tax brackets

Should Both Parents Work?

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The birth of a child is one of the most amazing, memorable times of a person’s life. I remember the birth of our first daughter, Alana, and how I truly understood the expression, “walking on air.” The births of each of our other children were equally as amazing.

With the birth of a child, or perhaps your second, or third, or sixth in my case, comes an important question. Does it make sense for both parents to return back to work? There are many factors to think about, financial and non-financial, but here are some of the financial elements:

Daycare Expenses: The cost can vary significantly, but a typical range can be $800 to $1,200 per month per child. If you have one child in daycare and are paying $12,000 per year, the cost may make sense, depending upon income, but what about two children in daycare with expenses of $24,000 per year?

Commuting: If you take mass transportation into NYC from NJ, you may have to pay for parking at the local train station, the PATH train to NYC, and possibly the subway. If you drive into NYC the toll is at least $11.75. That comes to $59 a week in tolls and approximately $3,000 a year!

Dining Out: Almost everyone likes to go out to lunch a couple of times a week to break up the monotony of work. If you spend $10 twice a week, this adds up to $1,000 a year. Also, if both parents work, then you may be more likely to order take-out more often during the week due to time constraints. This may add another $1,000 to $3,000 a year.

Taxes: My favorite subject. This really depends upon your bracket, but even with a parent in the 15% federal tax bracket, once payroll taxes and state taxes are included, at least a quarter of your earnings will go towards taxes. Although, you do get a credit of around $600 for each child in daycare up to a maximum amount of $1,200.

If you have two kids in daycare and work in NYC, you can easily spend $40,000 for the privilege of working! Unless you are able to work from home, have a flexible schedule, and even have a grandparent help out, working doesn’t sound so appealing.