How to Figure Out if You Can Afford Not to Go Back to Work after Maternity Leave

The number that most of us have in mind when we think about staying home after maternity leave is the gross income we'll have to give up; that is, the amount of our total salary before taxes and other withdrawals are taken out. And when you subtract that big number from your overall household income, the idea of living without it might seem impossible -- at first.

To get a better idea of just how much you truly need to get by, remember that you've been living on your take-home pay (the amount you actually receive in your paycheck each month), not your gross. Then take a detailed look at your living expenses, breaking them down into essential and nonessential spending to get a clear understanding of where your money goes:

Essentials

Nonessentials

For each expense (and any others you may have), list your monthly spending -- to the penny, if you can! Don't forget to include any new expenses that you'll have after the baby is born, like diapers, baby clothes and food, and doctor visits.

Finally, be sure to consider how much you can save by not returning to work. For most new parents, the biggest expense is day care, which can run anywhere from $800 to $1,200 per month. But don't overlook smaller expenditures that add up fast:

Now that you know how you're spending your hard-earned cash, you'll have a better sense of exactly how much income you truly need each month. But if you've crunched the numbers above and it still doesn't look good, don't panic. Instead, read on, and make a plan.

If you've always known that you want to stay home with your child, ideally you'll plan better (or at least sooner!) than my husband and I did. But even if you've experienced a sudden change of heart as the end of your leave approaches, don't give up hope!

As soon as you suspect that you don't want to return to work after maternity leave, try living on one paycheck and banking the other. Not only will you see if you can make ends meet on one salary, but you'll also build up your savings account in the process. Now is also a great time to pay down any credit cards or other consumer debt to help reduce or eliminate your monthly payments and put yourself on more solid financial ground.

With your list of expenses in hand, ask yourself a few questions:

But what if you didn't plan, and you're weeks into your maternity leave before you realize that you want to stay home? Think about how your habits have changed since the baby was born. Chances are you go out much less, but you may be spending more on diapers, groceries or take-out dinners at home. Have you been collecting maternity benefits during your time off, or are you on unpaid leave, already essentially living on one salary? Imagine that next month (or next week) you will need to get by on your spouse's salary alone. How do the numbers look?

Take the time to answer these questions as thoroughly as you can. The more information you have, the better prepared you'll be to make your decision.

When you and your partner are making your final decision, it's important for you to know yourselves. What is your track record as a couple when it comes to saving and budgeting? Are you disciplined, or do you like to splurge? How do you feel about giving up some of the small luxuries to which you've become accustomed? If you've crunched the numbers and you're just squeaking by on paper, will you and your partner have the self-discipline to curb your spending and change your lifestyle as needed to stay out of debt?

Be honest with yourselves and with one another. Having the tough conversations now can help you avoid resentment, financial stress and crushing debt down the road.

Once you've reviewed your current and future expenses, made a plan and subjected your past spending habits to some deep introspection, your overall financial picture and the answer to your question should become clear.

If you are able to stop working, congratulations! Be sure to talk with your HR department to ask how your decision will affect your maternity benefits. What is your employer's policy on maternity leave? How much will you receive and for how long? Will you still receive full benefits if they know you're not coming back?

If you know you want to stay home, but you simply can't afford it right now, try not to despair. Know that you are making the decision that is right for your financial security and for your family's future, and consider your options. Can you and your partner create a plan that allows you to stop working in six or 12 months, or can you work out a part-time schedule with your employer?

Remember that your return to work doesn't need to be for forever. If staying home is still your goal, chances are that the time you spend with your new baby will have you feeling more motivated than ever before to find a way to make it happen!