The cost of childcare is high and it’s only rising. For example, the average two-parent, two-child household in Maine devoted over 12% of their annual income to childcare in 2015. Even in less expensive states, like Louisiana, the same family could expect to put around 7% of their annual income toward childcare.

With those whopping figures, it’s no wonder the percentage of stay-at-home parents is increasing after years of a steady decline. If your family is in the middle of the “work or stay at home” conversation, you’re certainly not alone. And this can be a difficult conversation to have.

Deciding whether to work full-time or stay at home full-time is about more than just the bottom line. There are social, emotional, and lifestyle factors at play here, too. Let’s look at each of these factors and then explore some ways to make parenthood mesh, whether you decide to work or stay at home.

Is the Cost of Childcare Worth It–The Bottom Line

The world of personal finance is full of little “rules of thumb” to help guide your decision-making. These rules aren’t hard and fast, and should always be examined in light of your particular situation. But they are helpful, especially when you’re just beginning to think about big questions like how much house you can afford, what type of car to buy, or whether to stay home or work full-time.

Unfortunately, there’s no tried and true rule of thumb available for the work or stay-home decision. But this tool from Childcare Aware of America could be a good place to start. The tool looks at average childcare costs by state.

So here’s our general guideline to start this money conversation: If the childcare you’re most comfortable with will eat up a higher percentage of your income than is average for your state, it’s time to seriously consider staying at home.

In general, it’s best to keep your childcare costs down to 10% or less of your household annual income. And this should be the cost you actually pay for the type of care with which you’re most comfortable.

Typically, childcare centers are the most affordable options, though in-home daycares can offer comparable prices. Nannies and other one-to-one care options are often much more expensive.

However, some parents are only comfortable leaving their child with a nanny or in another extremely low-child-to-caregiver ratio environment. If this is the case for your family, make your calculation based on this type of care.

Another caveat here is that 10% may actually be too much of your income to devote to childcare, depending on your circumstances. If you look at your budget and see that there’s no way you could even afford the less-expensive daycare center with your budget as it stands, consider your other options.

Career Considerations

When you’re having this conversation, it’s easy to focus only on the short-term financial implications of either working or staying at home. This is especially true if you’re relatively young in your career.

Let’s say you’re fresh out of college and in a new career that starts with a $35,000 salary. You become a mom (whether planned or not is irrelevant!), and suddenly full-time care for your infant eats up nearly half of your annual salary.

Unless your husband or partner is a big earner, you may break this 10% rule.

But what if you stand a good chance of getting a major promotion within a year or two? In this case, it may be worth your while to tough it out financially in order to secure that next step in your career. Sure, it’ll be rice-and-beans living for the first part of your child’s life. But after that, you may settle into a better stride financially, and you won’t have to worry about regressing in your career.

Speaking of career backsliding, this is another consideration to make. Whether you’re a mom or dad, leaving the workforce to stay home full-time can have professional consequences. Even short-term breaks of two to five years can make it difficult to get back into the workplace, and you may find yourself re-entering your career a level or two lower than you were when you left.

The best way to soften the impact of temporarily leaving the workforce is to keep your time at home short. These days, many young professionals deliberately have children one to two years apart. Then, mom or dad can stay home until the youngest is in preschool without leaving the workforce for more than five to seven years.

Of course, you can also mitigate career backsliding by maintaining your work skills, working part-time, and continuing to network during your stint as a stay-at-home parent. We’ll talk about all of these strategies in a moment.

Social and Emotional Considerations

As with most money conversations, this one has just as much to do with how you feel as it does with the facts of your budget. And these considerations can go both ways. Generally, though, mom or dad will feel emotionally pulled in one direction or the other, depending on a variety of factors.

Fair warning: you may not understand a strong urge to stay home with your child until that child actually arrives. It’s not unusual for moms, especially, to put off the decision about returning to work until the last minute, and then ultimately decide to stay at home.

So what if you are pulled, emotionally or for social or religious reasons, to stay at home with your child(ren)? In this case, it’s best to try to make staying at home work. Maybe it means that you devote significant time to trimming the budget or work part-time on the weekends.

Living on one income is often more possible than you think. Following your heart, if at all possible, can result in better outcomes for both the parents and the children.

What if, on the other hand, you’re a career-minded person who loves being a parent but can’t imagine staying at home full-time? In this case, you’ll likely be better off emotionally if you work full-time, even if childcare eats up a significant portion of your income.

Lifestyle Considerations

What about the type of lifestyle you’d like to lead? Will you be more stressed if both spouses are working full-time? Or will the stress of living on a tight, single income lead to tension? And what about your time? Would you prefer to have the flexibility for a random day at the zoo, or will you be happy with a good job that still allows for family time?

These are all things to consider when having this conversation. And it’s important to remember that your preferences may change.

For instance, in my family, we both work full-time jobs, but we both have a good amount of flexibility. So we get evenings and weekends as a family, and sick days aren’t stressful for us. We even get to go on the occasional school field trip.

This is easier because our daughter is in full-time daycare, which gives her flexibility, too. If I have a random day off, I can easily pull her out of daycare for some quality time. On the flip side, daycare is available whenever I’m working, and we don’t have to worry about school breaks.

For now, our two traditional full-time jobs are working really well. But when our children are in school, things may change. Then, we’ll have to juggle school breaks, shorter hours in class, and less flexible schedules. At that point, we may re-evaluate the “normal” job routine in favor of a more flexible part-time or work-from-home job for one parent.

Other parents, though, prefer to spend more time at home and with the kids when they’re tiny. Really, this is all about preferences, and will also hinge on the types of jobs both parents are working.

When you’re making this consideration, though, think through how your schedules will affect your family life, and the lifestyle you’d like to have.

Also, don’t forget to work financial considerations into that lifestyle talk. If it’s important for you to take frequent vacations, travel abroad, save for college and retirement, or meet other big financial goals, two incomes may be a necessity. If you’re fine with a quieter, more frugal lifestyle, you might be happy as a single-income family.

Making it Work with Two Incomes

So, how can you make it work if you decide to have both parents working full-time? Paying for full-time daycare for just one child can be a stretch. Adding a second or even third to the mix is even more financially stressful.

Luckily, there are some ways to make the working-parent lifestyle work for you, such as:

  • Opt for center-based daycare. Generally, center-based daycares or home daycares are the most affordable option, and many offer excellent programming and caring staff. To save even more, look at church-based options, which tend to be even less expensive.
  • Consider a nanny share. If you’re only comfortable with the more intimate option of a nanny, trim your expenses by sharing with a friend or neighbor.
  • Work alternate schedules. If you can swing it, consider having each partner work a four-day workweek, so that you’re only paying for three days a week of childcare. Or work opposite shifts so that you need daycare for shorter amounts of time each day. This can be stressful and result in less time together as a family, but it can allow you both to keep working while trimming childcare costs.
  • Take advantage of sibling discounts. Think you’ll have more than one child? Consider having them close enough together to be in a daycare around the same time, as many centers and even home daycares offer discounts if you have multiple children at the same location.
  • Alternatively, opt for a longer space between siblings. If the cost of two kids in full-time daycare is prohibitive, you could alternatively space out your children so that your first is in kindergarten before you have another. You may still need to pay for after-school care for your kindergartner, but that’s a world away from full-time childcare for a preschooler or toddler!
  • Hang in there. If daycare is taking up a significant chunk of your budget, but you’ve decided that two full-time jobs work best for you, hang in there. Keep in mind that daycare is an expense that will eventually end. Trim your budget where you can to make it work, and know that in a few years, you’ll be done with this budget line item and able to make room for other things.

Making it Work with One Income

What if you’re pulled towards the stay-at-home parent route? Or what if daycare would take up well over 10% of your total household income? In this case, here are a few tips to get through those years of living on one income:

  • Find ways to be more frugal. The internet is packed with great ideas for frugal living, including ways to save on groceries, housing, clothing, and more. For the stay-at-home parent, finding ways to cut expenses can be a part-time job in and of itself.
  • Work part-time or from home. Many stay-at-home parents these days are finding that working part-time gives them ties to the outside world, which is healthy. Plus, it brings in extra income. Or consider working from home or launching your own business to bring in extra income while the kids nap or are otherwise occupied.
  • Keep up on your skills. If you’re planning to go back to work as soon as your youngest child is school-aged, take time to keep up on your skills and connections. Take a free online course or go to graduate school, if you can swing the expense. Be intentional about having coffee and lunch dates with old colleagues to stay abreast of the latest industry news. Subscribe to industry magazines and email lists, too. All these things will make it easier to get back into the swing of things once you’re ready to go back to work.

Parenting young kids isn’t easy, whether you’re a single parent, a stay-at-home mom or dad, or a working parent in a two-income household. And both paying for childcare and staying home full-time involve significant financial and personal costs. When making this decision, just be sure you think through all the angles, reevaluate as needed, and know that you’re a great parent, regardless of your choice.


  • Abby Hayes

    Abby is a freelance journalist who writes on everything from personal finance to health and wellness. She spends her spare time bargain hunting and meal planning for her family of three. She has a B.A. in English Literature from Indiana University Purdue University Indianapolis, and lives with her husband and children in Indianapolis.