The high cost of being a stay-at-home parent

Child care is likely to cost you a small fortune – whether you hire a professional or take on the task full time yourself. So it's critical that you take those costs into account as soon as possible.

"When you start to think about having a baby, it's time to think about what your overall household budget looks like and how child care will fit into that," says Alyssa Johnson, vice president of global account management for Care@Work, a division of Care.com that customizes corporate care benefits. "After looking at your mortgage, your utilities, your groceries, what would you have left for child care, and how do you juggle things around?"

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Consider this: On average, across the nation, day care for a child under the age of 5 is $9,589 a year, according to The Care Index, a report from online child care resource Care.com and policy research institute New America. The average annual cost for having a nanny is $28,354. And what you actually pay can vary greatly, depending on many factors including your child's age and where you live. For example, full-time care for infants in day care can be as little as $6,590 a year in Arkansas – where that still equates to about 15 percent of the state's median income – and as much as $16,682 a year in Massachusetts, or 25 percent of median income, according to the Care Index.

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Facing those kinds of bills, many parents may understandably try avoiding them altogether by staying home. After all, it's basically free to do-it-yourself child care, right? Of course, you'd be giving up your current salary to become a stay-at-home parent. But if that monthly take-home pay is about the same or less than the monthly cost of child care, you might think the decision is a no-brainer.

Not so fast. Remember that, on top of your paycheck, you'd also be losing employee benefits – including possibly your employer's contribution to your 401(k), i.e., free money – and opportunities for raises.

That's what economist Michael Madowitz of the Center for American Progress took into consideration when making this decision for his own growing family. And much to his surprise, he had trouble finding any widely available tools to assist other people in making these calculations. Why wouldn't such a thing already exist? "I think there's a real tension on not wanting to put a price on something like this because the time you spend with your kids is fleeting and so important," he says. "To openly say this is a financial decision, I think people are really uncomfortable with that idea."

And though you do have much more to consider when it comes raising a family, the money angle is indeed extraordinarily important. "I would love to spend a ton of time with my children and would totally take x years off to do it," says Madowitz. "But I really need to know the price of something before I buy it."

So he and the Center for American Progress developed a calculator that gives you a better idea of how much you'd really be giving up in order to stay home with the kids. You enter your gender, age, current salary, when you started working full time, when you plan to stop working, how long you intend to stay out of the workforce, your planned retirement age and you and your employer's current 401(k) contributions. The tool then tells you how much you stand to lose total in lifetime earnings.

[See: 12 Money-Saving Ideas for New Parents.]

For example, let's say a 29-year-old woman, who started working at age 22 and currently makes $50,000 a year, wants to step away from the workforce for five years to focus on family. Taking into account that she contributes 6 percent to her company's 401(k) and collects another 3 percent contribution from her employer, those five years off would cost her $250,000 in income, along with a potential $226,373 in wage growth and $189,072 in retirement assets and benefits over the course of her life. Her total loss: $665,445.

And that's not all. Even once you feel ready to re-enter the outside work world, it may not be so ready to welcome you back. "One challenge that I see over and over is people are so short-sighted when thinking about this transition," says Nicole Mayer, financial consultant and partner at financial planning firm RPG Life Transition Specialists, based in Riverwoods, Illinois. "They think they're going to be able to just jump back into the workforce at the same level that they left, but a lot can happen in four or five years, and you may not be able to work at the same level. You have to think about the long-term impact taking time off will have on your career."

In other words, the longer you stay out of the workforce, the harder it becomes to get back in – and the greater your total income loss gets.

Compare all that with the $47,945 an average American family would pay for five years in day care, and the answer to that no-brainer decision might flip-flop and make continuing to work the most logical option.

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Clearly, choosing between having to pay a big necessary expense today or face a potentially huge financial loss over the long term is no easy task. Plus, you need to consider your own preferences and other factors on top of the financial aspect. The right answer will be different for every family. Just be sure you're looking at the big picture and the long term when making the choice for yourself.

"It's always going to be a struggle, and it's a difficult decision for anybody," Mayer says. "Kids are awesome, but you have to know there's going to be sacrifice. You have to be really savvy about making these decisions and really think about the long term."