mother or Father. I made the choice to have our children and knew then that I could not work full time or part time during their little years and be able to enjoy their milestones. I volunteered at the school doing nurse type things and also was a room mother as many people have been. I am a nurse and when they were older I worked 3-11 PRN. I did a 6 week Refresher Course to go back to work and felt ready to work again. The course also met all of my CEU requirements for the next renewal. Depending on what was going on with their life, I could commit to days that did not conflict with the kids special events. I realize that it is not an option for all parents and am grateful for that time with the children. I would not give up the time I was home with out children for the biggest pension in the world.

    Reply
  4. Mrs. Potts
    Mrs. Potts says:

    I gave up a career to raise a family. At the time, I was grateful my husband’s income was sufficient to allow me to be home with the children. Disability happened for him. The small job that gave him supplemental income is ending. Now, at the age of 61, when I should be smiling at the future like a Proverbs 31 woman, there are no smiles. There is only regret that I didn’t look out for my own future financial security.

    Reply
  5. lisette
    lisette says:

    The choice need not be between working and staying home, and really should not be. If you choose to be at home you certainly can generate income by telecommuting, running your own “mompreneur” business or freelance work in many fields. I would urge any woman never to be totally without a source of income of her own. Your own and your children’s security depends on it. Husbands can get laid off,be disabled, leave or die. Many people now make an income as freelancers.

    Reply
  6. lisette
    lisette says:

    Not working at all means you have much less leverage in the marriage. Are you okay with being obedient and submissive to your husband? If you want to be treated as an equal, staying ho.e and being an “employee” of your husband may not work for you. If you get divorced or widowed you are going to be in bad shape. You cannot expect to waltz back into the workforce at the same level you left. You will be doing well to get back in at entry level. You will not have a retirement and if your husband dumps you when you are fifty or sixty you may find yourself quite impoverished. And lastly, if you took up space in a college classroom and got financial aid to get a degree, why? Someone else who was going to use those resources may not have been able to get them. And being a housewife is absolutely a good and honorable vocation but it does not require education.

    Reply
  7. Tawn B.
    Tawn B. says:

    I see three comments recommending working rather than staying home with the kids. I would like to share another opinion. My husband and I chose to have me stay home with our kids. These years were unbelievably precious! I was there to see their firsts, to influence them, to help guide them. I was able to do some things to earn money (play the organ for church, substitute teach, write, etc.), but my family always came first. With more margin in my life, I was able to save money in various ways. Our kids now? One went to four years of graduate school and is now a pastor. Another graduated debt-free from Harvard. One is studying to be an accountant and the other is choosing a college. Sure, we could have more money in savings. But we’ve had time together and healthy “margin” in our lives. If I had to do it all over again, I’d do it the same! Children are precious gifts and I consider it a blessing to have had this time with them!

    Reply
    • Jennifer Beikes
      Jennifer Beikes says:

      Agreed. Being home with my kids had some financial drawbacks, but none come close to the unparalleled experience, for the kids and myself (and, of course, my husband). If my daughters-in-law choose to return to work when they have kids, I’ll be first in line to be the nanny 🙂

      Reply
  8. Sharon Campbell
    Sharon Campbell says:

    You have to consider your retirement income as well. And the ability to get a high-paying (i.e., something over minimum wage) in the future. At the very least, work part-time to keep yourself in the job market.

    Reply
  9. Cindy Hurlbutt
    Cindy Hurlbutt says:

    I also had the problem of staying home with children or working. We live in a small town of 1500 population. I had a good office job with good hours. As you can imagine, there are not several of these type jobs available. We made the decision for me to keep working although my income was going to child care. I was working toward the future when my income would count in our household budget. Just another point to consider.

    Reply
  10. BZ
    BZ says:

    I agreed with the second-income logic when I was a young mom, and now I earnestly wish I had not. The reason? Social Security. I did work part time during those years, and until my youngest was in middle school. I am now much older, and looking at Social Security statements (with horror). I have been fortunate and not been penalized for my years of working part time. But I am past 50, and many of my peers cannot find work at all. I think what I did when younger was extremely shortsighted. If I could undo it, I absolutely would.

    Reply

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