I am a Stay at Home Mom. Here’s How I Finagled My Finances to Make It Happen.

The biggest decision Husband and I have made regarding our lifestyle and finances was for me to stay home with Son. That meant a 50 percent cut in our income, but we thought about it quite a bit before Son was even a twinkle in Husband’s eye, and we planned ahead.

Here’s how we made it happen:

1. We did the math. We thought out what expenses we’d be able to cut/save if I stayed home and which would go up. Daycare was easily the biggest expense we’d be able to forgo. We’d also save on gas to and from work, eating out (lunches and dinner) dry cleaning and income taxes (hello lower tax bracket!). We’d see an increase in electricity, water and groceries (now that I’d be cooking more), not to mention all of the new expenses for the baby (healthcare, food, diapers, etc.). Having more than one child can have a huge impact, too. My income was such that we’d still be losing a huge chunk of income, but for some people I know staying home made very little difference in their bottom line. Check out this great second income calculator to help you figure out how much your second salary really brings.

2. Cut unnecessary expenses. I stopped getting my nails done and cut out my daily Dunkin’ Donuts coffee stop. We both started bringing our lunch to work more, and we looked to cut our cable bill and other bills to get what we wanted, but not more than we needed.

3. Started to live just on Husband’s income. Since we knew we wanted to start trying for kids right away we began doing this a few months after we were married (I wish I’d started sooner). We did (do) dip into it occasionally, but we wanted to get used to the idea of living just on his income.

4. Changed our insurances. Instead of the better PPO health plan we went with the HMO, saving us several hundred dollars per month. And we pray for no serious health issues.

5. Paid off or set aside money for big recurring expenses. While I was still working we paid off some life insurance we had so we wouldn’t get that bill when I wasn’t working, and we got a discount on the premiums by doing so (and an extra tax bill, but still worth it). We set aside three years’ property tax payments and a few other once-a-year payments (just in case).

6. Made sure cars and appliances were in good condition. We didn’t want to be saddled with a car payment or large appliance replacement at least for the first three years. We had our mechanic check our cars (which were paid off), bought a new dishwasher and set aside money to replace our AC unit (we did have to replace it) and our dryer (still kicking).

7. Decided to stop adding money to retirement plans. Except for Husband’s 401k (he gets matching funds, and we never throw away free money), we stopped contributing to our IRAs. We decided we’d likely need the money to live on, and when son went to school and I started working again during school hours we’d be able to make up for the lost time.

8. Get more freelance work. Husband is a graphic designer, an occupation very conducive to freelancing. This extra income would (has) allow us to make up for any shortfalls, and give us treats such as vacations and iPods and flat screen monitors.

9. Found alternative sources of income. When opportunity knocks we invite it in. I find bargains and re-sell them, take surveys, participate in market research, and took a temporary job working for Husband’s Uncle (very lucrative, but only lasted a few months, dadgummit!). A friend of mine makes extra money providing after school care for neighborhood kids. We also speculated that Husband would be getting a raise or two, but we didn’t count on it. He has gotten several raises and bonuses (though his Christmas bonus this year was a bit unsatisfying), and they’ve certainly helped!

Thanks to this plan we were able to put much of my salary into savings, creating a nice cushion for what we knew would be “the lean years”. Now, nearly four years later, it’s been a rousing success.

If becoming a Stay at Home Mom or Dad is what you want to do, take a look at your own life and see what’s possible.

I highly recommend it.

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