Going against the grain: stay-at-home dads Dr. Johnny Noet Ravalo INQUIRER.net
June 11, 2008
My wife and I work long hours and the kids are growing up with the house help. We have talked about “slowing down” but it really doesn't work. We have also considered the possibility that one of us stop working while the kids are still young. I am more prepared to be the one to stop but every time I am close to resigning, the impact on our finances scares me more. I know that my time with our small boys is fast dwindling but being a “houseband” was the last thing I imagined I would do. --- Paul
There is no template out there that we can just pull out as a guide for solving your dilemma. I know, however, that we can separate the financial aspect of the problem from the trickier question of being a stay-home dad.
Adjusting from a double-income to a single-income household will not be easy. While monthly family income drops like a log immediately after you resign, expenses like tuition, most utilities, medical bills and debt obligations show no such inclination. These are expenses that are hard to downsize.
By opting to be a stay-at-home dad, the family is now dependent on your wife's income. That is not untenable since there are many out there who are – either by choice or circumstance – single income families as well. However, shifting from double to single income does leave your family with fewer options than before. If the conditions at your wife's office deteriorate, she cannot simply tender her resignation when she has had enough. Whatever company benefits you have (like a medical plan or gasoline allowance) these too are foregone once you resign.
Caring for your small boys does not mean that you have to totally give up working. Consider doing some consulting work which is somewhere between being totally at an office and totally at home. Be careful that you do not get confused with labels: consulting is often more time consuming than a regular 9-to-5 job. The upside is that you can do part of the work at home (addressing your concern with the children) while continuing to stimulate your mind.
Unfortunately, there are downsides too. There is no retirement plan, no corporate benefits and your tax treatment is more complicated. Aside from the regular income tax, consultants are subject to either a 12.0 percent value added tax or a 3.0 percent percentage tax. There is also the cost of engaging an accountant, which is required by law.
Not all expertise, however, can be offered on a consulting basis. Doctors are consultants whether or not they hold clinic at a hospital. A commercial banker, though, cannot really practice his or her craft on a solo basis.
You did not mention your line of work. Is this a contributing factor to why you are the one more in a position to quit your full-time job? Transforming yourself from a full-time executive to a stay-at-home dad is a major move with both financial and non-financial impacts.
Our society is still uneasy with the idea of stay-home dads. Here in the Philippines, the arrhae is an integral part of every Roman Catholic wedding symbolizing the husband's willingness to support the family as the “breadwinner”.
Recent estimates in the US say that the implicit value of a stay-home parent ranges from $32,000 per year to as high as half a million dollars annually. This is the implied cost of all the services rendered – child-care, counseling, tutoring, logistics management, supervision – but does not yet include the foregone income from choosing to be out of the work force.
In this age of streaming information, 24 hours is never enough to get things done. Double-income is “convenient” but in the process our children are thrust into a 24/7 double-income-but-not-enough-time environment.
Deciding to become a stay-home dad will mean a lot of pencil pushing, a lot of head scratching and a lot more of prayer. But in some situations it can work.
As I re-read your question Paul, the particular memory that comes back is my children's dismissal at pre-school. All the kids are sitting on benches lined up at the school gate. The teacher would call out their names once the “sundo” arrives. Once my kids would get a glimpse of me, they would smile, run towards me and meet me with a hug together with a loud cry of “Daddy”. Precious.
(Have a question for Dr. Noet? Email personal_finance@inquirer.net.
(Noet Ravalo is a macro-financial economist by practice and profession. He was chief economist of the Bankers Association of the Philippines until 2002 and has since been doing consulting work. Since 1994, he has been asked to provide technical inputs to both the Senate and the House of Representatives on various economic and financial legislation, some of which will have big impact on Filipinos' personal finances.)
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