Maximize your chances at success before you make the leap

7 Steps to Becoming a Stay-at-Home Parent

by Gary Foreman

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So you want to be a stay-at-home mom or dad. But you're afraid that you won't be able to swing the finances. If that's you, follow these 7 steps to becoming a stay-at-home parent.

Are both parents on board with the goal? Becoming a stay-at-home parent isn't something you can do without your partner's support. It's a major decision for any family. So make sure that you're in agreement.

Discuss both the advantages and disadvantages of having a parent stay home with the kids. Consider the financial and emotional issues. Both partner's roles and responsibilities will change.

One big challenge you'll face is the trap of thinking that your job is harder than your partner's. When finances are tight and tempers are short, it's easy to forget that each of you has a job that's equally important. Now is the time to talk about how you'll handle those feelings.

Review your spending. It's important to know where your paycheck goes each month. No one likes to budget, but you won't be successful unless you know how much you spend and where you spend it.

Between your credit/debit card and bank statements you should have a pretty good idea. You don't need to track every penny, but your "unexplained" or "miscellaneous" category can't be 10 percent of your expenses, either.

Adjust your spending habits. Any worthwhile goal requires some sacrifice. The same is true of being a stay-at-home parent. You'll need to adjust your spending. Don't wait until you quit your job to start.

Start with luxury items and conveniences. Now is the time to find out whether you're willing to live without premium TV channels and fast food. Don't be afraid to make cuts that seem a little painful.

Set aside any money you save. Put it in a savings account. You'll find it handy when you face an unexpected bill after you quit your job.

Put together a stay-at-home budget. You're probably well aware of how much income you'll lose. Add the information from your expenses and put together a hypothetical budget.

Look for areas where staying at home can save you money. For instance, your grocery budget should come down when you do more food prep and cooking at home. The cost of commuting, business lunches, and clothing will all be reduced or eliminated.

Your taxes will be lower, too. Talk with your accountant or HR rep to see if you should change the number of dependents you claim.

Don't expect your estimates to be right on the money. You'll probably be a little high on some and low on others, but do make every effort not to tilt the numbers in one direction to get the answer you want. That won't help you if you decide to stay at home. You'll just become frustrated when your budget proves unrealistic.

The stay-at-home budget should give you an idea of how close you are to your goal financially. You may find that you need to squeeze expenses more than you thought or even find a part-time job to bring in a little income.

If circumstances have put your family in debt, find out how to conquer your debt by creating a plan personalized to your family's budget and lifestyle.

Test your budget. As much as you can, see how close to your "after" numbers you can get while you're still working. For some items, like commuting, you won't be able to make any changes before you stay home, but for others, you will be able to see how realistic your budget estimates are.

Make the decision and switch. After a few months, review your budget performance with your mate. You should have a good idea of whether your finances will support a stay-at-home lifestyle.

Finally it's time to become a stay-at-home parent. Your change should be less stressful. You've eliminated most financial uncertainty. And, you know what's required of both of you to make staying at home successful.

Adjust your plan. Some parts of your plan will work exactly as expected, but others won't. Be prepared to make adjustments in how you spend your time and your money.

Becoming a family with a stay-at-home parent isn't easy, but if you decide that's what you want to do, taking an organized thoughtful approach will increase your chances of success.

Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, and Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.

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