I have a mild obsession with becoming a lottery winner. While I definitely wouldn’t call myself a “gambler” (I spend less than $5 a month on lottery tickets), I have many dreams for what I’ll do with my abundance of cash on that lucky day.

My first step after winning the lottery would be to drop everything and become a stay-at-home-mom. Yes, I know it’s not an easy or relaxing job, but I would love to spend all day with my son. In fact, my friend and I have a deal: once one of us wins, we’re splitting the goods and taking off on a stay-at-home-mom adventure. I have a vision of endless days spent going to mama-baby activities, weekends at amusement parks, story times at the library, and play dates with friends. But then again, maybe I’m just blinded by the new-momness. After all, he hasn’t even hit the terrible twos yet.

When one parent chooses to stay at home, managing the household finances can be tricky. Think about this: When you were single, managing finances wasn’t an easy task. Getting married and learning to share money is pretty darn challenging. The trickiest thing of all can be having a baby and learning to split one income, especially after you’re used to living on two.

Why is money so complicated for families with a stay-at-home parent? While one parent is at a job to bring home a paycheck, the other parent is doing an equally important job raising the children. In fact, Salary.com values stay-at-home parents at over $112,000 annually. If both partners don’t have a plan for dealing with money, it can become a very divisive factor. The working parent might feel that he or she should have ultimate control of finances, since it’s technically “their” paycheck paying the bills. The stay-at-home parent might feel left out, inferior, isolated and resentful. The keys to experiencing successful stay-at-home parenthood is learning how to manage finances in this unique situation and keeping the lines of communication open.

I can’t speak for every couple’s individual situation, but if you’re considering cutting down to one income, you should do some serious advance planning. Here are some ways to deal with finance issues between the two of you, so you can keep your household running smoothly and enjoy your extra time with the kids.

Cut it down to one income, ahead of time. You get married, settle down and buy a house. You both have active professional careers and are living pretty high on the hog. Say you each make $45,000 a year. If one of you stops working to take care of the baby, that’s $45,000 a year you won’t have anymore. The best fix for this is to take the reduced income for a “dry run.” Several months, or even years, before you even try to have a baby, start living off one income. The rest can be put into retirement funds or various other savings. It’s very hard to get adjusted to living a more frugal lifestyle when you’re used to spending larger amounts of money. Therefore, it’s best to try it out before the fact, and make sure it can be done. You don’t want to quit your job and end up in debt.

Determine a “salary” for the stay-at-homer. Realistically, daddy won’t be able to pay mommy the $112,000 salary she deserves, or vice-versa. But that doesn’t mean the stay-at-home parent shouldn’t be able to have any personal money. It can be easy for the stay-at-home parent to feel guilty about spending money on his or herself when that parent isn’t the one bringing home the bacon. Each parent should be given a set amount of personal money to spend as they see fit. This money can be used for anything from a rainy-day savings account to new clothes and date night.

Have separate AND joint accounts. Money for any household expenses should go into a joint checking account. But don’t forget that in order for the stay-at-home parent to have any kind of autonomy, both parents should have a separate “fun money” account. This can help tackle the problem of how to spend extra money. Perhaps dad works and mom stays home, but dad doesn’t want mom to spend $70 on a pair of shoes. Each of you can spend money on whatever you please out of the “fun money” accounts, funded by a set portion of each month’s income. In other words, this personal account is where the stay-at-home parent’s “salary” should go.

Don’t be left out of money management. Both parents should be involved with the family finances. While one parent may manage the money, the other should have a thorough understanding of where money is going. This will prevent financial dishonesty between partners and prevent the stay-at-home parent from feeling left out.

Have a decent emergency fund. You should have an emergency fund anyways, but this becomes especially important when you’re down to one income. What happens if the primary breadwinner becomes unable to work? You should try to allot enough funds to keep the household running for at least 3–6 months.

Continue saving for retirement. NBC recommends rolling over your 401(k) from your previous job into a Rollover IRA. You should still continue to make contributions to your personal retirement account. You never know what could happen, and in the event of a divorce, you don’t want to be the one left without any retirement savings.

Once you get everything figured out, being a stay-at-home parent can be pretty awesome. You can give your children the childhood you always dreamed of, and have satisfaction knowing that you’ll never miss one of those precious firsts. Come prepared with a financial plan, and the transition will be a breeze!

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  1. Awesome tips! Definitely something I plan on doing for at least a little bit of my life once I have kids so I’m happy to know what to do going into it 🙂

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