Considering the move to one income

Many families feel pressure to have two incomes to make ends meet. Conversely,

working parents often wish they had more time with their children and a less hectic home

life. If your family is wondering whether it makes sense for one parent to stay home and

help care for the kids, little math and soul searching can help. You should determine if

the cost of working is greater than the reward at the end of each pay period — and how

you can achieve the right balance in your home.

Trading a paycheck for playtime

Staying at home can pay dividends by giving you more time with your children,

reducing work-related stressors and making life simpler. It can also mean less money for

day-to-day expenses, and may jeopardize your ability to save for a vacation, college,

retirement or other family goals. If your family can’t manage without your income or you

can’t imagine giving up the career you love — and you are comfortable sharing the

responsibility of childrearing with family members or trusted caregivers — your answer

may be “no.” The loss of career traction is a valid reason for staying put. On the other

hand, if you can’t bear the idea of missing milestones that may take place when you’re at

work, or you suspect you are not making enough money to make it “worth it,” you owe it

to yourself to figure out how to make one income work.

Consider the real costs of working

When was the last time you added up the costs associated with holding down your

job? You might be surprised by how expensive it is to be gainfully employed. Total the

costs of being in the working world every day and take a hard look at the tab. To clarify a

murky bottom line, ask yourself:

• What do you spend to commute to work each day? (Don’t forget to include gas, car

repairs, bus fare, etc.)

• How much money do you pour into your wardrobe, dry cleaning and other work-

related expenses?

• How much do you pay for day care?

• How much do you spend on prepared food and dining in restaurants?

Subtract the sum of these expenses from your take-home pay to arrive at your “adjusted”

income. You may find you have less to lose than you thought by removing yourself from

the workplace.

Find ways to scrimp and save

Erasing one half of your earnings from a two-wage-earning household is bound to

hurt, but you can minimize the damage by creating a budget and sticking to it. Look at

your monthly expenses to determine if you will fall short on one income. If the numbers

don’t add up, look for ways to cut back. Can you manage with one car? Can you reduce

your mortgage payment? Are you willing to cut back on dining out and other luxuries?

As an alternative to leaving the workforce completely, you may find that a part-time job

can help you gain more family time and keep enough income flowing into your coffers.

Talk to a financial planner

A financial expert can help you evaluate the impact of moving from two

paychecks to one, especially with the recent growth in unemployment numbers. With a

financial plan in place, you can set spending, saving and investing goals to determine

what is right for you. If you decide having one parent stay at home is the best

arrangement for your circumstances, then a financial advisor can help you move forward

while keeping in mind your other important goals for the future.

Daniel J. Lensing, CPRC

Financial Advisor

Business Financial Advisor

Ameriprise Finanical Services, inc.

14755 No. Outer 40, Suite 500

Chesterfield, MO 63017

Tel: 636-534-2097

This communication is published in the United States for residents of Missouri and

Illinois only; and this advisor is licensed only in the states of Missouri, Illinois,

California, and Minnesota.

This column is for informational purposes only. The information may not be suitable for

every situation and should not be relied on without the advice of your tax, legal and/or

financial advisors. Neither Ameriprise Financial nor its financial advisors provide tax or

legal advice. Consult with qualified tax and legal advisors about your tax and legal

situation. This column was prepared by Ameriprise Financial.

Financial planning services and investments offered through Ameriprise Financial

Services, Inc., Member FINRA & SIPC.

© 2008 Ameriprise Financial, Inc. All rights reserved.

File # 80263

(12/08)