Quote Of The Week: How Staying Home With Your Kids May Cost Way More Than Childcare

day careMany new parents want to stay home with young children, but the decision to stay home is a complex one involving many factors, including daycare costs.

Here’s what happened when Michael Madowitz, a think tank economist, tried to research exactly how much it would cost the family if his wife stayed home with their young children. He ended up writing a program to compute the total cost, and was astonished when he saw the final tally, as told to Fortune Magazine:

“The results surprised him: He had assumed that taking a break from work might cost about as much as a car, but, in fact, it was “closer to a house,” he says.

The average American woman taking a 5-year break from her career starting at age 26 will lose out on $467,000 in income, wage growth, and retirement assets and benefits over her lifetime. An average American man of the same age will lose $596,000.

How does the price one pays for taking a career break compare to the price of childcare?

Even in Washington, D.C., where child care is most expensive in the country at about $1,400 per month for a four-year-old, paying for five years of care will run a family $84,000. A steep price to pay, but much lower than the $500,000 in income lost if a parent decides to take on the responsibilities of childcare him or herself.”

Valentina Zarya, “Staying Home With Your Kids Will Cost More Than Childcare,” Fortune Magazine, June 22, 2016

 The Takeaway: Want to run Michael Madowitz’s calculator for yourself? You can find it here.

 

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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