I can’t count the number of times corporate women have come to me whispering about their dream to quit their job and stay home with their children and possibly start a business. This is particularly disheartening for me when I’ve been hired to come into their organization to teach and train them on how to be better employees (BTW, one of the reasons that I’m so effective as a Corporate Trainer is because I train people to be better IN LIFE not just ON the job. Conscious choices about who you are going to BE in LIFE makes you better on the JOB.).
Anyhow, as they are telling me what they want they also talk themselves out of it by saying they can’t afford to quit their job and stay home.
Before YOU talk yourself out of your dreams get the facts. It may be financially possible for you to quit your job and stay home with your children for a few years and/or start a business; you just need to answer some questions to get the facts:
- What are your monthly expenses?
- How many of those expenses will be eliminated if you weren’t working?
- Will eliminating those expenses allow you to live comfortably on one salary?
- How much do you need to save to feel somewhat “safe”?
I’ve put together this check list to help you decide if you can afford to quit your job and stay home.
DETERMINE YOUR MONTHLY INCOME
- Your after-tax monthly income
- Your spouse’s after-tax monthly income
Total 1: This is your monthly net income
DETERMINE YOUR MONTHLY LIVING EXPENSES
- Car Payments
- Insurance premiums (auto, homeowners/renters,life)
- Other household bills combined (cable, internet, cell phones, cleaning services, lawn care, you get the picture)
- Debt payments (student loans, credit cards, personal loans, etc)
- Contribution to money accounts (IRA, ROTH, Educational IRA, Emergency funds that you are saving, Christmas funds, but don’t include those automatically deducted from your paycheck)
- Dinners out, take-out, movies, other entertainment (be honest)
- Emergency fund for unexpected expenses (medical, car or home repairs, etc.)
Total 2: This is your basic living expenses per year
DETERMINE YOUR MONTHLY WORK EXPENSES
- Commuting expenses (public transportation, gasoline, parking)
- Food (breakfast-stopping to get for yourself AND included the number of times you bring in donuts, coffee for your team, lunch, snacks, birthday cakes, coffee, after-work drinks out)
- Work clothes/jewerly
- Dry cleaning
- Miscellaneous gifts (birthday, secret santa, Christmas, weddings, baby showers, pot luck meals, your special UpsideDown 7Up cake that you bake every year for your team, etc.)
- And anything else that I haven’t mentioned here but it pertains to YOUR job specifically.
Total 3: This is your work cost per year
DETERMINE YOUR MONTHLY CHILDCARE EXPENSES
- Childcare Expenses
- After School care for older children
- Fees for being late to pick up your children
Total 4: This is your yearly childcare cost
DETERMINE OTHER ANNUAL EXPENSES
- Holiday and birthday gifts-this is for family members
- Beauty and family upkeep (beauty salon trips for you and your daughter, manicures & pedicures, trips to the spa, haircuts for the men in your family)
- Clothes (non-work related)
- Child-related expenses
- Medical expenses not covered by insurance
- Gym & other club membership dues
- All other expenditures that I haven’t mentioned but it pertains to your family
Total: This is your annual extras cost
Add Total 2-4 and subtract from Total 1 then take and honest assessment:
- What you can live with and what you can live without?
- What you are willing to sacrifice?
- What are you willing to do yourself as opposed to pay someone else to do it for you?
- What kind of changes are you willing to make?
- Is your job generating unnecessary expenses?
- What percentage of your expenses are generated by your job? What’s the dollar amount?
With this checklist in front of you and some honest answers to the assessment questions you should be able to quickly estimate if you can afford to quit your job and stay home.
*Disclaimer: This is the basic estimation tool that I use when talking to clients. Always defer to your financial planner or accountant before making decisions about quitting your job.
Here’s a link to my radio show, I’m The Boss of Me. Here I interview regular men and women who made an honest assessment did the financials and decided to make the leap. Yes, they quit their jobs and went home.