What's That Second Income Really Costing You?
If you or your spouse want to stay home and raise your kids, but think you can't afford to, you're not alone. But you may be mistaken in thinking that you couldn't get by on one salary. More and more women (and men) are finding creative ways to enable one parent to stay home. The methods they use to live on one income can also be used by anybody who wants to lower their monthly expenses, is facing possible job loss, is looking for ways to stretch their income, or wants to start a home-based business.
Calculate the Cost of Working
The first step is to calculate the true cost of having both parents work, so you can evaluate how much the second income is really contributing after work-related expenses are deducted. To do this, make a list of every work-related expense you can think of, no matter how trivial. Some examples are:
- Child care (full day care, after school care, summer camps, etc)
- Transportation (car pool, bus, subway, parking, gas, repairs and maintenance, tolls, wear and tear on your car, auto insurance)
- Clothing (work clothes, shoes, panty hose, dry cleaning)
- Food (office lunches, office parties, vending machine snacks, sodas)
- Professional fees (licenses, dues, subscriptions, clubs)
- Convenience foods (expensive but convenient foods you buy to save time)
Total the monthly cost of these and any other work-related expenses and subtract them from your monthly NET income (after taxes and payroll deductions).
Some Examples of the Cost of Working
- Dry cleaning 5 items/wk - $1300/yr
- Day care - $400/month; $4800/yr
- Lunch take-out 5 days/wk (@$5-$10/day)- $1300 - $2600/yr
- 3 pair of panty hose/wk - $468/yr
- Gasoline-$10 - $20/wk; $520 - 1040/yr
- Daily cup of coffee - $390/yr
See Page Two: What's That Second Income REALLY Worth?