Fathers, you can afford a stay at home mom, but do the math first

Earlier this week, the blog post “Fathers, you can’t afford a Stay-At-Home Mom” went viral and was featured on a segment on “Good Morning America” on Tuesday. One of the mysteries of the Internet is why now since this post is dated March 20, almost 3 weeks ago. Anyway, it’s actually a touching post as the author, Steven Nelms, arrives at a total annual salary of $73,960 that he estimates his stay at home wife would earn and says she is so valuable he can’t afford her on his salary, which he does not disclose but mentions they are in the $12,951-$49,400 tax range and mentions it’s “nearly double my actual income”.

It is touching. I wish I heard more appreciation in general for stay-at-home parents. However, none of this should be a surprise. Four years ago when we decided that I was going to stay home with a 2-year old MBA Son, we did quite a bit of analysis to make sure we could in fact afford it. Granted, we are analytic people, MBA Dad and me. When we lived together and split our expenses before getting married, he actually counted my share as Accounts Receivable on his spreadsheet each month.

So, here is how we decided we could afford for me to be a stay-at-home mom.

As is the case with most of our decisions, there was a detailed spreadsheet. We have always had an income statement showing income and expenses that is actual (looking back) and projected (looking forward) for each month of the year. The obvious changes to the budget included stripping out my income and in keeping with the matching principle of accounting, also stripping out daycare and babysitter costs for MBA Son. We were also able to exclude certain expenses I incurred due to my commute and working full-time, such as coffee on the way to work each morning, lunches, dry cleaning, and extra gas and likewise, we also had to add some incremental expenses that would arise from staying home, such as extra groceries for me and a budget for activities outside the home for MBA Son. There was a tax impact as well so we modeled out what the lower tax burden would look like for us.

Income less expenses less taxes equals savings. We determined that we would require a higher level of savings since we were losing my 401(k) contribution so we wanted to make that up as much as possible.

I also wanted to be sure I would still be employable if I decided to return to paid work. So, I called a recruiter I knew, shared my concerns, and asked him for his honest opinion. He assured me that I would, but it was important to keep up the skill set. As a result, last year I took a class to prepare for an exam for corporate treasury professionals.

It was only when we were comfortable with the numbers before the fact that we decided that we could afford for me to stay home.

Again, I admire the intention which I feel is an endearing one, the message of wow, you are so good at what you do I cannot afford you! Still, I do think there are some weak links in the author’s analysis, some of which are hinted at in the 1200+ comments. First, there is the use of national averages but most of these services, especially the nanny/babysitter, are priced in very local markets so costs vary widely. He uses the “national average weekly salary of a full-time nanny is $705, that’s $36,660 per year”. Using some back-of-the-envelope analysis, he is assuming a 40 hour workweek and a 52 week year and therefore would pay the caregiver $17.625 per hour. Well, we know he lives in Plano, TX so I went to Care.com and input his zip code to obtain a quick estimate of what full-time costs in his area and it is $14 per hour. Also, he is using a 52 week year and I can tell you from experience that full-time nannies usually negotiate vacation time. Therefore, 50 weeks is a better estimate. ¬†50, 40-hour weeks at $14 an hour is $28,000 per year.

I am not saying this is what he should pay for care; this is more to illustrate how some small tweaks in the assumptions make quite a material difference. When we had a full-time nanny when MBA Son was a baby, we paid $16 per hour for an experienced nanny to care for one child, and this was in a very high-cost area of the country, lower Fairfield County in Connecticut. Care.com now has my old zip code at $17 per hour.

Also, I do think there are some synergies between the nanny and the professional cleaners, shoppers and chefs Nelms mentions in his post. Usually the nanny will take care everything relating to the child including laundry, cleaning and cooking. That reduces the hours needed for these services, but there is the question as to whether one would pay for professional services all the time. As an example, if you heat up a frozen meal from Trader Joe’s, would you pay the rate of a professional chef for that? Also, included in the cleaner’s price is the price of all the supplies they bring with them, and if cleaning at home you usually have all the cleaning supplies, so again, some double counting here in the rate.

Some of these others we can debate all day long, and Salary.com has an annual survey that estimates what stay-at-home parents would make and it is much higher than $73,960. ¬†Still, based on these numbers and analysis in the post, to answer the question as to whether or not he can afford a stay-at-home mom, I simply can’t say based on the numbers laid out. If he worked for me, I would make him resubmit the numbers.

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Microsoft Excel, a key ingredient in our decision for me to stay at home

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