How Young Families Can Afford to Have a Parent Stay Home

The Dream That’s Actually Within Reach

More young couples today are expressing the same goal: they want to raise their own children. Not out of judgment toward families who make different choices, but from a genuine desire to be the primary influence during those formative early years. They don’t want to outsource the bedtime routines, the first words, the scraped knees, and the everyday moments that shape who their children become.

The question isn’t whether this is a good idea—research consistently shows the developmental, emotional, and even economic benefits of parental investment in early childhood. The question is: how can working middle-class families actually make it happen?

The answer requires being smart, budgeting carefully, and honestly weighing the risks. But for many families willing to plan strategically, it’s more feasible than they initially think.

Why This Matters: The Research on Parental Investment

Before diving into the finances, let’s acknowledge what young parents instinctively understand and what research confirms: the early years matter profoundly.

Studies on childhood development consistently demonstrate that consistent, responsive parenting in the first five years creates foundations for:

• Better emotional regulation and mental health outcomes
• Stronger cognitive development and school readiness
• More secure attachment patterns that influence relationships throughout life
• Lower rates of behavioral problems and better social skills

The “return on investment” of parental time isn’t just emotional—economists have calculated that high-quality early childhood investment (whether through parents or exceptional care) yields some of the highest returns of any human capital investment, with estimates suggesting $7-$12 in societal benefit for every dollar invested in early childhood development.

When parents provide that investment themselves, they’re not just saving money—they’re building human capital in their most important asset: their children.

The Economics That Make Families Reconsider

Here’s what’s driving more middle-class families to explore one-income households: childcare costs have become genuinely prohibitive.

In South Dakota, infant care averages $1,400-$1,800 per month. For families with multiple young children, costs easily exceed $3,000-$4,000 monthly. In many markets, infant care now costs more than in-state college tuition.

For a middle-class family where one spouse earns $40,000-$50,000 annually, here’s what that second paycheck actually looks like after:

• Federal and state taxes (15-22% marginal bracket)
• FICA taxes (7.65%)
• Childcare for one child ($16,800-$21,600 annually)
• Commuting costs ($2,400-$4,800 annually)
• Work wardrobe, lunches, dry cleaning ($1,200-$2,400 annually)

A $45,000 gross income might net only $6,000-$10,000 after these expenses—sometimes less. That’s working full-time for $500-$800 per month of actual household benefit.

Suddenly, having a parent at home isn’t just an idealistic dream. It’s a financially rational choice.

How to Make It Feasible: A Working Middle-Class Strategy

Success doesn’t require a six-figure income or family wealth. It requires planning, discipline, and being strategic about timing and priorities.

Credit: Pexels

Step One: Test the Reality Before You Live It

The most important step happens before anyone quits their job: live on one income for 12-18 months while both partners are still working.

This accomplishes three critical things:

1. Proof of concept – You discover whether your budget actually works, not whether you think it will work
2. Emergency fund building – Banking one entire salary for a year creates $30,000-$50,000 in cushion
3. Habit formation – You develop the spending discipline required for one-income life before the stakes are high

During this period, be ruthlessly honest. If you can’t make the budget work with two incomes flowing in, you definitely can’t make it work with one. This is your chance to adjust housing, eliminate debt, and prove the model works.

Step Two: Get the Insurance Foundation Right

When you move to one income, you’re concentrating all your family’s economic security in one person’s ability to work. This makes insurance non-negotiable.

Life Insurance for the Working Spouse: Term life insurance for 10-15 times annual income isn’t optional—it’s the foundation. A healthy 30-year-old can typically get $500,000 in 20-year term coverage for $25-$40 monthly. This protects the family’s future if the unthinkable happens.

Disability Insurance: This is the most overlooked piece. The working spouse’s earning power is now 100% of the family income. Long-term disability insurance protects against illness or injury that prevents work. If the employer offers it, take it. If not, purchase individual coverage.

Life Insurance for the Stay-at-Home Parent: Yes, this too. The cost to replace everything the at-home parent does—childcare, household management, food preparation—would be substantial. A $250,000-$500,000 policy provides security if tragedy strikes.

Step Three: Enter One-Income Life Debt-Free

High-interest debt is a budget killer when you’re living on one income. Before making the transition:

Eliminate credit card balances completely. At 18-24% interest, credit card debt compounds faster than you can get ahead on a tight budget.

Pay off car loans if possible. If not, ensure payments are minimal and vehicles are reliable. The goal is to drive paid-off cars for as long as feasible.

Handle student loans strategically. Understand your repayment options, including income-driven repayment plans. Don’t accelerate student loan payoff at the expense of emergency funds, but know exactly what you owe and what the payments will be.

The point is simple: enter one-income life with the lowest possible required monthly payments.

Step Four: Be Realistic About Housing

This is often the hardest conversation for young families, but it’s the most important one.

On one income, housing costs should ideally stay under 25-28% of gross income. For a family earning $65,000 annually, that means keeping housing (mortgage/rent, insurance, taxes, HOA) under $1,500 monthly.

This might mean:

• Staying in a smaller home longer than you’d prefer
• Choosing a neighborhood farther from trendy areas
• Postponing the dream home purchase for 5-7 years
• Considering multi-generational housing if family relationships support it

Here’s the truth: you can have the bigger house, or you can have a parent at home, but for most middle-class families, you can’t have both in the early years. Choose what matters most.

Living the One-Income Life Successfully

Once you’ve made the transition, certain financial priorities become non-negotiable:

Build and Protect Your Emergency Fund

Aim for 6-9 months of expenses—more than dual-income families need. With one income source, job loss or medical issues have no cushion. This fund is your insurance against every “what if” that keeps you up at night.

Keep building it even after you hit your target. Life happens, and having a year’s worth of expenses saved provides remarkable peace of mind.

Credit: Pexels

Never Stop Investing in Retirement

This is where many families stumble. When the budget feels tight, retirement contributions feel optional. They’re not.

The working spouse should:

• Contribute enough to capture the full employer 401(k) match (this is literally free money)
• Aim for at least 15% of gross income toward retirement once consumer debt is eliminated
• Open a spousal IRA for the at-home partner (up to $7,000 annually in 2024-2025)

The at-home parent’s retirement doesn’t disappear because they’re not earning a paycheck. Plan for both futures, not just the working spouse’s.

Keep One Foot in the Working World

For the parent at home, maintaining some connection to professional life provides security and options:

• Keep professional licenses and certifications current
• Stay networked in your industry through occasional lunches, LinkedIn, professional groups
• Consider freelance work, contract projects, or part-time consulting during nap times
• Take online courses to keep skills relevant

Even modest income from flexible work—$500-$1,000 monthly—can meaningfully supplement the budget. More importantly, it keeps career options open for when you’re ready to return, whether that’s in two years or twelve.

The Non-Financial Returns

Beyond the budget spreadsheet, families report benefits they never anticipated:

Being present for the moments that matter. First steps, first words, the questions about why the sky is blue—you’re there for them, not hearing about them secondhand.

Reduced family stress. No frantic morning rushes to drop-off. No agonizing over who stays home with sick kids. No juggling two demanding work schedules.

Flexibility when life happens. Medical appointments, elderly parent needs, school activities—you have margin to handle life’s demands.

Stronger family rhythm. Home-cooked meals become feasible. Bedtimes aren’t rushed. Weekends aren’t consumed by catch-up tasks.

The research on parental presence in early childhood isn’t just about developmental outcomes. It’s about building a foundation of security, connection, and family identity that shapes children for life.

When One Income Doesn’t Make Sense

Honesty requires acknowledging when this path isn’t feasible or wise:

Income realities: If the second income significantly exceeds childcare costs and the family needs that income to meet basic needs, staying home may not be realistic.

Career trajectory concerns: Some careers penalize gaps severely. High-level professional tracks, specialized medical fields, and certain executive paths make re-entry difficult after extended absences.

Debt burden: If existing debt requires both incomes to make minimum payments, the family needs to stabilize finances first before considering one-income life.

Relationship or personal well-being: If staying home would create severe depression, isolation, or relationship strain, the emotional costs may outweigh financial benefits. Mental health matters.

The decision should make sense for your specific situation, not just align with an ideal.

Planning for the Future

Life changes. Whether by choice or necessity, the at-home parent may eventually return to work. Planning for this possibility includes:

Maintain marketable skills throughout. The workforce changes rapidly. Stay somewhat current even during at-home years.

Understand re-entry realities. Career re-entry often means starting at a lower level or salary than when you left. Budget for this possibility.

Time the return strategically. Many families aim for the youngest child entering kindergarten, balancing family needs with career trajectory.

Build the transition into your financial plan. Will the returning spouse’s income fund 529 college plans? Accelerate mortgage payoff? Boost retirement contributions? Know the plan before you need it.

Making It Work: The Bottom Line

For working middle-class families who want to raise their own children, one-income life is achievable with careful planning:

1. Test the budget for 12-18 months while both spouses work
2. Build substantial emergency savings during that testing period
3. Get insurance right—life and disability for both spouses
4. Eliminate high-interest debt before making the transition
5. Choose housing you can afford on one income, not what you qualify for on two
6. Maintain retirement contributions even when it’s difficult
7. Keep the at-home parent’s skills current for future flexibility

This isn’t about returning to a 1950s model or making a political statement. It’s about middle-class families making an informed choice to invest themselves in their children’s early years, backed by both economic calculation and developmental research.

The early childhood years are remarkably short. For families who want to be present for them and are willing to budget carefully, sacrifice some material comforts, and plan strategically, it’s more feasible than you might think.

Wondering if your family could make one-income life work? Let’s look at your specific situation together. Black Hills Financial Planning helps young families run the real numbers and build sustainable plans for the future they want.