A few years ago, I came across a blog post by a writer named Emma Johnson who declared, in no uncertain terms, that "You. Cannot. Afford. To. Be. A. Full-time. Stay-at-home mom. You just can’t."
I like strong opinions because they make me think and help me clarify my own feelings, and this statement certainly did that. I have actually been thinking about it ever since, and I’m convinced Ms. Johnson missed a very important part of the equation.
First, a little context. My wife, Cori, happens to be a stay-at-home mom. She is an educated, smart, talented and strong-willed woman who decided to remain at home with our children. After graduating from the University of Utah with a finance degree, she could easily have taken one of the many jobs available to her in the field.
While we didn’t do the math at the time, we looked at the numbers recently. According to the Bureau of Labor Statistics, the average salary for a finance job in Utah is $63,090. Using some imprecise math and adjusting for inflation, being a stay-at-home mother for the last 20 years may have cost us over $1 million in lost income. That is not a small number, but we also considered a second question: What is the value of the work she did with our children over those 20 years?
We can’t calculate the emotional value using a spreadsheet. But here’s one way to think about it. We have a family balance sheet that includes the normal list of assets and liabilities. But down the balance sheet a bit, we also have a line item that reads, "Cori being a full-time mother." We placed a high value on that decision because we knew someone needed to be there for our four children. Cori wanted that someone to be her.
Though we can’t put a number on the emotional value of her choice, we are certain that for us, it pales in comparison to what she would have earned over the last 20 years, even if it would have added up to a seven-figure sum. As we have watched our children grow up, the return on her investment is apparent to us every day.
For many people, staying at home is an unaffordable luxury, and I know how lucky we were to be able to choose it. I also know that some parents simply prefer working or think it is actually better for their children if they do so. My goal isn’t to make a moral argument for stay-at-home parents. Instead, I simply want us all to become aware of the need to write down our choices and assets even if they seem to defy calculation. Think of these items as lines on your emotional balance sheet.
Maybe in your situation, the item or asset has nothing to do with a parent staying home. Perhaps your emotional balance sheet shows another item that is hard to define by numbers alone, like having children in the first place. Several years ago, Nadia Taha estimated in an article in The New York Times1 that the cost of raising a child could be in the millions. That’s a very hard number to fit into any budget. And what if you decide to multiply that number by two or three? After doing the math, why would anyone have children?
You could easily conclude that having children is always a bad financial decision and be right — mathematically. Except for the little issue of the value you place on having and raising a family. That value won’t fit neatly and numerically into any traditional asset or liability column, but it will fit on your emotional balance sheet.
For me, the cost of raising my children pales in comparison to what I have received. The emotional return on investment makes a mockery of the idea of trying to translate my experience into a dollar amount. But that is because I place an immeasurable value on those relationships. You might see it differently, and that’s the point.
If we limit our view to what can be measured in dollars, most of what brings us happiness could be defined as bad financial decisions. Travel, time with friends or long meals with parents could all qualify (or be disqualified, as the case may be), unless we’re also weighing the benefits that we can’t enter into a calculator. Real financial planning must acknowledge that reality.
I suggest you try building an emotional balance sheet with all the items you value. You don’t need to attach a specific price tag to them, but it doesn’t hurt to include a rough estimate to remind you that these items are valuable to you. Then, when someone makes a blanket statement about what qualifies as a bad financial decision, you’ll remember that it may not be a bad decision for you.
Carl Richards is a financial planner in Park City, Utah, and is the director of investor education at the BAM Alliance. His new book is "The One-Page Financial Plan: A Simple Way To Be Smart About Your Money." His sketches are archived on the Your Money page.
1 The Cost, in Dollars, of Raising a Child, By Nadia Taha, Published in The New York Times on November 13th, 2012