If you could invest $20,000 per year for five years and this investment returns 100 percent in the first five years, 200 percent in years 5-10, 300 percent in years 10-15 and 400 percent in years 15-20, all in after-tax dollars, would you be interested? This is where you nod in excited agreement!
I oversimplified the situation above, and you can easily tell that the investment at $20,000 after tax per year for five years is the child care costs for your child for years 1-5, while you are out there being a fabulous working mom. I am assuming that after year five, your child will attend a public school, dramatically lowering your child care costs. The returns are your work earnings, growing over time due to raises, promotions, bonuses and your general awesomeness. To be added to the above returns are the medical and dental benefits, savings plan, retirement plan and a variety of other fringe benefits that may be available to you.
There are many reasons why women do not return to work after becoming mothers and I respect the choices a mother makes. I often hear, however, that mothers do not return to work because it does not make financial sense. I hear that their after-tax salaries barely cover the cost of child care, so why bother going to work to just turn around and write a check to a daycare center or pay cash to a nanny? What is missing from these statements is the word TODAY. You may be right, TODAY. The cost of child care may be a large percentage of your salary now, but your salary today is a fraction of what it can be in the FUTURE if you stay in the workforce, and nurture your career, along with your children.
If your dream is to have a career and raise children, these are the things I wish I would have known before I became a working mom, as they would have saved me some worrying:
- Child care costs will generally decrease dramatically after your child is five years old
- Your salary will generally increase with annual raises, promotions and job changes.
- Your bonus may grow as your career grows
- Your other sources of compensation (stock options, restricted stock, etc.) may also grow as your career grows
- Therefore, the percentage of your total earnings spent on child care costs decrease dramatically after year 5 and continuously until college.
Of course, I am assuming that you are hard working, talented, a little lucky and don’t stink at your job.
If your dream is to have a career and children, don’t leave your career before you even got it started! Stay in your career, knowing that the first few years are the lean years of investment for the next few years, which can bring tremendous financial, personal and professional growth.