Family matters: Is your second income worth the hassle?
Dual-income families are commonplace these days, however, some couples are discovering that their second income may not be worth the added aggravation and effort. After taking into consideration daycare expenses, commuting expenses, the countless take-out meals, and additional clothing costs, many are surprised at how much (or how little) of that second income is actually hitting their bank account.
Before you and your spouse head off for yet another hectic workweek, it may be worth your time to take a few moments to do a few simple calculations. After assessing what expenses are necessary in order for both parents to work, many couples quickly realize that their second income is essentially paying for the second person to be working.
Crunch the numbers.
To determine whether your second income is worth it, you will need to calculate the estimated value of the second income. First determine how much the second income brings in after taxes. Then subtract expenses incurred due to the second person working, such as dry cleaning expenses, childcare bills, transportation costs, housecleaning services, landscaping services, and outside dining expenses. The result will be the estimated value of the second person working.
Consider the long-term.
Even if the result are small, you may find that having the second person working will be beneficial to the household in the long run. However, donít forget to consider that, by losing the second income, you may also be losing future retirement benefits and social security earnings.
Take a "dry run".
Before reducing down to one income, try living on the personís income you intend to keep for six months, stashing the other income into an emergency savings account. If you are able to do this, chances are you will be able to endure for the long haul.
Many factors can affect a familyís decision to have both parents work Ė including the fulfillment each parent may get from working regardless of whether their income is adding significantly to the household. However, if trying to make ends meet is the major reason, it may pay off to spend some time analyzing the real net benefit from that second income. If you need any assistance while determining if both spouses should work or not, please feel free to contact the office.
The information presented in this document is of a general nature only and should not be relied upon to replace professional advice. Before acting on this information, talk with a professional advisor as laws and regulations are constantly changing. Readers accept full responsibility; no document found here is a substitute for a consultation.