Can I afford to be a SAHM?

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smi1
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Can I afford to be a SAHM?

Post by smi1 »

DH and I are 40 and 38 respectively. We have a toddler. I have been a SAHM since our little ones birth. Can I continue to be one?

Net worth $1.1 million
No debt
Renting
His Gross income ~175k
Annual expenses with allowances for travel ~65k

Thank you!
starboi
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Re: Can I afford to be a SAHM?

Post by starboi »

Yes :beer :beer
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JoeRetire
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Re: Can I afford to be a SAHM?

Post by JoeRetire »

smi1 wrote: Tue Jun 21, 2022 1:39 pm DH and I are 40 and 38 respectively. We have a toddler. I have been a SAHM since our little ones birth. Can I continue to be one?
Of course, as long as you are still able to live within your means and achieve your financial goals without your income.
This is gonna be my time. Time to taste the fruits and let the juices drip down my chin. I proclaim this: The Summer of George!
delamer
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Re: Can I afford to be a SAHM?

Post by delamer »

If your husband should become disabled or die, are you prepared financially to deal with those scenarios?

Does he have adequate life insurance and disability insurance?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
tenkuky
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Re: Can I afford to be a SAHM?

Post by tenkuky »

delamer wrote: Tue Jun 21, 2022 1:54 pm If your husband should become disabled or die, are you prepared financially to deal with those scenarios?

Does he have adequate life insurance and disability insurance?
This.
Also are you doing Roth (or backdoor) for both of you?
I understand spousal IRA can happen even with one earner.https://www.thebalance.com/what-is-a-sp ... ra-5223061
Topic Author
smi1
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Re: Can I afford to be a SAHM?

Post by smi1 »

tenkuky wrote: Tue Jun 21, 2022 1:57 pm [quote=delamer post_id=6739504 time=<a href="tel:1655837696">1655837696</a> user_id=24124]
If your husband should become disabled or die, are you prepared financially to deal with those scenarios?

Does he have adequate life insurance and disability insurance?
This.
Also are you doing Roth (or backdoor) for both of you?
I understand spousal IRA can happen even with one earner.https://www.thebalance.com/what-is-a-sp ... ra-5223061
[/quote]

Yes! Taxes are filed ‘married and filing jointly’ and hence we contribute to the spousal IRA.
Topic Author
smi1
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Re: Can I afford to be a SAHM?

Post by smi1 »

delamer wrote: Tue Jun 21, 2022 1:54 pm If your husband should become disabled or die, are you prepared financially to deal with those scenarios?

Does he have adequate life insurance and disability insurance?
He has disability insurance through work.
Good point on the life insurance. Will look into getting it. Thank you!
Last edited by smi1 on Tue Jun 21, 2022 2:13 pm, edited 1 time in total.
HomeStretch
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Re: Can I afford to be a SAHM?

Post by HomeStretch »

Does your $65k in annual expenses include everything - income taxes, healthcare, periodic expenses such as a new car, major home repair, etc.?

If your spouse’s income is $175k and your annual expenses are $65k, does that mean you are saving annually the difference of $110k (=1.7x annual expenses)? If yes, you are more than fine to continue as a one-income household.

In addition to delamer’s points, if you have the opportunity to keep your professional skill set/network up-to-date, that can be very valuable in the event your ability to stay-at-home changes or you seek to re-enter the workforce as your child ages.

Is your estate planning in place and does it include power-of-attorneys for healthcare and financial matters for each of you? It’s important that you each have the legal authority and sufficient knowledge of your finances/healthcare to handle all matters for your household in the event one of you becomes incapacitated or a widow(er).
IowaFarmWife
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Re: Can I afford to be a SAHM?

Post by IowaFarmWife »

If you are enjoying what you do and can afford to continue to do it, then absolutely continue to do so! I was a SAHM for a few years, and I can honestly say they were some of the best years of my life and my children's lives.
“The quickest way to double your money is to fold it in half and put it in your back pocket.” —Will Rogers
nerdymarketer
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Re: Can I afford to be a SAHM?

Post by nerdymarketer »

Absolutely and my wife highly recommends it! A few years ago she walked away from a high-prestige / high-pay job to spend her days raising kids.

You are in a good place financially, if your family gross is $175K and only $65K expenses.

One thing we've found is that having one parent focused on "project managing the kids/house" has actually freed me up a bit so that I can be mentally more focused on work... I'm not working more than 40 hours a week, but I no longer have to "spend an hour during my work day dealing with X related to household stuff". Some jobs that doesn't matter, but for my line of work it's allowed me to perform better.
delamer
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Re: Can I afford to be a SAHM?

Post by delamer »

smi1 wrote: Tue Jun 21, 2022 2:11 pm
delamer wrote: Tue Jun 21, 2022 1:54 pm If your husband should become disabled or die, are you prepared financially to deal with those scenarios?

Does he have adequate life insurance and disability insurance?
He has disability insurance through work.
Good point on the life insurance. Will look into getting it. Thank you!
His disability insurance through work may or may not be adequate.

If death/disability occurs, how would you get health insurance for the family?

What is your skill set in terms of finding a job that could bring in a middle-class income?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Marseille07
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Re: Can I afford to be a SAHM?

Post by Marseille07 »

delamer wrote: Tue Jun 21, 2022 2:34 pm His disability insurance through work may or may not be adequate.

If death/disability occurs, how would you get health insurance for the family?

What is your skill set in terms of finding a job that could bring in a middle-class income?
But if you argue this way, no household can SAHM / SAHD. Dual income w/ health ins would be the only option.
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ThankYouJack
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Re: Can I afford to be a SAHM?

Post by ThankYouJack »

You can definitely afford it and with a toddler, now is the perfect time to be a stay at home parent IMO.
smi1 wrote: Tue Jun 21, 2022 2:11 pm
delamer wrote: Tue Jun 21, 2022 1:54 pm If your husband should become disabled or die, are you prepared financially to deal with those scenarios?

Does he have adequate life insurance and disability insurance?
He has disability insurance through work.
Good point on the life insurance. Will look into getting it. Thank you!
By all means get life insurance if it makes you feel better but with your low expenses and 1.1M saved, you may be fine self-insuring. First, I would think about your expenses if you went from a family of 3 to a family of 2 and how they would change - possibly spending less on food, travel, taxes, transportation, hobbies, etc.
I would also consider your husband's social security survivor benefits to see how much the annual benefit would be.
Zeno
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Re: Can I afford to be a SAHM?

Post by Zeno »

smi1 wrote: Tue Jun 21, 2022 1:39 pm DH and I are 40 and 38 respectively. We have a toddler. I have been a SAHM since our little ones birth. Can I continue to be one?

Net worth $1.1 million
No debt
Renting
His Gross income ~175k
Annual expenses with allowances for travel ~65k

Thank you!
You are in fine shape.

To give further comfort, you might consider your family's net worth as a function of age and salary. There are several metrics: https://www.investopedia.com/articles/p ... -worth.asp. Granted, these metrics are crude and imprecise, but at least they provide some semblance of a benchmark. The Stanley metric regarding what one's NW should be, for example, is NW = (age x pretax income)/10. For your family, that would be NW = (40 x $175K)/10 = $700K. You ($1.1M) are well north of $700K, so even based on one salary alone you are roughly on track with that metric and, quite frankly, ahead of a lot of folks your age.

Best wishes to you.
Last edited by Zeno on Wed Jun 22, 2022 7:49 am, edited 1 time in total.
delamer
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Re: Can I afford to be a SAHM?

Post by delamer »

Marseille07 wrote: Tue Jun 21, 2022 2:39 pm
delamer wrote: Tue Jun 21, 2022 2:34 pm His disability insurance through work may or may not be adequate.

If death/disability occurs, how would you get health insurance for the family?

What is your skill set in terms of finding a job that could bring in a middle-class income?
But if you argue this way, no household can SAHM / SAHD. Dual income w/ health ins would be the only option.
I wasn’t really arguing any specific way. I was asking question so the OP can be sure she is considering all the financial implications of her choice.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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retired@50
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Re: Can I afford to be a SAHM?

Post by retired@50 »

smi1 wrote: Tue Jun 21, 2022 2:11 pm Good point on the life insurance. Will look into getting it. Thank you!
Please, don't get drawn into a whole life policy or some other mixture of life insurance and savings. :shock:

It's typically best to use a term life insurance policy. See the wiki for guidelines on how much insurance will meet your family's needs.

Link: https://www.bogleheads.org/wiki/Life_insurance

Regards,
This is one person's opinion. Nothing more.
Point
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Re: Can I afford to be a SAHM?

Post by Point »

You’ll also want to consider the runway needed to get up to marketable speed, and how to keep your skill set relevant.
smi1 wrote: Tue Jun 21, 2022 2:11 pm
delamer wrote: Tue Jun 21, 2022 1:54 pm If your husband should become disabled or die, are you prepared financially to deal with those scenarios?

Does he have adequate life insurance and disability insurance?
He has disability insurance through work.
Good point on the life insurance. Will look into getting it. Thank you!
dknightd
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Re: Can I afford to be a SAHM?

Post by dknightd »

We managed to have a live live at home spouse for many years. We kept term life insurance on both of us.
Retired 2019. So far, so good. I want to wake up every morning. But I want to die in my sleep. Just another conundrum.
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Re: Can I afford to be a SAHM?

Post by AlohaJoe »

smi1 wrote: Tue Jun 21, 2022 1:39 pm His Gross income ~175k
Annual expenses with allowances for travel ~65k
I feel like you must be leaving out something. Surely you can look at those two numbers and come to your own conclusion? What are you leaving out that makes you think you can't do it and have to come ask a bunch of internet strangers?
KlangFool
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Re: Can I afford to be a SAHM?

Post by KlangFool »

smi1 wrote: Tue Jun 21, 2022 1:39 pm DH and I are 40 and 38 respectively. We have a toddler. I have been a SAHM since our little ones birth. Can I continue to be one?

Net worth $1.1 million
No debt
Renting
His Gross income ~175k
Annual expenses with allowances for travel ~65k

Thank you!
What is your annual savings/investment?

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Valuethinker
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Re: Can I afford to be a SAHM?

Post by Valuethinker »

smi1 wrote: Tue Jun 21, 2022 2:11 pm
delamer wrote: Tue Jun 21, 2022 1:54 pm If your husband should become disabled or die, are you prepared financially to deal with those scenarios?

Does he have adequate life insurance and disability insurance?
He has disability insurance through work.
Good point on the life insurance. Will look into getting it. Thank you!
And what is the income you will be giving up? Is it possible to restart that career in say 5 years?

How does the lack of that affect your life goals ie intended retirement date etc.

My spouse works part time because we can afford it. She enjoys it but not enough to want to be full time and we have retirement savings. Financially I am the primary breadwinner but by and large I like keeping busy with work.

BTW disability insurance through work is markedly inferior to a personal policy. Unfortunately however the latter is often quite expensive. But it's worth at least checking it.

Given you don't own your home, I am thinking you need something between 5x-10x cover on his income. Renting a house could easily cost $50k pa for the rest of your life? And it will grow with inflation. Until at least your child is 18 (arguably longer if we include college tuition). Life insurance should be fairly cheap so don't skimp on it. A 20 year policy on the order of $1m to 1.75m.

Because any insurance that comes with work terminates on end of employment I don't recommend relying on it for protection purposes. When life goes wrong, it tends to come in clusters - job loss, severe or terminal illness etc. You have to catastrophe plan. Remember with insurance you "lose" if you never make a claim - but the whole goal is to have a life where you never make a claim.

You probably want to have some kind of mental plan on how to return to the workforce once the toddler is in school.
wander
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Re: Can I afford to be a SAHM?

Post by wander »

OP, yes you can.
Zeno
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Re: Can I afford to be a SAHM?

Post by Zeno »

duplicate
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winterfan
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Re: Can I afford to be a SAHM?

Post by winterfan »

Yes! I became one 10 years ago on less NW and an income of around 55K. It was worth it for our family. You can put away a lot of money every year too.
A440
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Re: Can I afford to be a SAHM?

Post by A440 »

Yes, after getting an affordable term life policy to cover your needs.
My DW became a SAHM 19 years ago and has not returned to working outside the home. She works at home, she just doesn't get paid. :happy
We didn't have 1 million back in those days, and my humble teaching salary didn't go very far. But, we made it work and have no regrets.
I don't know what the future holds, but I know who holds my future.
Onlineid3089
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Re: Can I afford to be a SAHM?

Post by Onlineid3089 »

Yes, you can.

However, by your numbers I would guess that your expenses do not include taxes? Does the 65k include expenses like health insurance that are paid via payroll withholdings? Just something to consider.

In any case, you are doing great. Many (most?) families don't make 175k combined and certainly don't have 1.1 million at 40 :beer
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BrooklynInvest
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Re: Can I afford to be a SAHM?

Post by BrooklynInvest »

Yes.

Life insurance is a good idea as others have said. Absolute worst case, you decide you can't afford it at some later point and you go back to work having spent some wonderful and irriplaceable early time with the kid.
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Re: Can I afford to be a SAHM?

Post by ScubaHogg »

Yes. Easily.
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marcopolo
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Re: Can I afford to be a SAHM?

Post by marcopolo »

HomeStretch wrote: Tue Jun 21, 2022 2:12 pm Does your $65k in annual expenses include everything - income taxes, healthcare, periodic expenses such as a new car, major home repair, etc.?

If your spouse’s income is $175k and your annual expenses are $65k, does that mean you are saving annually the difference of $110k (=1.7x annual expenses)? If yes, you are more than fine to continue as a one-income household
.

In addition to delamer’s points, if you have the opportunity to keep your professional skill set/network up-to-date, that can be very valuable in the event your ability to stay-at-home changes or you seek to re-enter the workforce as your child ages.

Is your estate planning in place and does it include power-of-attorneys for healthcare and financial matters for each of you? It’s important that you each have the legal authority and sufficient knowledge of your finances/healthcare to handle all matters for your household in the event one of you becomes incapacitated or a widow(er).
Well, they are probably paying some taxes as well out of that $175k
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marcopolo
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Re: Can I afford to be a SAHM?

Post by marcopolo »

AlohaJoe wrote: Tue Jun 21, 2022 8:51 pm
smi1 wrote: Tue Jun 21, 2022 1:39 pm His Gross income ~175k
Annual expenses with allowances for travel ~65k
I feel like you must be leaving out something. Surely you can look at those two numbers and come to your own conclusion? What are you leaving out that makes you think you can't do it and have to come ask a bunch of internet strangers?

This was my first thought as well.
Once in a while you get shown the light, in the strangest of places if you look at it right.
mbasherp
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Re: Can I afford to be a SAHM?

Post by mbasherp »

I'll put it this way... if you can't afford to be a SAHM with those numbers, we can't even afford to be a single family household with ours. Yet we are totally comfortable as we are.
carolinaman
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Re: Can I afford to be a SAHM?

Post by carolinaman »

delamer wrote: Tue Jun 21, 2022 1:54 pm If your husband should become disabled or die, are you prepared financially to deal with those scenarios?

Does he have adequate life insurance and disability insurance?
These are good points that you should address, but you are in great shape to be a SAHM. Many families do it with far less income.
Broken Man 1999
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Re: Can I afford to be a SAHM?

Post by Broken Man 1999 »

Yes, you can.

But, understand taking a break from your career, in some cases, can affect your employability, and your career earnings.

DW took a nine year break to be a SAHM for our three daughters, and was able to get to $50,000/year before she retired in 2008 to watch our grandchildren. Her final pay wasn't that much over what she was making prior to her leaving the workplace in 1977. Basically a lost decade of employment.

For us it was the right thing to do. We lived fine on just my salary alone.

Broken Man 1999
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Exchme
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Re: Can I afford to be a SAHM?

Post by Exchme »

Of course you can afford to be a SAHM. At my old workplace, we also had quite a few re-entrants to the market of SAHM's once their children were in school, so it may not be a "forever" decision if you decide to go back to work later. My wife chose to get a part time job close to home once the kids were old enough to be in school. That limited the money she could make, but she liked having some things going on that didn't involve children (just co-workers that occasionally acted like children :happy )
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Re: Can I afford to be a SAHM?

Post by CoastLawyer2030 »

smi1 wrote: Tue Jun 21, 2022 1:39 pm DH and I are 40 and 38 respectively. We have a toddler. I have been a SAHM since our little ones birth. Can I continue to be one?

Net worth $1.1 million
No debt
Renting
His Gross income ~175k
Annual expenses with allowances for travel ~65k

Thank you!
Can Michael Jordan dunk?
an_asker
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Re: Can I afford to be a SAHM?

Post by an_asker »

smi1 wrote: Tue Jun 21, 2022 1:39 pm DH and I are 40 and 38 respectively. We have a toddler. I have been a SAHM since our little ones birth. Can I continue to be one?
[...]
Thank you!
I think someone needs to review and revise the terms --> SAHM/SAHD.

Thanks to WFH, I'm definitely a (gainfully employed) SAHM ;-)
an_asker
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Re: Can I afford to be a SAHM?

Post by an_asker »

CoastLawyer2030 wrote: Wed Jun 22, 2022 12:25 pm [...]
Can Michael Jordan dunk?
I don't know - haven't seen him recently. If he's double his peak fitness width, that would be questionable!

Now, if you rephrase to "Could Michael Jordan dunk?" my answer would be an unqualified Yes!
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FoundingFather
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Re: Can I afford to be a SAHM?

Post by FoundingFather »

You can certainly stay home and continue to be a full time mom if that is your goal! For context, my wife stayed home with our 2 (at the time) kids when I was doing my MD and PhD on an income of $29,000 in New England. We made it work, and my wife and I are both glad that we did.

I'd just give one piece of advice - make sure that you and your husband are both on the same page. If he is hoping that you go back to work soon so that he can buy a Lamborghini Aventador, then you deciding to stay home might cause some unhappiness. I am sure that you have discussed this, but sometimes I am shocked at the conversations that don't happen, so I just thought to bring it up. 😉

Founding Father
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iamblessed
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Re: Can I afford to be a SAHM?

Post by iamblessed »

Sure easy.
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White Coat Investor
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Re: Can I afford to be a SAHM?

Post by White Coat Investor »

smi1 wrote: Tue Jun 21, 2022 1:39 pm DH and I are 40 and 38 respectively. We have a toddler. I have been a SAHM since our little ones birth. Can I continue to be one?

Net worth $1.1 million
No debt
Renting
His Gross income ~175k
Annual expenses with allowances for travel ~65k

Thank you!
Yes.

You're almost FI already and not even into your 40s. You're probably CoastFIRE already aren't you? If you don't start spending more soon, you should be able to have two SAH parents within 5 years.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
delamer
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Re: Can I afford to be a SAHM?

Post by delamer »

CoastLawyer2030 wrote: Wed Jun 22, 2022 12:25 pm
smi1 wrote: Tue Jun 21, 2022 1:39 pm DH and I are 40 and 38 respectively. We have a toddler. I have been a SAHM since our little ones birth. Can I continue to be one?

Net worth $1.1 million
No debt
Renting
His Gross income ~175k
Annual expenses with allowances for travel ~65k

Thank you!
Can Michael Jordan dunk?
More to the point of this thread — he could dunk at one time, but if he didn’t play for 5 to 10 years, would he still be able to dunk?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Chadnudj
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Re: Can I afford to be a SAHM?

Post by Chadnudj »

smi1 wrote: Tue Jun 21, 2022 2:11 pm
delamer wrote: Tue Jun 21, 2022 1:54 pm If your husband should become disabled or die, are you prepared financially to deal with those scenarios?

Does he have adequate life insurance and disability insurance?
He has disability insurance through work.
Good point on the life insurance. Will look into getting it. Thank you!
I would humbly suggest looking carefully at what the work disability policy covers, when the coverage starts, and/or when it ends, and how much replacement income it provides. I know that I, for one, bought disability coverage above that provided by my employer (itself on top of SS disability) to fill gaps in my compensation and make sure I received approximately what I would lose from my job if I did become disabled.
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