There was a time when dual-income households were more of an exception and less so the norm. But these days, it's fairly common to have households where both spouses work. According to the Pew Research Center, back in 1970, only 31% of two-parent households had two working spouses. Today, that number is close to 50%. If you're married, you may be wondering whether it makes financial sense for your husband or wife to work. While the extra income might help pay the bills, you'll need to consider the costs of having your spouse pursue a career.
The cost of going to work
Most Americans have to spend money in order to work. Take commuting costs, which can be several hundred or several thousand dollars a year depending on where you live and your method of transportation. But an even greater work-related expense that today's families face is child care.
The average American family currently spends over $10,000 a year on full-time day care center care. Meanwhile, the average family that uses an after-school babysitter spends close to $8,000 a year. And for families that employ a full-time nanny, the cost can easily near the $30,000 mark. It's therefore not uncommon for families to have one parent stop working once children come into the mix, especially in cases where the cost of child care equals or exceeds the lower-earning spouse's income.
While commuting and child care are typically the biggest expenses associated with going to work, there are other less obvious costs to consider as well. Clothing and dry cleaning, for example, can eat into your net income, as can incidental expenses like work lunches and office-related obligations (think get-well baskets for injured coworkers, holiday gift exchanges, and the like).
Crunching the numbers
If you're not sure whether it pays to have your spouse work, this helpful calculator can help you run some numbers and find out:
This calculator will help you weigh your salary and benefits against the costs you'll incur by going to work to see whether it actually pays to have a job. Let's say you input the numbers and it turns out you'll gain $1,000 a month by having your spouse work. That's enough money to change your financial picture. But if you only stand to gain $100 a month with that second income, you can more easily cut corners to make up the difference.
Other avenues to consider
If having your spouse work full-time doesn't make sense financially, you might try exploring different options where the cost of going to work isn't quite as high. For example, if child care alone is enough to virtually wipe out your spouse's salary, it might pay to have him or her take on a part-time job at night or on weekends when you're not at the office. That way, you can eliminate the need for child care and retain more of your spouse's earnings. If you have school-aged children, your spouse might also look at finding a part-time job during the day.
If part-time work isn't an option, there are still ways to trim the costs of going to work. You might, for instance, try carpooling to lower your commuting costs. Better yet, you can sign up for commuter benefits if your employer offers them and pay for your travel expenses with pre-tax dollars.
Along these lines, you can sign up for a dependent care FSA, which lets you use pre-tax dollars to pay for your child care expenses. Couples who are married and file a joint tax return can put up to $5,000 a year into a dependent care FSA, while parents who are married but file their taxes separately are allowed up to $2,500.
Of course, the decision to have your spouse work shouldn't just be about the short-term benefits; there are certain long-term consequences that come with not working. For one thing, your spouse might limit his or her Social Security benefits by taking a break from the workforce. Social Security benefits are based on a person's top 35 years of earnings. If your spouse only works for 30 years, he or she will have five years of $0 in earnings included in that calculation. Furthermore, taking just a few years off from work could make it more challenging for your spouse to get back in the game later on.
Finally, consider your personal finance picture and what it will look like if your spouse works or stays at home. If you can manage just fine on one salary, having your spouse at home may improve your family's quality of life. On the other hand, if losing out on that extra salary means increasing your likelihood of going into debt, it probably pays for your spouse to work, even if that additional income is minimal at best.