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The cost of going back to work after your baby is born

Many of us weigh financial pros and cons of returning to work after baby is born. Here are some costs beyond childcare to consider.

Cost of going back to work after baby is born

When you add a little bundle of joy to your family, you’ll make a lot of decisions. Some will be small, like how many cute baby onesies you really need. (Answer: probably not as many as you think!) However, others are huge and have the potential to impact your family life in a lasting way, like whether you want to go back to work after parental leave, or become a stay-at-home parent.

The best thing you can do for you, your partner, and your baby right now is to look at this decision in several lights:

  • The financial implications of going back to work vs. staying home
  • The emotional impact that your decision could have on both parents
  • What solutions are available to you, including childcare and work options, and how they might impact your lifestyle both in the short and long-term

Let’s start by looking at financial benefits and drawbacks. While of course, the decision has emotional and practical components as well, knowing long and short-term costs of both options can help you see a more comprehensive picture of what may develop one, five, or even ten years down the road.

The financial cost of returning to work

Although returning to work feels like the financially savvy thing to do, this isn’t always the case. If the partner who is considering staying home is the breadwinner for your household, losing the salary may be a bigger hit than your family can cope with. However, if you and your spouse or partner have relatively equal salaries, or your spouse could potentially cover your living expenses with his or her salary alone, staying home may be a financial benefit for your family.

If you return to work, you could face several heavy expenses. First and foremost, most parents are shocked at the cost of daycare. For babies and toddlers, the average cost of daycare centers is $10,000 to $11,000 per year nationwide. For preschool-aged children, the average cost is a little bit less – around $9,000 a year. Still, those are some big numbers to suddenly have to work into your budget. In some cases, given the high cost of childcare, you might actually lose money by going back to work.

Explore other childcare options, like a part-time nanny, or nearby family or friends (if they’re willing and able) to help reduce the cost of childcare. Look into whether or not your employer offers subsidized childcare options, including the option to set aside a portion of your earnings in an FSA. Check with your local church or community center for childcare choices, or see if your local government offers assistance.

Costs other than childcare that you should think about include clothing for your job, transportation and workday meals.

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The financial cost of staying at home with your baby

If you plan to take off several years to stay home with your child and avoid paying the high cost of daycare, you run the risk of losing employer benefits, if they are offered, such as:

  • Access to workplace benefits like healthcare (if this isn’t available through your spouse or partner), an HSA, and a retirement savings plan
  • Employer-provided freebies or discounts on technology  like a laptop or a cell phone
  • A 401(k) employer match

You could also lose:

  • The continued career and salary growth that comes with time in the workforce, a big contributor to the lifetime wage gap between women and men. Some studies project that the wage gap will cost millennial women $1 million over their careers. One of the factors that contribute to the wage gap is the disproportionate amount of time that women spend caring for the family.
  • Career growth and honing valuable skills, both of which come with time in the workforce
  • Social Security benefits that accrue while you’re in the workforce, which could result in a lower payment to you when it’s time to collect. Social security benefits are tied to your lifetime earnings. In 2017, retired men collected an average of $1,519 per month compared to an average $1,202 for women. The lifetime wage gap is partly based on the number of years in the workforce.

You’ll notice that a few of the costs of not returning to work are fairly forward-thinking. It’s important to frame your value as an employee in your given field based on the ongoing training you receive, work you do, and industry changes you’re up to speed with because you’re in the thick of it every day.

When you step away from your career, it’s possible that you’ll lose some of the experience that can only be gained while on the job. This might mean getting hired back into the workforce several years down the road at a lower salary or having more limited benefits available to you as a new employee.

Non-financial factors that may sway the work or stay-at-home decision

The decision to stay home with your kids or return to work is so much more than a financial one. You also need to reflect on emotional pros and cons, lifestyle preferences, and responsibilities that you and your partner carry in your relationship (and how those might change). The emotional cost is real. Don’t ignore it.

If you go back to work:

Some parents go back to work and feel the emotional drain of being pulled in two different directions. Following your gut, and knowing what works best for your family’s finances, can help to ensure you make the best decision for you.

If you stay at home:

Many stay-at-home parents feel a sense of isolation, and they miss the creativity and freedom that their previous career provided. On the other hand, some stay at home parents love it so much they can’t imagine re-entering the workforce, even after their kids head off to kindergarten in a few years.

Create a game plan in advance to sidestep some of these common emotional pitfalls:

  • Know who you can ask for help (including some new friends who are also new parents) — even if it’s just to give you an hour away from the house without the kids.
  • Get up to date on paperwork. Even if you’re not bringing in any taxable income, you’re actively contributing to your household. If you were no longer there, how would your spouse handle childcare and household management? A stay-at-home parent is worth at least $115,000 a year. An individual term life insurance policy can provide peace of mind, and is independent of your employment status. Considering a life insurance policy as a stay-at-home parent can be a smart move for your family.
  • Clearly define new responsibilities between you and your partner. Just because one of you is staying home to care for an infant full-time doesn’t mean that you should also be responsible for 100% of the “non-work” responsibilities that come with adulthood.
  • Find a group of people who are also staying at home! You’ll find parent groups, playgroups, and groups specific to interests and identity, like stay at home dads or work from home moms. Connect. This group can act as a support system when you feel alone.
  • Define yourself. Just because you’ve walked away from the workforce doesn’t mean you don’t have interests, hobbies, friends, or goals.

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How other families navigate the “stay home” question

The good news is there is no one “right” way to navigate the “should I stay home?” question. And the solution may change from year to year, or from child to child.

For example, Emily, 32, a former magazine editor, made the decision to primarily stay at home, with the idea that she would consult and write freelance articles. By the time her daughter was one, Emily got an offer to work three days a week on a contract basis in an office. “At that time, I was ready to dip my toe back into commuting and the office life, and I feel doing some work during the year I had taken to be at home kept me in the loop. It required some late nights and some last minute childcare to make my at-home writing business work, but for me, I was able to keep the best of both worlds.”

Nobody can tell you what’s best for you and your family, financially or emotionally. Talking with a financial planner can help to open your mind to all of the options on the table, and make an informed decision based on what you want out of your life and for your family. From there, you, your partner, and your planner can help put together an actionable game plan to insulate you against financial instability as you make the transition to parenthood.

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Mary Beth Storjohann, CFP® and Founder of Workable Wealth, is an author, financial planner and accountability partner working to help clients in their 20s-40s across the country make smart, educated choices with their money. Her recent accolades include the “Top 40 Under 40” by Investment News, “10 young Advisors to Watch” by Financial Advisor Magazine, and “10 of the Best Personal Finance Experts on Twitter.” She frequently appears on NBC as a financial expert and her expertise has been featured in The Wall Street Journal, CNBC, Forbes and more. Opinions are her own.

Haven Life Insurance Agency offers this as educational information. Haven Life does not offer investment or tax advice and encourages you to seek advice from your own legal counsel, investment advisor, or tax professional.

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Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit:

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