Should I Work or Stay Home With My Kids?

When parents first find out they are expecting, their thoughts often quickly turn to the logistics of work and childcare. Will one parent stay at home with the child? Will the child attend daycare? Will someone be hired to watch the child in the home? There is no “right” answer to these questions and the answer can change or evolve based on the changes that occur in a family unit.

When making a decision about whether or not you will be staying home, you need to take to ask yourself two basic questions.

First, what is the economic value from working outside the home relative to staying at home? If you decide to work outside the home, you will have four additional major expenses that you must consider: daycare, transportation (car payment, gas and maintenance), clothing and eating out for lunch (and sometimes dinner). You should add up all of these working expenses and subtract this sum from your after-tax income before contributions made to your 401k. Your cost of health care might also be different if you are working versus attaching to a spouse’s policy. So, remember to also adjust for that.

The largest expense from working will likely be from childcare. You have two main options. Daycare centers are often easily accessible. Depending on your part of the country, daycare centers can run upwards of $100 per day per child. These centers are regulated by state and local laws and regulations to keep your child safe. Some people find these centers able to accommodate their work hours, while others find the fixed open and close times that are hard to align with their work schedules. In-home care is another option that working families look into, whether it is bringing your child(ren) to someone elses home for care or having someone come into your home to watch your children. Often, the relationship between caregiver and child is more nurturing in these in-home settings, as attention is solely focused on a small number of children. It might also offer more flexible hours. Websites like and offer a way to locate childcare providers in your area. For a fee, these websites will allow you to search by certification (CPR, First Aid, Nurse, Educational) and salary. These sites also provide you with references and experience.

Second, what is the non-economic value to you from being at home with your children relative to working? Some jobs require a lot of work outside of normal hours, which may not be feasible for a parent going home to a house full of children. Other occupations require extensive travel. You need to take a serious look at whether you can meet the job demands while being a “mom” or “dad”.  Being honest with yourself and your family about these tradeoffs will help you form a plan. Some related questions that you should ask yourself:

Are you able to take days off when a child is sick?

Can you leave work early if a child gets sick?

Will you be able to attend school events for your child(ren)?

In the event of daycare close or childcare canceling, is there a backup plan?

If you chose to stay home with your children, it is important to realize that you are still “working.” Choosing to stay at home, even temporarily, as Charlotte Latvala in “The New Stay At Home Mom” put it, “doesn't mean today's SAHM {stay at home mom} has abandoned her career aspirations or traded her BlackBerry for an ironing board, just that she's more concerned about living a balanced life than proving she's Superwoman.”

It is imperative to remember that what works for one family, may not work for another and that your choice is completely personal. Regardless of what you decided, it is important to form a supportive network of family, friends, and co-workers to support you and your family.

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.