How Much Does It Cost to Be a Stay-at-Home Parent? A financial cost analysis

cost of stay at home parent financial cost analysis

As you may know, we are a single-income family where I work full-time and Mrs. T stays home with the kids. For the time being, Mrs. T is staying home with the kids to spend more time with them. Given our single income situation, I have always wondered what’s the actual financial cost of a stay-at-home parent. Therefore, I decided to reach out to Chrissy at Eat Sleep Breathe FI about writing a post and analyzing how much does a stay-at-home cost?

She has been a full-time-stay-at-home mom for 14 years. She agreed with me that this would be a very interesting exercise. Rather than a generic article, I requested Chrissy to provide as many numbers as possible (I really pushed her comfort zone with this request hehe!). I wanted to make sure that we cover as many potential scenarios as possible with a lot of calculations (because I’m a numbers nerd). Hopefully we didn’t miss out anything. 

In case you’re wondering, this LONG article took a lot of back and forth between the two of us before it became ready. I have to thank Chrissy for putting up with all my demanding suggestions, ha! 

Take it away Chrissy!

Thank you Tawcan. As mentioned, I’ve been a full-time stay-at-home mom since my first son was born 14 years ago. Interestingly, I’ve never taken the time to calculate the cost of that decision… until now!

With this article, I go in-depth to calculate the costs and benefits of a stay-at-home parent by:

  • Outlining the financial and lifestyle benefits.
  • Analyzing the opportunity costs.
  • Revealing the real cost of a stay-at-home parent.

At the end of it, you’ll have all the numbers—and a clearer idea of whether this is the right choice for your family.

 

Disclaimers

I realize that the choice to stay home (or not) is a sensitive, emotionally-charged topic. As I wrote this article, I tried to be cognizant of this. Additionally:

  1. Stay-at-home parenting isn’t right for everyone. It’s a personal decision that every family needs to make for themselves.
  2. Not everyone has the choice for one parent to stay home. I acknowledge that I’m fortunate to have this privilege.
  3. This article is in no way meant to judge other parents. I equally support and cheer on working and at-home parents; single and dual-income households.
  4. I made every attempt to be thorough and accurate with the numbers. (I used a combination of my actual numbers and numbers from reliable online sources.)
  5. Where possible, I used average/typical scenarios for my analyses. If this information wasn’t available, I used scenarios based on my personal experience. 
  6. In my experience, dual-income households have little time to optimize their finances. However, some do manage to do this! If that’s the case, the numbers shown here may not apply. 

With that, let’s get into the numbers!

Table Of Contents

 

Part 1: Financial benefits

Based on my experience, here are some of the ways that having a stay-at-home parent can save money:

1. Childcare costs

Families with a stay-at-home parent realize the greatest amount of savings in childcare costs. Let’s take a look at average childcare costs for children from 1 to 12 years old.

Assumptions:

  • Childcare costs based on Vancouver, BC, or Canadian rates from:
  • Both parents work 40 hours per week, Monday–Friday.
  • No childcare help from grandparents or other family.
  • Parents opt for one year of parental leave, so childcare isn’t needed until 12 months of age.
  • Daycare is the same monthly rate—regardless of holidays, sick days or vacations. 
  • Due to decreasing need for adult supervision, daycare rates decrease as a child ages. (Strangely, Vancouver’s average toddler rate is slightly higher than the infant rate.)
  • These are the typical daycare age groupings:
    • Infants: 0-18 months
    • Toddlers: 19-36 months
    • Preschoolers: 3-5 years
  • Before and after-school care is covered by parents staggering their work hours.
  • For day camps:
    • In dual-income households, 8 weeks per year of day camps are needed to cover spring and summer breaks. (Based on 8 weeks of summer camp plus 2 weeks of spring break camp minus 2 weeks of family vacation during one of the breaks.)
    • In households with a stay-at-home parent, most still put their kids in a few weeks of day camps. Typically, they’ll book 1 week of all-day camp over spring break and 2 weeks over summer break.
  • For full-time live-in nanny costs, my research shows the average pay increase per child is $1/hour, from average base pay of $13/hour.

Scenario 1: Full-time stay-at-home parent

  • 0-4 years old: $0
  • 5-12 years old: $300/week for 3 weeks of all-day camp per year for 8 years = $4,800
  • TOTAL: $4,800 for 12 years = average of $400/year/child

Scenario 2: Daycare and camps

  • 12-18 months: $1,400/month for seven months = $9,800
  • 19-36 months: $1,407/month for 17 months = $23,919
  • 3-5 years: $1,000/month for 24 months = $24,000
  • 5-12 years: $300/week for 8 weeks/year for 8 years = $19,200
  • TOTAL: $76,919 for 12 years = average of $6,409/year/child

Scenario 3: Full-time live-in nanny

  • Base pay (includes room and board):
    • One child: $13/hour x 40 hours/week = $520/week
    • Two children: $14/hour = $560/week
    • Three children: $15/hour = $600/week
  • PLUS Employer contributions to CPP and EI
    • One child: $70/week
    • Two children: $76/week
    • Three children: $82/week
  • TOTALS: 
    • One child: $520 + $70 = $590/week x 52 weeks = $30,680/year
    • Two children: $560 + $76 = $636/week x 52 weeks = $33,072/year
    • Three children: $600 + $82 = $682/week x 52 weeks = $35,464/year

Comparison

Let’s put the numbers together and compare the annual costs for one, two, or three kids:


Scenario 1Scenario 2Scenario 3
One child from 1-12 years old$400$6,409(+$6,009 vs Scenario 1)$30,680(+$30,280 vs Scenario 1)
Two children from 1-12 years old$800$12,818(+$12,018 vs Scenario 1)$33,072 (+$32,272 vs Scenario 1)
Three children from 1-12 years old$1,200$19,227(+$18,027 vs Scenario 1)$35,464 (+$34,264 vs Scenario 1)

Average savings: $12,818/year

Based on the cost of daycare and camps for two children, families with a stay-at-home-parent save an average of $12,818 per year in daycare costs or $32,272 in nanny wages.

Families with three children stand to save a whopping $18,027 per year in daycare costs or $34,264 in nanny wages.

 

2. Food costs 

When both parents work full time, it can be challenging to do all the things needed to cook at home (meal planning, grocery shopping, meal prep, etc.) Throw in kids’ activities in the evening, and it’s all but impossible to prepare home-cooked meals some days!

With one parent at home full time, it’s far more feasible to homecook most meals. Let’s see how much can be saved by eating out less often:

Assumptions:

  • Assume each home-cooked meal costs $10 for a family of four, or $2.50 per person per meal. (Results in a $900 grocery bill per month)
  • $100 for a restaurant dinner for a family of four.
  • $12.50 for an average workday lunch.
  • 90 total meals per month (3 meals per day * 30 days)

Scenario 1: One meal out per month

This scenario assumes one parent is at home full time and can cook most meals at home. The working parent would bring lunch to work every day. 

  • 1 restaurant dinner per month
  • 89 home-cooked family meals per month

Total: [ $100 + 89*10 ] * 12 = $11,880 per year

Scenario 2: Two meals out per week  + Two lunches out every workday

In this scenario, since both parents work full time, the family eats out twice per week. Additionally, both parents buy lunch every workday. 

  • 2 restaurant dinners per week (8 per month)
  • 2 lunches out every workday (20 per month x 2 parents) 
  • Home-cooked meals per month: 61 for the parents, 82 for the kids

Total: [ $100*8 + $12.50*20*2 + 62*2.50*2 + 82*2.50*2 ] * 12 = $24,240

Comparison

Let’s put the numbers together and compare the costs:

Scenario 1Scenario 2
$11,880/yr$24,240/yr

Average savings: $12,360/year

Families with a full-time stay-at-home-parent save an average of $12,360 per year in food costs compared to families with two full-time working parents. 

 

3. Vehicle expenses

When both parents work outside the home, chances are each will need a car to commute to and from work. This creates increased car expenses due to:

  • Higher insurance costs.
  • Higher gas costs.
  • Higher maintenance costs.

Let’s take a look at how these increased expenses add up.

Assumptions:

  • The cost of the car purchases is not considered in this calculation.
  • Mileage:
    • Each working parent’s commute is 20 km each way, resulting in 10,000 km per year.
    • For errands/kids’ activities/events/weekend getaways: 7,500 km per year (based on my personal experience).
    • For vehicles used for daily commute and errands: 15,000 km per year (10,000 for commuting plus 5,000 for errands.) This errand mileage is lower than a vehicle solely for this purpose since some errands are on the way to/from work.
  • Insurance, gas, and maintenance costs are based on a 2014 Honda Civic.
  • Gas is $1.50/litre and gas mileage is 9 litres/100 km.
  • Oil changes are $125 each (tax included).
  • Major servicing and repair costs average out to $400/year, based on my personal experience.
  • Insurance costs based on:
    • $2,000,000 in liability coverage.
    • $2,500 deductibles for collision and comprehensive.
    • Vehicle use:
      • To/from work over 15 km (for daily commute vehicle): $2,100/year
      • Pleasure use only (for errand vehicle): $1,985/year

Scenario 1: One car for the family

  • Mileage: 
    • Commuting: 10,000 km/year
    • Pleasure use: 5,000 km/year
    • TOTAL: 15,000 km/year
  • Insurance cost: $2,100/year
  • Gas cost: $2,025/year
  • Oil changes: $125 x 2/year = $250/year
  • Major servicing, repairs, other maintenance: $600/year
  • TOTAL: $2,100 + $2,025 + $250 + $600 = $4,975

Scenario 2: One car for daily commute + One car for errands, kids’ activities

One vehicle will be used for daily commuting only. The other will be used for errands/kids’ activities/weekend events and getaways. 

  • Mileage: 
    • Vehicle 1: 10,000 km/year
    • Vehicle 2: 7,500 km/year
  • Insurance cost: 
    • Vehicle 1: $2,100/year
    • Vehicle 2: $1,985/year (lower cost because no work commute counts as pleasure use)
  • Gas cost: 
    • Vehicle 1: $1,350/year
    • Vehicle 2: $1,013/year
  • Oil changes: 
    • Vehicle 1: $125 x 1/year = $125/year
    • Vehicle 2: $125 x 1/year = $125/year
  • Major servicing, repairs, other maintenance:
    • Vehicle 1: $400/year
    • Vehicle 2: $300/year
  • Sub-totals:
    • Vehicle 1: $2,100 + $1,350 + $125 + $400 = $3,975
    • Vehicle 2: $1,985 + $1,013 + $125 + $300 = $3,423
  • TOTAL: $3,975 + $3,423 = $7,398

Scenario 3: Two cars for daily commutes, errands, and kids’ activities

One vehicle will be used for daily commuting only. The other will be used for daily commuting PLUS errands, kids’ activities, weekend events, and getaways. 

  • Mileage: 
    • Vehicle 1: 10,000 km/year
    • Vehicle 2: 15,000 km/year
  • Insurance cost: 
    • Vehicle 1: $2,100/year
    • Vehicle 2: $2,100/year
  • Gas cost: 
    • Vehicle 1: $1,350/year
    • Vehicle 2: $2,025/year
  • Oil changes: 
    • Vehicle 1: $125 x 1/year = $125/year
    • Vehicle 2: $125 x 2/year = $250/year
  • Major servicing, repairs, other maintenance:
    • Vehicle 1: $400/year
    • Vehicle 2: $600/year
  • Sub-totals:
    • Vehicle 1: $2,100 + $1,350 + $125 + $400 = $3,975
    • Vehicle 2: $2,100 + $2,025 + $250 + $600 = $4,975
  • TOTAL: $3,975 + $4,975 = $8,950

Comparison

Let’s put the numbers together and compare the costs:

Scenario 1Scenario 2Scenario 3
$4,975$7,398$8,950

Average savings: $1,552/year

One-car families save an average of $3,975 per year in vehicle costs compared to families with two cars and two working parents. (They’d also be able to save and invest the amount they would’ve used to purchase the second car. This could be a significant amount.) 

Families with two cars but only one commute would still save a significant amount: $1,552 per year. 

 

4. Income taxes

The spouse or common-law partner amount is a non-refundable tax credit available to Canadians. If the stay-at-home spouse doesn’t earn income, the working spouse can claim the entire credit. However, any income the stay-at-home spouse earns lowers the credit by the same amount.

For example, the full federal spouse or common-law partner amount is $11,809 for 2019. If the stay-at-home spouse earns $1,000, the credit is lowered to $10,809. (Note that there’s also a provincial spouse or common-law partner amount.)

That means: the less the lower-income spouse earns, the more credit the higher-income spouse can claim. Let’s take a look at how income earned by a stay-at-home spouse can affect a higher-income spouse’s taxes:

Assumptions:

  • One spouse earns $80,000/year. Second spouse earns $60,000/year.
  • To keep things clear, we’ll only look at the tax savings in this section. The $60,000 earned by the stay-at-home spouse is not included. (Earned income from the stay-at-home spouse will be accounted for in Part 3 below.)
  • All values below calculated for BC tax rates using the Tax Tips Canadian Income Tax Calculator

Scenario 1: One spouse earns $80,000; second spouse earns no income

  • $80,000 in taxable income.
  • Full $11,809 spouse or common-law partner amount available to claim.
  • $16,938 (16.68%) in taxes owing.

Scenario 2: One spouse earns $80,000; second spouse earns $60,000 in income

  • $80,000 + $60,000 in taxable income.
  • None of the $11,809 spouse or common-law partner amount available to claim.
  • $19,211 (19.52%) in taxes owing for spouse who earns $80,000 in income.

Scenario 1Scenario 2
Total taxes paid by spouse who earns $80,000 in income $16,938$19,211 (+$2,273 vs SAHS earning no income)

Average savings: $2,273/year

By earning no income, the second spouse lowers the working spouse’s tax bill by $2,273/year. 

 

5. Investment fees

When both parents work, there’s little time to think about investments. (This was the case when my husband and I both worked full time.) A full-time stay-at-home parent could take on management of the household investments, or free up time for the working spouse to do so.

By DIY investing in low-cost index ETFs, this family could save 1%+ in financial advisor fees and another 1%+ in MERs. Plus, as the nest egg grows, the savings continue to increase:

Nest egg sizeInvestment fee savings
$300,000$6,000
$500,000$10,000
$1,000,000$20,000

There’s also another component to factor in—the growth from keeping that 2% invested instead of going to fees. Just in the first year, this is the growth that could be generated (based on an average 7% return from index investing):

Nest egg sizeInvestment fee savingsAnnual growth of fee savingsTotal 
$300,000$6,000$420$6,240
$500,000$10,000$700$10,700
$1,000,000$20,000$1,400$21,400

Average savings: $6,240/year

Based on a $300,000 portfolio, $6,240 per year could be saved if the stay-at-home spouse manages the family’s investments.

 

6. Recurring expenses

Optimizing recurring expenses is one of the easiest ways to save a lot of money. When both parents work, it can be challenging to find the time, energy, and motivation to take on this task.

Fortunately, the ‘work’ of optimizing expenses can be broken up into short segments of time. This makes it possible for the stay-at-home parent to squeeze the following tasks into nap times or other quiet times during the day:

  • Calling around for quotes.
  • Switching providers.
  • Negotiating better rates with existing providers.
  • Researching better, cheaper options.
  • Taking time to consider which expenses could be cut out.

Listed below are some of the larger expenses that I’ve been able to optimize:

ExpenseOld cost per yearNew cost per yearSavings per year
Life insurance (took the time to better-optimize our coverage)$2,650$455$2,195
Home insurance (switched to get better coverage and a lower rate)$1,800$910$890
Car insurance (took the time to better-optimize our coverage)$2,100 x 2 cars = $4,200$1,800 x 2 cars = $3,600$600
Landline + internet (switched to VoIP calling and wholesale ISP)$1,260$616 $644
Property taxes (saved up the monthly instalments in a HISA instead of letting the city hold it, and also paid for the bill using a credit card and Paytm)$19 saved(interest paid by the city for my monthly instalments that they hold through the year)$169 saved (interest from EQ Bank for my monthly savings towards the property tax payment + credit card cashback on payment through Paytm)$150
TOTAL:$4,479

Average savings: $4,479/year

Optimizing expenses saves us $4,479 per year. That’s pretty significant, especially when you consider that I only needed to lower each expense once—then it’s done! 

With no further effort, we’ll continue saving from that point on. (But I recommend you revisit your recurring expenses every 1-2 years.) 

 

7. Credit card rewards

It doesn’t take a lot of time or effort to better-optimize your credit cards. But it does require some focused time. In a dual-income household, it’s not always easy to find the time for ‘optional’ tasks like this. 

Having one stay-at-home spouse helps to free up both partners so that one is able to take on tasks like this. Doing so can earn most families over $1,000 per year in credit card rewards. 

(I use a simple, low-maintenance system to manage our credit card rewards. You can read more about it here.)

Average savings: $1,000/year

 

8. Discretionary spending

When my husband and I both worked, we were usually too busy to deal with things like watching for deals or researching purchases. Most often, we’d have to choose convenience over savings. 

Being at-home full time, I’m better-able to optimize our spending. Additionally, I have time to follow up with manufacturers when products break or perform badly. This usually results in free product replacements or generous coupons and vouchers.

Here are some recent examples of ways I’ve saved on our discretionary spending:

ExpenseRegular priceSale priceSavings per year
Flights to Japan$900/person x 4 = $3,600$731/person x 4 = $2,924$676
Kids’ clothing$450/yr (at 10% off regular price of $500/yr)$250/yr (at 50% off regular price of $500/yr)$200
Following up with manufacturers$150 (broken door handle) + $50 (prematurely spoiled food that had to be discarded)$200 in free replacement products, coupons, or vouchers$200
TOTAL:$1,076

Average savings: $1,076/year

 

9. Clothing

When I worked outside the home, I had to buy dressier and pricier clothes and more pieces of clothing than I need as a stay-at-home mom. Let’s take a look at how much can be saved when a professional wardrobe is no longer needed:

Scenario 1: Stay-at-home parent wardrobe

As a stay-at-home mom, I can get away with wearing a few items over and over. So I only need 2 new tops per year and 2 new bottoms. I also don’t need dressy or high-quality clothes, so the average cost per piece is only around $20. That totals $80/year.

Scenario 2: Working parent wardrobe

When I was working, I used to buy around 10 new tops and 4 new bottoms per year. (It’s still not socially-acceptable to wear the same outfits too often. That meant I needed to keep a larger inventory of clothing for work.) At an average cost of $60/piece, that totals $840/year.   

I’d also still need to buy some non-work clothes (probably only half of what I’d need as a stay-at-home mom.) That would be $40/year in non-work clothing.

So as a working parent, I’d spend a total of $880/year in clothing.

Stay-at-home parent wardrobeWorking parent wardrobe
$80/yr$880/yr

Average savings: $800/year

 

Total financial benefits 

Let’s take all the savings listed above and tally them up:

ExpenseSavings realized with one stay-at-home parent
Childcare$12,818
Food expenses$12,360
Vehicle expenses$3,975
Income taxes$2,273
Investment fees$6,240
Recurring expenses$4,479
Credit card rewards$1,000
Discretionary spending$1,076
Work clothing$800
TOTAL:$45,021

Average total savings: $45,021

Based on the average assumptions I used for each category, a family of four could save an average of $45,021/year with one parent at-home full-time.

Note: In order to earn an after-tax income of $45,021, the second parent would need to earn a salary of $58,150 per year. This is the minimum salary required for it to make sense for the second parent to work full time.


Part 2: Lifestyle benefits

The financial benefits of a stay-at-home parent are significant. But I feel the most important benefits are those that improve the family’s quality of life. These are things that tend to be tied to our core values, and are what most would consider to be ‘priceless’.

Here are seven ways my family has benefitted from having one parent at-home full-time:

 

1. Decreased stress

With a full-time stay-at-home parent, the entire family feels less stressed. Here’s how:

  • Fewer transitions: Transitions are hard on everyone (especially young children). With one less work commute and no childcare commute, there are far fewer transitions for everyone each day. 
  • Time freedom: With only one work schedule and no childcare schedule to plan for, the family gains a lot of time freedom.
  • Slower lifestyle: With fewer transitions and more time freedom, the family can choose a slower lifestyle.
  • More energy: A slower lifestyle leaves everyone with more energy.
  • More productive: With more energy, both parents are able to get more done and not constantly feel behind on life.
  • Overall decreased stress: This entire chain of events leads to an overall less-stressful lifestyle for the entire family.

 

2. Worry-free days off

I’ve seen the stress that unexpected or frequent days off creates for working parents. It’s not easy juggling work and kids’ schedules! With a full-time stay-at-home parent, there’s always someone there to cover:

  • Sick days.
  • School professional development days.
  • Early dismissals.
  • School holidays.
  • Snow days.

My husband can go to work worry-free even if one or both of our kids are sick. And if my kids get injured or sick while at school, I can drop everything to bring them home. This would all be a lot more stressful to arrange if both of us worked full time.

 

3. One parent is always there 

For me, this was the biggest reason why I chose to be a stay-at-home mom. It was so important to me that either my husband or I be there for as much of our kids’ lives as possible. This is a privilege that we were willing to trade just about anything for.

While the most wonderful childcare providers (including loving grandparents) come very close to replicating the care a parent would provide, it’s not the same. 

Each of us as parents have our own unique values we’d like to pass on to our kids. These values are taught in all the little moments that make up the days, months, and years of our lives. It’s such a gift when at least one partner can be there to teach and connect with their children in all these little moments. 

 

4. Never miss out

Some of my most vivid childhood memories are of missing my mom when she went back to work full-time. (She stayed home with my twin sister and I until we started kindergarten, but out of necessity, returned to her job to help provide for our family.)

I remember the envy I felt towards other kids who had stay-at-home parents. Their parents could join us for field trips, Girl Guide outings, and sports days. These memories, while sad, motivated me to find every way possible to be at-home full-time with my kids.

I can’t put a value on how wonderful it’s been (for me and my kids) to have witnessed every milestone and special event in my children’s lives. And in doing so, I’ve also been able to include my husband by recording the events in photos and videos or retelling the event to him. 

Importantly, it’s not even the big events that mean the most to me. Being there for the fleeting moments of silliness, sadness, anger, joy, messiness, craziness—all of it—is something I’d give up any material possession for.

 

5. More involvement at school

This is one area that has hugely benefited my kids. Volunteering at my kids’ school has benefited them (and us) socially and academically.

Social benefits

As a family, we’ve benefited from the strong connections we have at the school and in the community. Volunteering has allowed me to better connect with various members of the school community:

  • Teachers and school staff: Since I’m physically present more often, I’m better-able to get to know the teachers and school staff. This makes it easier for us to communicate, which leads to better problem-solving should my kids need help. It also strengthens our relationships at the school and helps me stay on top of the latest happenings.
  • Classmates: Being around the school also allows me to get to know my kids’ classmates and friends. This helps my kids socially by allowing me to figure out who would be the most-suitable friends. It also benefits our family socially since I grow to care for these children—further deepening our family’s connection to the community.
  • Oher parents: Volunteering with other parents has created many new friendships. As a side benefit, this helps to build a network of parents that all our kids can be comfortable with and supported by.

Educational benefits

By offering my time at school, I not only benefit my kids, but all students at our school. Thanks to parent volunteers, our school has benefitted from:

  • Better-equipped classrooms.
  • A strong music program.
  • A well-stocked and well-staffed library.
  • Extra in-school and after-school programming.
  • Playground upgrades.
  • Reduced field trip costs. 

 

6. More involvement at home

The after-school hours are some of the most important to me as a stay-at-home parent. While my kids aren’t the most pleasant to be with at this time of day (they’re usually hangry and tired!) it’s when I do a lot of connecting with them. 

It’s the best time for me to:

  • Listen and support: On the walk home from school, I hear about the problems and triumphs of the day, and help to coach my kids through their challenges. Usually, by the time my husband gets home, everyone has fully divulged their issues, and is ready to enjoy a quiet, relaxed evening together.
  • Make a nutritious snack: Since I’m home in the after-school hours, I have time to make a nutritious snack for my kids. This saves money and is more healthy than buying packaged snacks.
  • Help with homework: Between 3–5 pm, I try to help my kids get as much of their homework done as possible. Usually, most of it’s done before dinnertime, so it frees us as a family to enjoy our evenings.
  • Cook a home-cooked dinner: Nearly every night, I have the time and energy to prepare a fresh, home-cooked family meal. We sit down to eat together, which provides yet another opportunity for our kids to connect with us and tell us about their day. (Additionally, regular sit-down family dinners have consistently been shown to be an important factor in children’s happiness and academic success.)

 

7. Easier scheduling/more time freedom

When my husband and I both worked, appointments and chores had to be scheduled for evenings and weekends. This often left us with little time to relax and just enjoy our off-hours. 

As a stay-at-home parent, I have a lot more time freedom. This means when the kids are at school, I’m able to schedule: 

  • My medical and dental appointments;
  • Meetings and appointments with repair people and other service providers;
  • Haircuts;
  • Car maintenance;
  • Menu planning;
  • Food prep;
  • Financial tasks;
  • Chores;
  • Errands.

Additionally, kids’ activities and appointments can be scheduled for after school, school days-off, or school breaks:

  • Playdates;
  • Parent-teacher meetings;
  • Kids’ medical and dental appointments;
  • Kids’ activities and sports.

As a result, most of our evenings and weekends are luxuriously slow-paced. This gives all of us time to relax, spend time together, and enjoy the freedom of having nothing to do! 

I’m so grateful that we have the option to choose this kind of lifestyle. The gift of time freedom pays off in so many incalculable ways:

  • Less stress and anxiety (from less rushing around and having more time to just relax).
  • Better relationships (due to more quality time together).
  • Increased confidence and happiness (from having the time to learn and master new skills and hobbies).
  • More creativity (from having to figure out what to do because every hour isn’t fully planned and booked).
  • Less grumpiness and arguing (because everyone can get to bed on time and sleep in most weekends).

 

8. Career benefits for the working parent

One final benefit that can’t be overlooked is the benefits to the working parent’s career. All the above lifestyle benefits lead to:

  • The working parent having a clearer mind and more flexible schedule. 
  • Better focus at work and the ability to work harder and more efficiently.
  • Being able to provide the employer with more value.
  • Greater opportunities for promotions.
  • More income for the whole family.

I look at it like this: with both partners funneling all their effort into supporting one person’s career (instead each focusing on their own career) it’s possible that the resulting gains in income could make up for (or even exceed) the lost income of the stay-at-home parent. 

 

Summary: Lifestyle benefits

There are many lifestyle benefits of having a stay-at-home parent. These benefits improve the entire family’s mental, emotional, and physical health. 

While it’s not possible to quantify how much these benefits are worth, I do know this: happiness increases, stress decreases, and life gets a lot simpler and slower. For us and some families, that’s worth the trade-off of a second income.

Additionally, these unquantifiable benefits can lead to the quantifiable result of more income for the family. The stay-at-home parent is able to make the working parent’s life outside of work easier. This allows the working parent to better focus on and advance in their career. This could make up for or exceed the lost income of the stay-at-home parent.


Part 3: Opportunity cost

We can’t discuss the true cost of a stay-at-home parent without also considering the opportunity costs. Lost wages and benefits can be a substantial factor and can’t be overlooked.

In this section, I’ll detail what a family could stand to lose when giving up one parent’s income.

 

1. Earned income

According to this article by Workopolis (based on data from Stats Can) the average salary in BC for 2017 was $49,244. This seems a bit low to me, so instead, I’ll base this section on what I would have earned had I continued working.

When I left the workforce in 2005, my annual salary was $48,000. Based on the inflation calculator from the Bank of Canada, my salary would have increased to $60,000 in 2019. (At the non-profit I worked at, there wouldn’t have been opportunity for promotions. Any pay increases merely kept up with inflation.) 

However, earned income can’t be calculated for one spouse in isolation. Because of the spouse or common-law partner amount, earned income must be calculated for the couple. 

So, based on one spouse earning $80,000 and the second spouse earning $60,000, here’s how the earned income would add up (assuming no RRSP contributions or other tax deductions):

One spouse earns $80,000; the other earns no incomeOne spouse earns $80,000; the other earns $60,000
Total net income of $62,982Total net income of $60,708 + $46,348 = $107,056 

Opportunity cost: $44,074/year

 

2. Extended health benefits

For some families, the lower-income spouse has the superior (or only) benefits package. Losing these benefits means the family would need to pay out-of-pocket for expenses such as:

ExpenseOut-of-pocket cost
Dental exams x 2 adults x 2/year$375 x 2 x 2 = $1,500
Dental exams x 2 kids x 2/year$180 x 2 x 2 = $720
Prescription medications for the family$1,300/year (based on our spending)
Eyewear for one child$400 every two years (average of $200/year)
TOTAL:$3,720/year

Opportunity cost: $3,720/year

 

3. Company-provided retirement benefits

My non-profit didn’t offer any retirement benefits, so I didn’t lose anything in this area. However, many companies do offer an RRSP contribution match. Based on this Reddit thread, typical RRSP matching in Canada is 100% match, up to 5% of your salary.

On my hypothetical 2019 salary of $60,000, I could have earned $3,000 in matched RRSP contributions for 2019.

Opportunity cost: $3,000/year

 

4. Government-provided retirement benefits

Stay-at-home parents lose out on CPP (Canada Pension Plan) benefits since it’s based on earned income. Based on my hypothetical salary entered into the CPP calculator I would’ve received $8,000 per year in CPP benefits had I continued working.

Opportunity cost: $8,000/year

 

5. Perks and discounts

This is a hard one to calculate since there’s such a wide range of perks and discounts that companies can offer. At my job, I had access to things like:

  • Free or discounted event tickets.
  • Group discounts on services and products.
  • Free parking (even when I wasn’t working).
  • Occasional free food or swag.

These perks and discounts could’ve saved us around $200 per year.

Opportunity cost: $200/year

 

Total opportunity cost 

Let’s take all the lost income listed above and tally up the opportunity cost:

ExpenseOpportunity cost of one stay-at-home parent
Earned income$44,074
Extended health benefits$3,720
Company-provided retirement benefits$3,000
Government-provided retirement benefits$8,000
Perks and discounts$200
TOTAL:$58,994

 


Part 4: The final cost of one full-time stay-at-home potent

Based on the math I’ve presented above, this is the final cost of one full-time stay-at-home parent:

Savings realized by having one parent at-homeOpportunity cost of having one parent at-homeDifference
$45,021/yr$58,994/yr$13,973/yr

Final cost of a full-time stay-at-home parent: -$13,973/year

Based on the average assumptions I’ve used in this article, a 4-person family living in the Vancouver area would lose $13,973 in income per year if one parent stayed at home full time. (Assuming a $60,000 salary if the stay-at-home parent were to work instead.) 

 

Part 5: Part-time work (something to consider) 

Throughout the article, I’ve compared the cost of a full-time stay-at-home parent to a full-time working parent. But there’s another option that could trump both those options: part-time work.

Part-time income allows the family to meet their financial needs while still maintaining a less-stressful lifestyle. 

Let’s do the math to see how part-time income affects the finances of our hypothetical family.

Assumptions:

  • One parent earns $80,000 per year.
  • The second parent’s potential full-time earnings are $60,000/year.
  • The part-time income comparisons in this section are all calculated against the above scenario ($80,000 + $60,000 dual-income household).

Additional assumptions:

At $10,000 of part-time income: 

  • The stay-at-home parent can rely on their partner to cover them for their few hours of work each week. 
  • No childcare is needed.
  • The higher income spouse loses most of the spouse or common-law partner credit.
  • All other savings remain the same because the stay-at-home parent still has the time to optimize the family’s finances.

At $20,000 of part-time income:

  • The stay-at-home parent works one to two days a week. 
  • Some childcare is needed.
  • The family eats out a little more.
  • Vehicle costs increase a bit. 
  • Work wardrobe costs increase a bit.
  • The higher income spouse loses all the spouse or common-law partner credit. 
  • All other savings remain the same because the stay-at-home parent still has the time to optimize the family’s finances.

At $30,000 of part-time income:

  • The stay-at-home parent works two to three days a week. 
  • More childcare is needed.
  • The family eats out a little more.
  • Vehicle costs increase. 
  • Work wardrobe costs increase.
  • The higher income spouse loses all the spouse or common-law partner credit. 
  • All other savings remain the same because the stay-at-home parent still has the time to optimize the family’s finances.

At $40,000 of part-time income:

  • The stay-at-home parent works three to four days a week. 
  • They now have access to company-sponsored extended health benefits.
  • More childcare is needed.
  • The family eats out more.
  • Vehicle costs increase. 
  • Work wardrobe costs increase.
  • The higher income spouse loses all the spouse or common-law partner credit. 
  • The stay-at-home parent no longer has the time to fully optimize the family’s finances, so those savings are now lost.

At $50,000 of part-time income:

  • The stay-at-home parent works four to five days a week. 
  • They now have access to company-sponsored extended health benefits.
  • More childcare is needed.
  • The family eats out more.
  • Vehicle costs increase. 
  • Work wardrobe costs increase.
  • The higher income spouse loses all the spouse or common-law partner credit. 
  • The stay-at-home parent no longer has the time to fully optimize the family’s finances, so those savings are now lost.

Spreadsheet used to calculate the numbers (you can download it here in case you want to change the numbers)

financial-cost-of-stay-at-home-parent-spreadsheet

Note: Values in line 3 ‘Total after-tax income of couple’ were calculated using the assumptions listed above and Tax Tips Canadian Income Tax Calculator

 

Comparison

Spouse 1 earningsSpouse 2 earningsCost to the family vs Spouse 2 earning $60,000/yr
$80,000$0-$13,973
$80,000$10,000-$6,291
$80,000$20,000-$2,693
$80,000$30,000+$220
$80,000$40,000-$5,798
$80,000$50,000-$2,877

Based on this comparison, the smallest loss in income (versus earning $60,000 from a full-time job) is at $30,000 of part-time income. In that scenario, a part-time stay-at-home parent actually adds $220 per year to the family’s income!

Interestingly, at $40,000 of part-time income, the cost to the family actually increases. This is the case because the second parent no longer has the time to fully optimize the family’s finances. In addition, the costs associated with going back to work increase.

Also of interest: at $40,000 of part-time income, the cost to the family is roughly the same as at $10,000 in part-time income (-$5,798 vs. -$6,291—a difference of $493). Similarly, at $50,000 in part-time income, the cost to the family is roughly the same as at $20,000 in part-time income (a difference of $184).

I have to wonder then—is it worth the longer hours required to earn more than $30,000 in income? It might be if you enjoy your job and prefer that over spending more time optimizing finances at home. But maybe it’s not worth it to you since it means more hours away from your family. 

To make this decision, do the math with your own numbers. It will help you see if your earnings, costs, and hours align with what truly matters to your family. 

 

Wrapping things up: How much does it cost to be a stay-at-home parent? -$13,973 per year!

Based on the average assumptions I used for each category, a four-person family living in the Vancouver area could save an average of $45,021 per year with one parent at home full time.

But once we factor in the opportunity cost of lost income and benefits, the same family loses $13,973 per year in income if one parent stayed at home full time. (Assuming a $60,000 salary if the stay-at-home parent were to work full time.)

One important thing to consider is that the second parent would need to make $58,150 per year in order to earn an after-tax income of $45,021. This is the break-even point where the second parent’s earned income matches what they could save as a full-time stay-at-home parent.

But finances aren’t the only factor! We can’t ignore the lifestyle benefits of having a stay-at-home parent. These benefits improve the entire family’s mental, emotional, and physical health. 

While they’re unquantifiable, I’d argue that the lifestyle benefits are even more important than the finances. Additionally, these lifestyle benefits could in fact lead to the working parent earning more money for the family. 

Finally, there’s one more option that’s worth considering: part-time work. Based on my calculations, if the second parent works part-time earning $30,000 per year, this would be the most financially-optimal scenario for a four-person family.

Shockingly, a family with the second parent making $30,000 per year in part-time income actually nets an extra $220 per year compared to a family where the second parent earns $60,000 per year at a full-time job! On top of all that, the part-time $30,000 earning family would still realize most of the lifestyle benefits of having a stay-at-home parent.

In summary, evaluate what’s most important to you. Do you need the extra income? Or do the lifestyle benefits outweigh the income? If you want the best of both worlds, consider a part-time job—it may be the best solution!

I’d love to hear your thoughts—comment below and tell us:

  • Do you and your partner work full time? Why or why not? 
  • What benefits and challenges have you encountered because of your choice to have (or not have) one parent stay home?
  • Have you calculated the cost of your decision? (If so, please share where you live and how much it costs your family.)

Finally, I’ve overlooked anything, please leave a comment below. I’m happy to converse with and learn from you! 

Thank you Chrissy for such an insightful article! It has been fun working on this article with you. 

Written by Tawcan
Hi I’m Bob from Vancouver Canada, I am working toward joyful life and financial independence through frugal living, dividend investing, passive income generation, life balance, and self-improvement. This blog is my way to chronicle my journey and share my stories and thoughts along the way. Stay in touch on Facebook and Twitter. Or sign up via Newsletter