During your first year as a parent, surprises come daily. Who knew that a baby could sleep so little, cry so much and crawl so fast? Many parents are also surprised by a new desire to stay at home after their first year of parental leave – even some of the most career-driven people decide they’d rather stay home instead of returning to work right away.
The big question of course is: can you afford to stay home? Let’s take a look at the numbers to find out.
First, you need to evaluate which government benefits end after the first year of parental leave and which keep going. Employment Insurance benefits, for example, are paid for a maximum of 50 weeks, so you know that income will stop after the first year. But other credits and benefits will carry on. For example, the Universal Child Care Benefit will continue to pay you every month until your child turns six.
You’ll also want to take a look at the tax-related benefits that you can take advantage of as a stay-at-home parent. For instance, your partner will be able to claim you as a dependant, which can really help come tax-time.
And finally, if you stay home there are some expenses that you can avoid altogether. Probably the biggest saving is that you won’t need to pay for child care, which in most parts of the country is a major expense. But don’t forget about the other costs that go with working outside the home — like transportation and work clothes. While smaller expenses individually, they can quickly add up and can be eliminated by staying home.
To figure out what will work for you, take a look at two budget scenarios — one based on going back to work and one based on staying home. There are some great online budgeting tools you can use to help you do this. We’ve also created a worksheet that can help make it even easier for you to create and compare budgets so you can make the decision that’s best for you and your family.