In your financial planning as you and your partner consider the implications of living on one salary for a period of time, ask yourself if you have the resources to cover your expenses. Can you really live on one salary? If yes, for how long? And, what are the long-term financial implications if you do pause your career?
In 2000, when Lisa Tankersley and her husband sat down with their accountant to review their family finances, he told them the high cost of day care was putting an undue burden on their bottom line.
Lisa was a project manager at a telecommunications start-up. The financial rewards were not in the salary at hand but in the hoped-for bonus that would come when the company was either acquired or went on the public stock exchange. Meanwhile, her husband was an engineer at a semiconductor company.
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His job was stable, the benefits were good, and, at that time, he made more than she did.
When I interviewed Lisa, she said, The accountant told me, Its probably not worth it for you to work, and I believed him Her voice cracked with anger, indignation, and self-reproach as she spoke.
In hindsight, Lisa said she was shocked the accountant didnt discuss the long-term financial implications of leaving the workforce. He didnt suggest alternative ways the family could cut expenses during the burdensome preschool years. He didnt recommend she find a more lucrative job at another company. He looked at their tax returns and told them her salary was not worth the cost.
The truth is the accountant, her husband, and Lisa herself viewed her career as secondary even though she was working as many hours as her husband and the theoretical upside was potentially much greater given she was working in the high-risk, high-reward start-up world. As a result, the cost of child care was compared against her salary, not half against his and half against hers.
Couples make children together. The cost of caring for those children should be spread across both incomes, not against the income of one member of that relationship. But in the vast majority of cases, that is not how couples do the accounting. The cost of child care is measured against the mothers salary, rather than against the salaries of both parents, when determining what changes, if any, need to be made in terms of work-life integration.