We all know of women (and men) who gave up their jobs and careers to stay home and take care of the children. For some, it is a temporary move. For others, it is permanent.
While it looks like something fairly simple, the decision for one person to give up their job to stay home is in reality a huge one and involves a lot of planning, thinking and discussing.
Carol Yip, founder and CEO of Abacus for Money, says it's not just women who give up their jobs. Sometimes, when the wife is earning more, the husband might give up his job to stay home and take care of the children.
“This is a major change for the whole family and the decision needs to be made by the husband and wife. As such it should be done with the view that you will not change your mind in 10 years' time, because if the husband or wife leaves their job, chances are they may not get reemployed in future. So, it is usually a long-term change,” says Yip.
As this is a big decision, couples should consider if their house is paid up, how many loans they are paying for, their dependents, extended family network and how much they need and how much they will need in future. This includes healthcare, the children's tertiary education and even the couple's retirement plan.
If the couple has just committed to a new house and is still servicing the bank loan, then there needs to be consideration as to how the house loan will be managed on a single income.
“This is where you have to be realistic about the income earning capabilities of the one working spouse. Don't just focus on how much each spouse is earning now – consider their earning capabilities for the future as well,” says Yip.
Something's gotta give
When switching from a two-income to a one-income family, some sacrifices must be made. Among them are:
- Family lifestyle;
- Giving up one car (if you have two);
- Downscaling on healthcare options (instead of going to private hospitals, perhaps you might have to go to the government hospital);
- Giving up the maid; and
- Cooking meals instead of eating out regularly.
Says Yip:
“Urban living is not easy but if you really look at your family, a lot of times there are indulgences that you can do without, such as the maid.
“Usually young couples like to spend on their children. If they become a one-income family, they might have to give up on these indulgences. The couple has to consider if it's something they can give up. It is a change that really has to be discussed.”
Homework
Yip suggests couples do their homework before one of them gives up their job.
For six months, the couple should try living on one income. Put aside the money from the second income.
Of course, this doesn't mean giving up the maid for six months. In such a situation, just do the math.
Couples need to sit down and list all their expenses. This means ALL the expenses; don't cheat or lie!
Can they spend within the limits of one salary?
“If you can't do it in that six-month period then you have to work towards it if you really want to become a one-income family. If after six months, you still have issues, then extend it for another six months. Let the whole family go through this exercise.
“This is when you can also examine how you can save on other areas,” says Yip.
A family that sticks together
If the children are big enough to understand, then couples should involve them in the decision and explain to them the six-month exercise.
“They need to be informed because this will involve a big change in their life. How will they handle peer pressure if their friends have nice phones and you can no longer afford to give them a phone? You can't just suddenly cut these things out. You have to get them to understand; change their mindset and behaviour.
“It's not just the financial aspect that will be a change for them; they will suddenly have a parent who is at home all the time. The children will find they have now lost some freedom.
“Then there is also a change to the whole daily routine. There needs to be a consensus on this; things need to be agreed upon.
“I always advocate families doing things together, even simple things like grocery shopping, because with the limited amount of money coming in, definitely there will be a change in your spending pattern.
“You would probably not eat out as often. You would end up cooking more often. All this is part and parcel of the change in your daily routine,” says Yip.
Support network
Like all major changes, a good support network is important.
Yip suggests families going through the transition to talk to others who have done it. They may have some ideas on how the family can tackle certain challenges.
She also recommends couples to inform the extended family as well because the in-laws might question motives. They might not know that this is a decision that both the husband and wife have made and it can lead to misunderstandings that can even break up a family.
Are you emotionally ready?
For most families, the motivation to give up one income is financial. In addition, one parent gets to spend more time with the children.
However, emotions and egos are often overlooked.
Says Yip: “Imagine cutting your family income down to half. Emotionally and ego-wise are you able to handle it? You will still go out to meet your friends, how will you cope with feeling left out if you're the only one not working? Sometimes that person might feel that they're giving up so much for their family and they're not appreciated. Suddenly, they feel like they have lost their independence and freedom.
“You have to weigh all these factors. All of this goes back to your self-esteem and your reasons for giving up your job and career. You need to examine why you are doing it – is it for your family or is it for yourself?”
There are also the emotions involved when one spouse feels like he or she is stuck at home with no freedom while the other is free to come and go. Additionally, the situation worsens if that stay-at-home spouse feels unappreciated.
Yip suggests families considering the big switch to talk to someone who has a counselling-cum-financial planning background or talk to a counsellor and a financial planner. Emotions, motives and lifestyle changes should be discussed.
Evaluation
After six months, the family needs to weigh the benefits and the sacrifices to see if they are “successful”. Is everybody in the family happy? It is good to have an outsider help assess the situation because sometimes when you assess it yourself, not everyone in the family will speak up if they're not happy.
If it is indeed deemed successful, then the family members need to consider if this is something they want to and can maintain for the next 10 years, at least.
“It's always good to stop and reassess if you do make the switch. It's like your health – if you have high cholesterol levels, you need to keep checking your levels every six months or a year to see if there are improvements. If there is no improvement, then you need to explore what needs to be done.
“It's the same with this. Check every six months or one year – are you improving according to your goals? Are your kids getting better? Are you happier – not just financially; are you fighting less, are you communicating more, do you have more family time? Those are the non-financial goals. And, if you're not achieving these goals then examine what needs to be done to rectify it.”
Crunch time
Yip doesn't believe that one spouse needs to cut off their career totally.
She suggests working from home by negotiating flexi-hours with the current employer. If that doesn't work then perhaps find another job that allows you to work from home for half a day or even three days a week.
This way, there will still be some money coming in.
“There's no right or wrong, black or white; there's just grey. Couples need to sit down and talk about it before making this decision.
“Some cases turn out well - the family saves on tuition fees because the mum is there to help the children with their studies and the husband becomes more productive at work because he has peace of mind.
“In other cases, it doesn't turn out well because one person is jealous of the other who is always out of the house and has all the freedom. The spouse at home starts to feel very intimidated and jealous. Then the one staying at home starts spending a lot of money to retaliate. It can even cause the marriage to break up.”
According to her, some couples forget to plan for their retirement when one spouse gives up their job. When they do realise they have not planned that far ahead, that spouse has to try to get back into the workforce and rebuild their career from scratch.
Giving up one income may not work well for all families. There are a lot of factors to consider and homework to be done before taking the ultimate plunge.
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