After having children, it can be difficult to decide whether both spouses should continue to work. You can't just look at the gross income generated from the second job, since a wide variety of expenses typically accompany that second income. Those expenses include:
- Taxes -- Social Security and income taxes can take a significant chunk out of the second income. Couples are taxed on their combined income, so the second income is taxed at a higher federal rate than the first income. The second income might also push the couple into a higher tax bracket or cause some tax benefits to be lost.
- Child care -- The cost of child care for young children can be very high. Even with school age children, arrangements usually must be made for care after school and during school vacations.
- Commuting -- Not only should you consider out-of-pocket transportation costs, but keep in mind that commuting keeps you away from home for a longer period. An eight-hour work day may actually mean nine or 10 hours away from home.
- Meals -- In addition to lunches, many working people purchase breakfast as well as drinks and snacks during the day. It's also not uncommon for working couples to dine out more frequently.
- Clothing -- Depending on the nature of the work, the second job may require significant expenditures for clothing and dry cleaning.
Once all costs are considered, you may find the second job really doesn't contribute much to the family's income. However, non-financial factors may also weigh in your decision. Some people value the personal fulfillment that comes from working and earning an income. Or delaying a career for even a few years may mean the spouse doesn't advance as quickly once he/she returns to work.