Click here to link to the show - November 20th, 2012

The tight purse strings of a new mom may force her to cut her maternity leave short and head back into the work force. Our personal finance expert, Kelley Keehn, comes to the rescue with advice on balancing the budget to make work-after-baby life stress free.

Is money is the number one reason people cut maternity leave short to go back to work?

Obviously, finances are a huge issue and if the money isn’t there, moms may have no choice.  But if one has a spouse in the workforce and/or they have budgeted well, there may be many other reasons she’d want to get back to work such as:

• Keeping her seniority
• She loves what she does
• She enjoys her stream of income even if she doesn’t need to go back to work financially
• Emotionally, she might really miss the social dynamic of her workforce

If a couple, who are new parents, are looking at their finances trying to determine if going back to work makes sense, where do they start?

Making a budget: list how much you require for fixed expenses (mortgage or rent, insurance, loan payments, utilities, food, etc.) and how much for extras like dinners out.  Now, determine how much money you absolutely must have to be modestly comfortable (with a cushion for emergencies).  Just as no two babies are entirely alike, so too are no two jobs and no two moms.

Consider whether the money you’ll make will offset the costs of earning it.  Calculate your budget based on both you and your spouse’s income and then deduct amounts for commuting, clothing, childcare, lunches – and keep in mind time away from the baby.  Are there options to reduce time away from home – like working part-time, or full or part time from home, or job sharing?

Lastly, make a list of pro’s and con’s of going back to work, for everyone in the household (not financially related) to make a truly informative decision.

**Accept the fact that you won’t be able to do it all (perfectly, at least) and think about what’s most important to you.

Is there a “magic” number (in terms of salary) that you need to make in order for going back to work to be worth it financially?
This all depends on budgeting. Some people with 6-figure incomes need all that money to cover their expenses while others with more modest incomes do well on less money and budget for a stay-at-home mom.

This is a great calculator to help couples determine if they can do it:www.parents.com/app/stayathomecalculator/

What can couples do if they’re in the pregnancy planning stage to make maternity leave easier?

Candor and Openness

Many new couples encounter problems when one spouse fails to be honest with the other about financial issues. Sometimes one spouse will hide debts or spending from the other. This almost always creates problems because it makes it impossible for the other spouse to adapt her spending or to budget accurately.



Budgeting and Planning

Young couples should budget to ensure that spending does not get out of hand. Likewise, planning and budgeting should include money for savings and investment for retirement. A budget will help assure that both spouses are on the same page regarding income, spending, and the lifestyle that is plausible given their financial situation. While one spouse may be more financially inclined than the other, both spouses need to understand and agree on the budget.

Don't Try to Match Your Friends' Spending

Many young couples fail to save enough, and they spend too much. Spending in order to match the consumption of others often will lead to debt and to too little savings.

Invest with a Long-Time Horizon

Young couples have many years during which to save and with which to invest. Consequently, young couples can be more aggressive in their investing than older couples. In fact, some financial advisers encourage young couples to invest exclusively in stocks and to bypass investments in lower risk instruments such as bonds.