Does having a second income really pay off?
Does it pay for both parents to work when the kids arrive or for one to stay home?
Well, lifestyle issues aside, there's clearly no right or wrong answer -- but it does pay to do the math, says Andy Dappen, author of Shattering the Two-Income Myth.
Some of his numbers are a bit dated for this economy, but the exercise is certainly worthwhile, maintains one stay-at-home mom, who blogs at On One Income, and concludes that the few extra dollars just weren't worth it.
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.
Unless you live in Quebec, where full-time day care costs is heavily subsidized, you’re likely looking at something like $200 a week per child in the large metro areas -- a cost The Economist expects will escalate here as it has in the U.K.
Also, take into account the costs of going to work; the commute, the clothes, the dry cleaning, the lunches -- all of which can add up to several thousand dollars a year. Of course, with so many people already working from home, this may not be as onerous as it once was.
As well, regardless of which parent is the one waving goodbye, the-stay-at-home decision often morphs into a second vehicle for errands and transporting the kids.
If you need help crunching all these numbers, try this tool. This is a U.S. calculator, however, and one big difference there is the way married couples file their tax returns. But the overall expense data should track reasonably well.
Otherwise, here's a stripped down Canadian version.
Is being a dual income family paying off on your house? Or do you even have any choice in the matter?
By Gordon Powers, MSN Money