Going Back to Work: Your Financial Game Plan
Returning to work after an extended break — whether for maternity leave or time at home with your kids — comes with its fair share of challenges. Beyond the logistics of balancing work and family, reentering the workforce makes your household finances just more complicated. A little financial planning may help the transition from childcare costs to adjusting your budget for a second income smoother.
Without a plan, the financial impact of returning to work can add unnecessary stress — right when you’re already juggling enough.
Before you step back from the workforce
Your return-to-work financial plan actually begins before you step away. Whether you’re taking time off for caregiving, personal growth, or a well-earned reset, the groundwork you lay now will shape how smoothly your transition unfolds later.
Here are key steps to consider before pausing your career:
- Build a financial cushion. Aim for 6–12 months of living expenses in an accessible account to give yourself breathing room and flexibility.
- Maximize retirement contributions. Consider fully funding your 401(k), IRA, or spousal IRA while you’re earning to keep wealth compounding in your absence.
- Review health coverage. Compare options between your employer, a partner’s plan, or the marketplace to avoid coverage gaps.
- Pay down high-interest debt. Reducing or restructuring debt before your household income decreases may help preserve cash flow.
- Protect your long-term plan. Review estate documents, insurance coverage, and your overall wealth strategy with your partner.
- Explore flexible income opportunities. Consulting, freelance work, or passive income can help maintain independence and ease your transition.
If you share finances, talk openly about how you will share household money during your time away.
- Will your partner increase retirement contributions on your behalf?
- Will they cover more day-to-day expenses while you pause your income?
- How will you both plan for your eventual return?
Clarity and shared expectations now can prevent stress and strengthen your financial partnership later.
8 steps to take when you reenter the workforce
1. Assess your financial starting point
Before you reenter the workforce, take stock of your full financial picture — current and expected income, expenses, savings, and debt. This baseline will guide every decision moving forward.
A return to work often shifts your tax situation, possibly bumping your household into a higher bracket. Revisit withholdings, deductions, and savings goals to ensure alignment. If your new employer offers a retirement match, plan to take full advantage of it from day one.
A comprehensive review of debt, insurance coverage, and investments may help your money work efficiently as you transition back.
2. Budget for the transition back to work
Reentry brings both new income and new expenses — childcare, commuting, professional wardrobes, continuing education, or networking costs.
Be realistic about how much of your paycheck will go toward these changes. The unpaid household labor that filled your time before will now need to be shared. This is the perfect opportunity to restructure roles and routines so that the division of time and money reflects both partners’ contributions.
Your budget should reflect your values as much as your numbers. A thoughtful plan can help you stay aligned with your long-term goals while supporting a balanced home life.
3. Rebuild emergency savings
If you used your savings during your career break, replenishing your emergency fund should be your top priority. Aim for 3–6 months of living expenses in a high-yield savings account and automate contributions each pay period—think of it as paying yourself first.
Align with your partner on how much of your new income will go toward rebuilding reserves versus other goals, such as debt repayment or investing.
Life is unpredictable, but having that cushion restores confidence and flexibility as your routines evolve.
4. Restart retirement & long-term savings
Time away may have paused your contributions, but it’s never too late to catch up. Maximize your employer-sponsored plan, such as a 401(k) or 403(b) especially if there’s a match.
If cash flow allows, gradually increase your contribution rate to close the gap left by your career break. And if you share finances, make sure you are both working toward a unified, long-term plan.
5. Manage debt & credit health
If debt has accumulated during your time away, develop a clear repayment strategy. Start with high-interest balances and consider refinancing or consolidating to reduce rates and free up cash flow.
One proven approach is the ‘snowball method,’ which some individuals find effective for managing debt:
- List debts from highest to lowest interest rate.
- Pay minimums on all but the highest-interest loan.
- Apply any extra funds toward paying off the top loan.
- Then, roll that payment into the next balance.
Each payoff builds momentum and confidence as your payments “snowball” into greater progress.
Regularly monitor your credit score and report, as healthy credit expands your flexibility for future goals like refinancing or home purchases.
6. Maximize employer benefits
When you rejoin the workforce, review your employer-sponsored benefits comprehensively:
- Health, dental, and vision coverage
- Life and disability insurance
- Tax-advantaged accounts (HSA, FSA, Dependent Care FSA)
Coordinating with your partner may help avoid overlapping coverage and optimize your household benefits to be cost-effective and comprehensive.
7. Adjust taxes & withholdings
A new job means a new tax reality. Update your W-4 to reflect your household’s current income and filing structure. Take advantage of opportunities like increasing pre-tax retirement contributions or using FSAs and HSAs to reduce taxable income.
If your partner also works, coordinate your filing status and withholdings to ensure accuracy —neither too much nor too little.
8. Plan for long-term financial growth
Once you’ve rebuilt your financial foundation, look ahead:
- Increase contributions to retirement and brokerage accounts
- Explore real estate or passive income opportunities
- Update estate documents and beneficiary designations
If you share finances, align on your investment philosophy and estate plans. A unified approach keeps your household working toward financial independence together.
The big picture
Stepping away from and returning to the workforce are two of life’s most significant transitions. Both require foresight, communication, and financial intention.
By planning, clarifying roles, rebuilding savings, and maximizing benefits, you set the stage for a future that’s not just financially stable but truly aligned with your values and goals.
Whether you’re planning your pause or preparing your comeback, proactive financial planning helps both seasons of life feel secure and successful.
This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.
