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August 17, 2021

Does it pay for both parents to work?

By Gordon Powers, Sympatico / MSN Finance

Does it pay for both parents to work when the kids arrive or for one to stay home? Well, there's clearly no right or wrong answer.

Lifestyle issues aside, when considering whether two paycheques will pay off, you have to figure out how much of the lower earner's salary will be eaten by dual-income expenses. For instance, the "working tax" on a second income includes childcare costs, work-related expenses, lost perks, and additional household costs. You may also find yourself in a higher tax bracket where you end up giving the government a bigger percentage of your overall family income.

Childcare is likely to be the biggest cost. Unless you live in Quebec, where full-time day care costs just $7 a day, you’re likely looking at something like $200 a week per child in the large metro areas.

Also, take into account the costs of going to work; the commute, the clothes, the dry cleaning, the lunches, and the office gifts and get-togethers – all of which can add up to several thousand dollars a year. As well, the-stay-at-home decision often morphs into a second vehicle for errands and transporting the kids.

You should save money on food, however. The biggest additional household cost that working families report is an increase in food and grocery expenses, largely thanks to ready-made lunch items for kids, salad-in-a-bag, or take-out food.

You're going to lose some perks as well. If the working spouse works for a company that offers medical, life and disability insurance coverage, you’re ok. Otherwise, particularly for someone who's self employed, be sure to factor in the costs of private coverage. Full coverage for a family of four will likely cost you around $350 a month.

Although this doesn't apply to everybody, you're going to forgo some employment perks as well, including free or at least subsidized meals or gym passes, purchasing or entertainment discounts and even cell-phone bargains – which you're probably going to need if you've been using a company phone.

If you need help crunching all these numbers, try this tool or this one.

A word of caution: These are U.S. calculators and one big difference here is the way married couples file their tax returns across the border.



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...