Wednesday, May 14, 2008

The Bottom Line

Probably the most difficult sacrifice of leaving the workforce to stay at home is the money.  There are undoubtedly many women who would like to make the choice to stay home but feel that they cannot afford it.  And in many cases, they probably can't.  

There are a lot of reasons given for why households today might require two incomes rather than one.  One of the most common is that we have grown accustomed to an expensive lifestyle.  A lifestyle that is often funded via credit, and then demands years of work to pay for.  And though I think there is a lot of truth to this argument, I think it is an oversimplification of reality.  Other factors are also at play.  For instance, companies don't offer the same health care and pension plans that were commonly offered during the 1950's, when single wages supported families.  Two wages are often required now to compensate for the those losses in benefits.  Also, real wages (salaries calculated in proportion to inflation) have not risen much since the '50's as well.  This means that more money is required to buy the same amount of stuff.  

Apart from these reasons for why a couple may need two incomes, there are also arguments about why a couple should want two incomes.  Retirement is the most obvious.  The truth is, I could be working right now, saving up my income for retirement.  And with the powers of compound interest, the dollars I earn now could be worth a lot more (A Lot More) than dollars I could potentially earn later on.  

Given these arguments, clearly we can see that choosing to opt out of the workforce is indeed a sacrifice.  I am definitely giving something up--something that is highly valued in our society.  But, what I sacrifice in income I make up for in other areas.  Areas that I suppose do not have the same monetary value, like greater relational quality in marriage, health, and creative energy, but are valuable to me.

In the end, the decision to say adios to income is one that only a couple can make together, based on their own personal values.  I will say that generally speaking, often what we need and what we want are two different things.  In my relationship, the money we need to pay the bills, etc. is far less than the money we might want to retire earlier or fund a vacation.  

Finally, if you are in a situation where a second income is currently required to finance your lifestyle, but would prefer to stay home, I would encourage active planning now.  Sit down and chart out a strategy to pay down debt, save more money, and live on less.  Living on one income is possible, even a modest income.  But short of winning the lottery, it doesn't just happen overnight.  For that matter, I would encourage all couples to try to modify their lifestyle so that they are living on one income, even if you're making two.  Sock away the other income for savings or retirement or vacation.  That way, if one of you decides at some point down the road that you would like to stay home (or if one of you has to stay home due to health, etc.), then the transition will be much easier.  

The bottom line is that your bottom line will suffer with the loss of an income.  Even my cuts in spending do not come close to the loss of my wage.  But for me it has been worth it, and it has been possible.  

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