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Stay at home or to work : What is the financial & professional price?

Some of our friends are pregnant or have just had a baby. So the conversation of staying at home or going back to work after maternity leave comes up fairly often. When I expressed my interest to stay at home for a couple of years after we start our own family to one of the soon-to-be moms, she was surprised and said she would never do that because it was too risky to leave her career. What if her husband loses his job or worse what if they get divorced after she stays at home for 10 years and is no longer employable? It got me thinking.

Now staying at home or going back to work after a couple of months with the new born is a battle every parent faces and it doesn’t have a right or wrong answer. I am pretty sure every parent wants to spend as much time as possible with the baby. So this post is not really about whether one choice is better or worse than the other, because ultimately this is a very personal decision.

79% of fathers prefer to work full time whereas 37% of mothers prefer full time work Source : Pew Research Center

But there are long term economics in play here as well. There is no denying the fact that there will be financial/professional/emotional repercussions for each of the choices.  Taking a break will hurt anyone’s career and bottom line.

This post analyses only the financial side and that is on purpose. Most of the time, the financial aspect of the decision is only considered after the fact, after having the baby and parting with the baby on that first day of day care. Most of the stay at home or go back to work posts tackle  budgeting challenges or money saving measures.

This is not a post to convince anyone that they should stay at home or that they should be a working parent. Rather this post is a thinking process on what changes financially/professionally so that we can better prepare for it (as much as possible).

Working mothers different countries compared
% of working mothers by country. Source : Nationmaster

Stay at home or to work : Professional consequences

Employability and Market Value

Women now make up almost half of the U.S. labor force, up from 38% in 1970. Most mothers would want to return to the workforce after the child is of certain age. But after being out of the market for 5 or x yrs, their employability reduces drastically.

Previous work history would make one simultaneously overqualified (for entry level positions) and underqualified (for experienced positions).

93 percent of women who took time off wanted to return to their careers at some point—but, unfortunately, only three-quarters of them were able to do so, and only 40 percent could return to work full time. SourceSylvia Ann Hewlett, Economist

In their famous “Motherhood penalty” research, Professors Correll, S. J., Bernard, S., & Paik, sent out fake resumes for a childless woman and a mom, both equally qualified. They found that the moms were viewed less favorably than the non-moms and were substantially less likely to be hired. The women with no kids received more than twice as many interview requests than moms with equal skills. (Fathers and childless men, meanwhile, received the same number of callbacks.)

So moms either end up taking anything that comes along their way or start from scratch.

Career & salary prospects

The “Motherhood penalty” research also found that with the same qualifications, mothers were offered $11,000 a year less in compensation on average. Even after successfully getting a job, working mothers are viewed as less competent and committed than non-mothers (fathers, on the other hand, rate higher than men without kids). Mothers, on average, earn 4-15% less than non-mothers with comparable jobs and qualifications.

Of 190 heads of state, 9 are women; Of all the parliaments in the world, just 13% of members are women; In top corporate jobs, only 15-16% are held by women; In the non-profit world, about 20% of the top jobs are held by women Source : Sheryl Sandberg, the COO of Facebook


Stay at home or to work : Financial consequences

Years of lost salary : According to the book, “The Price of Motherhood” having a child costs the average college-educated woman more than a million dollars in lifetime income. I don’t know if I will lose a million dollars, but it is easy to calculate the lost salary. It is more difficult to calculate the lower salary after re-entering the workforce and it’s effect on subsequent raises. Suffice it to say that it is quite a bit of money.

Retirement : This is where the real financial toll is. For example, if Sarah earns $100,000, maxes out her 401k and her company matches 100% up to 5% of her salary, every year she misses the opportunity to save $22,000. At the end of 5 years with 5% ROI, her investments would have been at ~$125,000.  This $125, 000 nest egg, in 30 years with 5% ROI will have provided her with $540,242 and if the market is good and she averages 8%, her $125,000 will get her 1,257,832, which is otherwise lost!!

Having a child costs the average college-educated woman more than a million dollars in lifetime income. SourcePrice of motherhood

Social security benefits : I don’t know if social security will still be around in another 30 years, but miraculously if it is still around, lost years in the workforce and reduced salary will translate to less benefits.

Mortgage Qualification : This is not a financial loss per se, but living in a high cost of living state such as CA, I see most of my coworkers need to show both spouse’s wages to qualify for a mortgage in a desirable area. It might be better to get a house that could be paid off with one salary, but sometimes, one salary could mean a house in a poor school district or a not-so-great neighborhood.

A plurality of the general population (41%) says the trend toward more mothers working outside the home is a bad thing for society. 

working mother public opinion

Divorce : Till Death Do Us Part

No one enters a marriage with the thought of divorce (no, I am not considering celebrities here). But we cannot ignore the fact that a LOT of marriages end in divorce. In 2009 in the US, the marriage rate was 6.8 per 1,000 total population and the divorce rate: 3.4 per 1,000 population.

If there is no one to count on to financially support the family, years of lost promotions, atrophied skills and no substantial retirement savings, leaves stay at home mothers in very frighteningly vulnerable positions.

Again, I wanted to stress that this post is not to convince parents on whether or not they should stay home.

How can I prepare to stay at home?

Do I think it is unfair that mothers get penalized? Yes and No. I cannot understand the fact that there is no “fatherhood penalty”, I can’t fathom how having a child makes a woman less qualified whereas that is seen as a desirable factor in a man. But I do understand that childless women have an upper hand in the job market compared to mothers.

Having a child is a choice (yes, I mean it). Staying at home is a choice. If someone makes their career their priority and was childless by choice, I don’t see why a mother, who made a choice to be with their kids should get the same benefits.

With that said, it doesn’t mean we can’t plan or prepare better.

Professionally, I see there are several things we could do. For example,

  • Keep your resume fresh by maintaining a flexible or otherwise part time job in your chosen field
  • Maintain current licenses and certifications
  • Take ongoing education courses to stay updated on issues within your field
  • Continue to network even after leaving the job force
Here is a great TED talk for working women -


  • Start a business and earn at least enough to contribute to retirement savings.
  • Make use of spousal IRA (you can contribute even if you don’t have earned income)

At the end of the day, I will choose to do what works best for my family considering all aspects. I won’t judge others and I won’t let the judgement of others affect me.

I think it is better to weigh all the consequences and options and come to an agreement on how everything will work. With either choice, there will always be a what-if question lingering in our minds. Personally for me, being prepared and knowing all the consequences will help me to be happy with the choice I make.

Stay at home mom intro







{ 28 comments… read them below or add one }

Money Beagle

This was something that my wife and I discussed way before we were married. Having an understanding and agreement is a bigger key than anything else. You have to make sure that both parents (or parents-to-be) are on the same page. I can’t tell you the number of stories I’ve heard where one parent was ‘surprised’ by the thoughts of the other, and the conversation was started after they found out they were pregnant. While circumstances can certainly change, I think having this conversation way in advance is going to be the biggest catalyst to success.



Career is now such an important part for a lot of women, so I am really surprised that this is not discussed more widely. And even the stay at home posts talks about budgeting and stuff. Some calculators try really hard to convince that staying at home is the wise thing based on budgeting. It might be a wise thing or a bad thing based on each individual. But a husband and wife not discussing this is def. an idea for disaster.


Jon - Free Money Wisdom

I am thankful that my fiancee and I have discussed this. She wants to stay at home with our kids. I think it is a shame when women place their career over their family and let their kids be raised by others. I know sometimes it is necessary for the mother to work — but it is a shame how our society upholds a career over being a mother. I think if you’re married and wanting to have kids then you should sacrifice your wants (AKA, a career) to raise your kids and don’t let a day care do it. The early years are the most crucial for molding their worldview and instilling in them Godly values. I am thankful for a woman who wants to sacrifice herself for the sake of our children.


Canadian Doomer (@CanadianDoomer)

“I cannot understand the fact that there is no “fatherhood penalty”, I can’t fathom how having a child makes a woman less qualified whereas that is seen as a desirable factor in a man.”

Really? I though that there was a lot of information about this. I read something a few months ago explaining why we have so few female doctors, or at least so few *practising* female doctors. And, YES, a lot of this is generalizing – no blanket statement ever fits everyone. But generalizations are what form preconceived opinions, after all.

1) Women still do most of the housework. So if husband and wife are both working 40 hours, she comes home to another full-time job. Men are, generally, more likely to come home and relax and recharge for the next work day.
2) Mothers still do most of the child care. Same problem as #1. After her paid job, she still has a full-time job.
3) Mothers are FAR more likely than fathers to take time off because of sick children or unavailable childcare.
4) A woman who has had a baby – with corresponding physical limitations and pregnancy leave – might do it again. (Oh, there’s no logic to that one, since a childless woman is just as likely to get pregnant, but it’s out there.)
5) Women with children are far more likely than men to leave the workforce altogether. As your graphic shows – 5 million stay-at-home moms in the U.S. and almost no stay-at-home dads.
6) If 40+% of Americans think that working mothers are bad for society, want to guess that a LOT of that 40+% are in charge of hiring? If they don’t approve of working mothers, why would they hire one?

Thousands of years of social conditioning aren’t going to change that quickly. :) There are still many people who approve of traditional gender roles – a good father works hard at his paying job and provides well far his family financially while a good mother maintains a nice home and takes care of the children. Obviously, the opposite is that a bad mother ignores her family and home in order to make money while a bad father lies around the house unwilling to work. The ‘fatherhood penalty’ is that men who stay-at-home are considered good-for-nothing louts.



@CD. I guess I could understand, the more appropriate way of explaining what I felt would have been disbelief. The problems I have is, even for stay at home dads when they got back to work they were not penalized as the stay at home moms. By nature this arrangement says that the dad does take a good chunk of childcare, but that is not seen as such in the industry.

But I see what you are saying. I can see how mothers are/can be seen as not as “competent”, I guess I was more upset that they are not given a chance to prove it one way or the other.


Miss T @ Prairie Eco-Thrifter

I am the same as you Suba. We will do what is best for us and I won’t judge others. Every family is different. For my hubby and I we both are career orientated so our plan is to balance that with raising a family. Maybe we will both work part time or something. Haven’t quite figured it out yet.



We go back and forth too. I am scoping how I could freelance and set my own timing and still not lose touch of my skills…


Newlyweds on a Budget

This was such a great well-written and thought out post. This is something that’s been on my mind for a while. I’d like to have children in a few years but I just don’t know how we’re going to do it. I would LOVE to stay at home but I have a great job with amazing benefits that make it hard to leave. I’m not even sure if we could live off my husband’s salary. My hope is that my company would allow me to work part-time but I haven’t seen it done for anyone so I don’t know if that’s just because no one has asked or if it’s because it’s not allowed. Then there is the issue of childcare…oh man. There is so much to think about and consider!


Ryan @ Planwise

There is so much to think about on this topic. I think the best place to start is communicating with your significant other. A decision is going to have to be made on way or another. Sometimes women like the fact of being a stay at home mom, others want their career to flourish and grow, but having that baby could really put a dent in their career.

It also depends on what the employeer compensation and procedurs are, this could also be a huge factor in the decision. As stated everyones situation will vary.
I wish everyone the best of luck


Sustainable PF

Something Mrs. SPF and I have been thinking about strongly. I will share this article with Mrs. SPF – the more information the better!



This is such an excellent post! Very though-provoking. I like your suggestions to continue to network, maintain your skills and take classes.



I want to be a stay at home dad, but the finance is not working out at the moment. We’ll keep working on it and keep crunching the number. I’m ready for a career change so it’s a good time for me. Mrs. RB40 is more driven so she can be the breadwinner for a while. ;)



Part of the reason there’s no fatherhood penalty is the amount of time off. I took a week or two off when each of my kids were born. My wife took a minimum of 6 weeks off.

Completely aside from the motherhood bit, if you take 1/10 of a year off every couple of years, it’s going to hurt your career.



This is a very thoughtful post, well done. You bring out some food for thought on this topic. It think it’s one that’s certainly very personal, and there’s no right or wrong way to do things.

As I see it, there are 2 key aspects to success in this type of life juncture:

1) The 2 partners need to be willing to agree and/or make joint compromises if need be, no matter which path they take.

2) Everyone needs to know that whatever choices are made, they are just that: choices. This means actions have consequences, and tradeoffs are often made. It’s not possible to be everything and do everything, and nobody’s entitled to have everything they want. So, it’s best to make the best decision for you as a couple, and be comfortable with the corresponding lifestyle later.


Financial Samurai

I sense an impending decision/announcement coming! :)

They say being a SAHM is worth $100,000/year. I couldn’t agree more!




Regarding the chart on working women %s across the world…I think it’s important to note that maternity benefits/leave are much more accommodating in other countries. New mothers get more time off. A lot more. In some countries a year. In some countries that time off is paid. Perhaps that contributes to the %s of working women there are the way their cultures are set up, women are allowed to adjust and bond with their new child and not feel like they have to forfeit their career over it.

Great article.


101 Centavos

I wouldn’t have minded being a stay at home Dad. Life circumstances dictated otherwise for us. We’re blessed in that Mrs. 101 has a talent and passion for working at home, and playing good financial defense.


Marie at FamilyMoneyValues

Excellant, excellant post.

As I see it, there are valid and invalid reasons for the motherhood penality. Biologically speaking, the woman has to bear the consequences of pregnancy (with the consequent physical and emotional issues), birth, recovery and nursing of the child. Time off from work is most advisable following a birthing! Jason indicated that he only took a week off when his child was born, but his wife took 6 weeks off. Would you (Jason) have been willing to take off the 6 weeks and let your wife go back in one? Biology is a valid reason to take time off. BUT, too much emphasis is often placed on the biology of the issue.

Once the child is past the nursing stage, there is no physical need for the mother to be the one attending, yet most often, the female takes charge of caring for ill children, taking time off to get them from school, get them to the doctor, and stay home with them while they are sick. Father’s need to be more willing to share this responsibility! Talk to your partner about this too.

Good suggestions on trying to stay involved with learning and part time work Suba. I loved the TED talk as well. Good luck with whatever decisions you are contemplating. I found having children to be very worthwhile!



You’re so right that it is quite a personal decision. I’m still undecided on having children, but if I did I’d like to work part time after the first 6-8 months, but that is way easier said than done. It bums me out that so many companies discriminate against mothers who have been out of the workforce who want to get back in, even though they’d never admit such a thing. Most all of the women I’ve worked with who got pregnant, came back to work full time right after completing their maternity leave. I’m not sure I’d be able to do that mainly because of the emotional fear of trusting someone else to care for my child for so many hours while they are so young, and I think I would have a really hard time focusing on my work thinking about the baby all day long. -Sydney


Sustainable PF

My co-worker and I both won coveted IT Intern jobs in 2002. She was a stay at home Mom for 18 years but used her house, budget, personnel and resource management, as well as her technical training to her advantage. She tailored her application and resume to highlight competencies and experience running a “small business” (a family!).

Her creativity and ingenuity got her the job, at which she is fabulous at doing. Smart lady.


Jen @ Master the Art of Saving

I never really thought about the big picture when I stayed home like my husband wanted. Now, my kid is 9 and I’m still at home. I never finished college, never had a “real” job and never began my career. I was young and didn’t think there would be any issues. Great post, Suba. :-)


SB @ One Cent At A Time

he main cause of our house feud is her sacrifice in favor of my career. Like a traditional Indian family we took it granted and never realized the opportunity loss. Now after 7 years out of college she can never get back her career in Chemistry.



Interesting article and very timely for me (my wife is pregnant). We are thinking through this exact decision right now on our “baby-moon” in the Bahamas. Our thought process is that my wife will work part-time and save enough to cover about 35%-40% of our monthly rent and use the rest of her earnings to fund her solo 401k since she is self-employed. My income will fund our other living expenses and “fun-money” and of course our savings plan, which is always paid first! I am very happy with this strategy, but it will be interesting to see how it works in practice. I am sure adjustments will be necessary, however I am much more comfortable going into this with a financial action plan rather than just winging it.


First Gen AMerican

When I first started working, I had a great mentor that would tell me all these unwritten things that went on. He was African American and took me under his wing because he knew I grew up in the inner city. Anyway, he was telling me how he got promoted after he was married and again after his wife got pregnant. He told me that when a man starts a family, he is seen as less of a “flight risk.” It’s harder for him to just up and quit because he’s got bills to pay and mouths to feed. When a woman settles down, I can easily see how she is seen as more of a flight risk…to stay home with the kids or be a trailing spouse and follow her husband’s career.

Great research on this article as usual. It wasn’t lost on me by the way that the countries who have the highest numbers of working mothers also have a lot more family friendly working environments and policies. If North America truly wanted more women working, they would change the policies to make easier to do so, but like others say, if 40% don’t approve, then it’s unlikely major changes will happen without a change in mindset first.


Thomas - Ways to Invest Money

My wife and I just had this conversation a few months ago as we are looking to have our first child. We think that you have to find something that works for your family. Right now though we are in a good situation it does not make financial sense for her to quit her job or work part time. Though we will end up spending a lot for daycare its nothing compared to the amount we would lose from here losing her income from her job. We have decided that for now just taking the maternity leave and her vacation will be all we are willing to do at this moment. Again this is all up in the air and could change since I had a friend whose wife who went into depression when she went back to work after the birth of their first.


Paula @ Afford Anything

Great post, Suba. This is an important issue that I’ve been thinking about a lot, lately, as more of my cousins and relatives have children. It’s tough to figure out what a person should do, and it’s a very personal choice, but it has HUGE consequences, and women have to deal with a “motherhood penalty” no matter what. It’s a hard double-standard … as you said, fatherhood doesn’t harm a man’s career in the same way that motherhood harm’s a woman’s career.



I think the issue varies tremendously based on profession. My wife is a teacher and in that line of work it is much easier to leave the workforce and return in a few years than it is for those who work in business.



I chose to become a stay at home mom 13 years ago. Righteously, I took to the job and had four little ones within 7 years. I loved my time at home when they really needed my attention and care. I used to be one of the only moms at the park that was full of nannies. Now, they are all school aged and I am BORED. Yes, I do the volunteer thing, I have hobbies, I clean the house. But, I lost my self in being a mom. I would love to work. I would love to earn a paycheck.

I don’t have any answers. I would have been so sad going to work with an infant at home. I am just realizing the long term consequences of leaving a career. Going back to College is duanting, taking a menial level job seems like a waste of time.

Any words of encouragement would help.

Stay at home mom of 13 years


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