To Work, Or Not to Work?

That is the question. With apologies to Shakespeare, it's also a common dilemma for new parents.

A caller to our radio show regaled us with a complicated assessment of whether it made sense, tax-wise, to return to work after the birth of her twins. "If I go back to work, I'll make X," she said. "But with heavy taxes and the cost of day care, I'll net so little, maybe it makes more sense, for my children's benefit, to just stay home until they're in preschool."

Once your first baby arrives, you, too, may find yourselves facing an emotion-wrought decision about whether you're both going to keep working. That's about as gender-neutral as we can get, but in reality, it's usually the new mom who has to make that decision, not that there's any reason a new dad can't stay home and take care of the baby. If Mom happens to be on a high-powered career track and bringing home most of the bacon that may be the case.

Either way, many financial considerations come into play here. Can you afford to have one parent stay home with the children for a few years? Can you afford not to? We can't make the decision for you, but we want to be sure you're considering everything.

Take a Look Down the Road

One of the most often overlooked factors is the long-term consequences of quitting work. You can figure out the short-term mostly by the salary you'll forego, but make sure you look beyond that as well.

Here are some long-term consequences of quitting work:

• You will put a dent in your Social Security and retirement benefits down the road.
• The corporate world still doesn't quite get it: Women who leave a high-paying job to raise children often have trouble regaining ground. You might have to return to the workforce with a loss of job status and a lower salary. There are solutions to this problem, such as starting your own business. But if your career is really important to you, the hiatus might be a tough blow–unless you discover you prefer being home with the children than in a corner office.
• All kinds of studies have shown that the dynamics of a marriage can change when a wife stops earning money. She might feel that she's turned all of the decision-making power over to her husband.

On the other hand, lots of mothers find it hard to leave a small child alone with a caretaker. If you have a child who cries and can't understand why you're abandoning him every morning– and you're paying out the nose for the whole painful experience–sit down and assess the whole situation. Add up all of the costs, monetary and emotional, long-term and short-term, and make your decision based on what works for your career goals and your family.

As your family expands, so does your need for smart financial planning. Be sure to check out these articles for more advice:

• When Baby Makes Three
• Family Finances - The Big Picture
• How to Bring Up Money Savvy Kids