Recent Statistics show a second income might be detrimental to financial status of many young couples with children who need daycare. Studies discovered families with one income were already ahead of financial game, if second income is a modest one.
Why? Simply because when both parents work outside home full time, additional expenses will expand rapidly. In fact, their financial stability will diminish instantaneously, leading to financial ruin, even bankruptcy. This article will cover what one young mother decided to do to improve her income.
I will use my good friend Sandy as an excellent example. Sandy is a married woman with a three year old son. She recently returned to work after being a stay-at-home-mom.
Please Note: All expenditures are on conservative side. Sandy is frugal and watches every penny she spends. Please adapt examples to your own situation to weigh your choices.
Sandy earns a respectable $24,000 per year, which she considered a good second income for her family. Wrong! Sandy discovered other expenses were consuming her new income. To begin, she had to deduct about 40 percent for fed, state, local, social security taxes, pension plan. She is down to about $14,400 extra. Yikes!
Daycare dwindles a large portion of her earnings. In many large urban cities daycare cost around $6,000 for one child. Sandy considered herself lucky to find a center charging about $4,800 per year. That reduces her extra income to $9,600.
Sandy works in a high profile business office, her appearance is very important. Sandy will need a new wardrobe. Of course, new ensemble will need dry-cleaning. Yearly fee, conservatively $1,000. That leaves Sandy with $8,600.