Count The Cost of Two Working Parents

Most people assume dual income families are better off financially. Two incomes are better than one, aren’t they? The answer is not always.

Around half of all children under two years of age have both parents in the workforce. When you take into account higher taxes, lower family benefits, child care costs, transport and the rest, the price of both parents going to work may offset the benefits.

The last thing I want to do is discourage people from entering or staying in the workforce. The truth is it’s not all about the money, many parents choose to return to work for other reasons like stimulation or the chance to socialise. However, it’s important you work out how much it’s costing you to bring in a second income… and whether it’s worth it for your family.

Tax and family payments

The real cost of two incomes can be much more than what you fork out in tax. Our means tested family tax benefit system hits second income earners, which are usually women, when they go back to work.

The more you earn the less Family Tax Benefit Part A your family will receive. Family Tax Benefit Part B cuts out altogether if the secondary earner, with a child aged 5 to 18 years, makes over $19,000 a year.

Transport

Add up how much you spend on getting to and from work. Include all tickets, taxis, parking stations, tolls, petrol and car maintenance. It’s not cheap. A weekly train ticket form Sydney’s outer suburbs to the CBD can cost close to $50.

Child care

Child care of up to a whopping $120 a day may seem okay when you’re comparing it to your gross income, but that’s not what you take home. Work out how much you’ve got left after you pay tax and transport.

Remember to take government help into account. You may be eligible for the Child Care Benefit, a payment to help cover the cost of childcare. The amount you receive will depend on your income and whether your kids are in an approved or registered childcare centre, but it could be as much as $184 a week for a child in approved care.

The quarterly Child Care Tax Rebate isn’t means tested. If you’re working and using approved childcare the government will meet 50 per cent of your out-of-pocket expenses, up to a maximum rebate of $7,500 per child each year. That halves the cost of childcare for many families.

Meals

There’s not much time for shopping and cooking after commuting home from work, picking up kids from childcare, and catching up on washing, ironing and other household chores. Work out how much extra you spend on dining out, home delivery and convenience meals from the supermarket than you would if you had more time to plan meals and cook.

Appearance

Think about how much you fork out on clothes for work and other expenses like make-up and dry cleaning. Some companies have strict corporate dress codes that require suits, collared shirts, ties and stockings. Other companies may provide a free uniform, which they even launder. The amount you spend depends on your profession and employer.

What’s your total?

Add up all your work related expenses. How much money do you actually make after you’ve covered tax and your other costs? If it’s a negative number you need to make changes. If you’re only breaking even or making a little bit of money it’s up to you to decide whether it’s worth it for your family.

Comments

0 #3 2011-04-26 23:01

sound advice as always Kochie ... sometimes people have to look objectively at the ins and outs and what's best for the family as a whole. great article

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+3 #2 2011-04-26 11:33

i always love your advice, its easy to understand and always relevent. After i read a post, i always feel motivated.
Wish we could see you when you come to Coffs Harbour, but sorry its not in our family budget.

Enjoy your time in our beautifull town. Thanks for the advice

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+1 #1 2011-04-26 10:17

A great article Kochie.

This is the reason why I choose to be self employed and work from home.

Not only to I save heaps of money and can claim some pretty cool tax deductions, I can balance this around my family.

Love your blogs. Hope you have had a wonderful Easter.

Cheers Leah

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