Friday 15 December 2017

What's the real cost of stopping work for kids?

Far from the madding crowd: Louise's husband Stephen with Lara and Kelan. Photo: Louise McBride
Far from the madding crowd: Louise's husband Stephen with Lara and Kelan. Photo: Louise McBride
Louise McBride

Louise McBride

When my eldest child started school last September, I gave up a well-paid full-time job in Dublin and started to work from home as a freelance journalist. I had spent the guts of a year prior to that trying to figure out one of the biggest jigsaw puzzles I had ever encountered.

My husband and I were determined to continue living in Wicklow - and to send our two children to our local school. We believed they would never truly settle in their home if we didn't do so. We were having no luck finding a childminder in Wicklow who would look after our children beyond 5.30pm - and our local village does not have a creche. Getting out of work on time to be back in Wicklow for 5:30pm everyday would itself be a challenge - never mind the commute. (The N11 is a nightmare most of the time.)

So how could we both continue to work full-time so we could pay our mortgage, send our children to the local school in Wicklow, and get to the office and back on time to either pick our kids up ourselves when school finished - or from a childminder who wanted to clock off at 5.30pm? One solution was to organise an extra childminder for the early evening - which would have been messy, left our children in childcare for almost 12 hours a day, and added to an already expensive childcare bill.

In the end, we decided it was jigsaw puzzle that wasn't worth figuring out. We would have been left with very little money after paying for childcare and have hardly seen our children (apart from at weekends).

I was lucky to be in a profession where I could freelance from home - so that's what I did. It was the right decision. Our children are much happier. They've lots of local friends. (They hadn't had the chance to make any before). They are no longer exhausted from commuting to a creche in Dublin every day.

I'm still earning money (though not as much as before). Our lives are still busy - but nowhere near as hectic as before. Yes, I have my moments. Like when dealing with a 30-minute tantrum because I rolled up my three-year-old son's left sleeve first - instead of his right sleeve - when washing his hands. Or when spending an entire afternoon playing referee between two warring siblings. But, all in all, I believe we have the best of both worlds now.

Still, giving up a full-time job so you can look after your children is a massive decision and adjustment - particularly if you are not in a position to earn some income from home. Here are some of the major financial sacrifices you have to make.

YOUR SALARY

The biggest financial shock is the loss of salary and with it, your financial independence.

This will be particularly hard to get used to if you have children late in life - chances are, you've been in the workforce for at least ten years if this is the case, so being financially comfortable is something you've long taken for granted.

Nothing can prepare you for the shock of not having a regular pay cheque. Unless your partner is loaded (and willing to share his or her money), you are unlikely to have much money to spend on yourself once you give up your job.

Yes, your partner (assuming he or she is still on the scene of course) will have to give you a household allowance - but this will be quickly gobbled up by grocery and utility bills, the cost of clothes and activities for your children, trips to the doctor, and so on.

Remember, as the only breadwinner, your partner will have to foot the bill for any mortgage you took on when you were both working - so the household allowance you receive will probably be quite small.

As well as managing that allowance to ensure it stretches to cover the basics, you will have to kiss goodbye to any personal luxuries you became accustomed to over the years. That could include make-up, haircuts, clothes, and weekend always with friends.

The birthday and Christmas gifts you buy for friends and relatives will become a lot cheaper - if you can afford them at all.

Of course, the cost of raising children means you will have already cut back on luxuries (particularly if you're forking out for childcare) - but give up your job and it becomes even more of a reality. You will find yourself asking your partner for things you never dreamed of - bus fare into town, money to fill up the petrol tank, and so on.

You must, of course, be sure that you can afford to give up your job before you do so - your mortgage could dictate otherwise. "Before giving up a job, even on a temporary basis, complete a budget and work out how much it costs to run your life each month," says Money Doctor, John Lowe.

YOUR PENSION

Time spent out of the workforce looking after children at home is time you will lose paying into a company pension - as well as having an employer pay into one on your behalf (if it does so). So you will have to play catch up if and when you return to the workforce - and you may not have enough time to do so.

You could also find that you no longer qualify for the contributory State pension (or you qualify for a smaller one than you expect) when you retire - particularly, if you never return to the workforce. Time spent out of the workforce usually leads to a gap in your social insurance record and it is this record that determines your eligibility for a contributory State pension.

The Government's homemaker's scheme, which ignores any years spent looking after children in the home when determining your eligibility for the contributory State pension, makes it easier for stay-at-home parents to qualify for it. However, you will not qualify for the homemaker's scheme if you are looking after children over the age of 12 - unless those children are ill or disabled.

Remember, you may still qualify for the non-contributory State pension but this is a means-tested pension so it can often be harder to get.

WORK PERKS

As well as losing the security of a full-time job, you will lose your entitlement to sick pay and death-in-service benefit (a lump sum often paid by an employer to your survivors should you pass away before you retire) if you give up your job.

Serious illness insurance, which pays out a lump sum should you or your partner become seriously ill, could be worth considering.

"Unlike the working partner who most likely has a back-up financial plan when they are unable to work due to illness, the practicality of a stay-at-home parent being struck down with a serious illness will require a replacement to be sought and paid for," says Laura Haugh, who is mum-in-residence for MummyPages.ie.

"Serious illness policies can provide peace of mind." It's important however to understand the conditions of any serious illness policy - and how hard it may be to make a successful claim.

You will also lose out on top-up maternity pay or paternity pay (if your employer offers these benefits) should you (or your partner) fall pregnant after you leave work. Similarly, a woman must usually be either working, or recently working, to qualify for State maternity benefit.

You're unlikely to qualify for State maternity benefit if you've spent a few years out of the workforce. You may still qualify for the benefit however if you are self-employed.

How to strike the balance between career and children

Along with losing the pay and perks of work, you could damage your future earning and career prospects by giving up your job to look after your children.

"It has become much more difficult for women to return to work after time spent out of the workforce," said Orla O'Connor, director of the National Women's Council of Ireland (NWCI).

This also applies to fathers who have made the same decision.

So how can you strike a balance?

Working part-time, such as a three-day week, could be an option.

You may be able to strike a deal with your employer where you work mornings only - and this can be particularly useful if you have school-going children.

You could divvy up the unpaid parental leave which you and your partner are entitled to so that each of you look after your children for one day a week. You will only be able to take your parental leave in this way if both employers agree to it but by doing so, you would only need to arrange childcare for three days a week. As each parent is entitled to 90 days parental leave per child, such an arrangement could last almost two years.

A career break may also be a possibility, as might working from home.

Check if your employer offers any flexible working arrangements - if not, suggest some to your boss. "Some people do compressed working times - where they work more hours in four days and have the fifth day off," said Ms O'Connor. "Or you may be able to start your working day slightly later. You may also be able to get term time - particularly if working in the public sector."

With term time, you take a block of unpaid leave when your children are off school for the summer holidays. Your pay is then spread out evenly over the year.

You could of course decide to sacrifice your career entirely so you can bring up your children at home."This can be daunting for those used to working full-time," said Laura Haugh of MummyPages.ie. "However it is potentially the most rewarding decision of your life too."

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