What All Parents Have in Common with Bristol Palin

On the surface, Bristol Palin's story appears to be about a teenager's struggle with abstinence and its consequences. But while reading a People Magazine article on the young mom, I realized that I (and other parents with young children) have more in common with Governor Sarah Palin's daughter than I could have ever imagined. We all need to figure out how to budget and pay for the added expenses that come along with a little bundle of joy.

According to the U.S. Department of Agriculture, the average family spends between $11,000 and $16,000 during a baby's first year of life and more than $200,000 before that kid reaches 18. Ouch!

How parents juggle those costs differs for every family. In Bristol's case, she says she working two part-time jobs to help pay for all the diapers and baby formula.

But while I was reading about Bristol's efforts to earn money, it struck me that she never mentions having to pay for child care -- the single largest baby-related expense for many working families. In fact, in a previous article she discusses how fortunate she is to have her grandmother and other family members around to help out.

Most parents aren't lucky enough to have access to free help. Indeed, the high cost of child care is often a key deciding factor for many mothers and fathers when they try to figure out if they should stay home or return to work after having a baby.

If one parent earns less than it costs for child care, the decision can be fairly straightforward. That parent usually stays home and the family starts to rein in their budget. But what do you do when you're breaking even after child care or coming out only slightly ahead?

This is a dilemma I faced myself. I decided to keep working so that I can keep my skills up to date and maintain my long term earning potential. This is important to me since I know my family will need my income once my daughter starts elementary school, especially as we try to reach our retirement and college savings goals.

Here are some thoughts you may want to consider when making your choice:

• Should you give up your job, you'll lose more than just your paycheck. You'll also miss out on valuable corporate benefits, such as access to a retirement account like a 401(k), subsidized health insurance, and in some cases, a flexible spending account that allows you to use pretax dollars for health care expenses and child care.

• If you stay home for a few years it's not always easy to find a new job. According to Sylvia Ann Hewlett's book Off-Ramps and On-Ramps: Keeping Talented Women on the Road to Success, more than a quarter of high achieving women who stop working to care for children or elderly parents struggle to find their way back into the workforce. And of those who do succeed, only 40 percent manage to secure full-time jobs.

• If that isn't bad enough, stay-at-home parents often take a pay cut when they do return to work. Women who take two years off find they lose 18 percent of their earning power. Stay home for three or more years and the average salary drops 37 percent.

For more on this topic and some helpful budgeting worksheets, you can check out my book The Wall Street Journal. Financial Guidebook for New Parents.

McCain Makes His Move on the Oldest Palin Daughter image by bpende, CC 2.0.