Quality of life really is what it is all about. That means that what is important to you and what works for your family may not be what is important to someone else and what works for them. (wouldn't it be nice if SIL could get that memo!?)
I was a SAHM for 11 years. I worked, like you, partly independently at home. Of course working from home is working... if anything it is HARDER than going to the office because you have to balance everything else too! My oldest has special needs and as those have increased with her size and age I've had to focus more on her care and couldn't run my own business any longer.
Because of my daughter's special needs and because we have a younger daughter that needs a lot of attention and love too, I stayed home. For us it worked because my older daughter's special needs meant that no day care would take her. Even public schools have a hard time. My youngest is starting 1st grade this year so it will be the first time she's in school full time without us having to pay anything (we paid for full day Kinder, which she LOVED, but it cost us an arm and a leg).
Financially we've always struggled a bit, but my "job" was partly to make it work. I couponed. I learned how to cook yummy, healthy, frugal meals. I kept the house looking nice, and tried to fix or make things to make it feel homey and keep everything going. It worked for us. After hubby ended his contract with the Army after 10 years, we found ourselves making about 1/3 what we were before, and really struggling. We moved to a VERY small house and cut out anything that wasn't absolutely 100% necessary. He found a job he loves but it just doesn't pay the bills, and if that wasn't enough, they just cut his hours in half. That means something has to change.
Hubby wants to go to school (the Army will pay for it, and will send a small stipend to us to help out financially when he does), and work part time. I want to support him in this endeavor, but we have to find a way to make ends meet.
I am now a working mom (wow- I think that's actually the first time I've said it). I started work as a social worker about 3 weeks ago, helping families of children with mental illness to find the support and resources they need. I can do about half of it from home if I choose to. For our situation that helps a LOT, especially because it is flexible hours based on when I am able to go meet with clients, so that works with our wacky schedule too.
I'm 6 months pregnant, so things will change soon, but I am hoping that I will be able to have family help with watching the little guy while I have to do my work with clients. For us right now, we NEED me to work, and I can still do it with spending MOST of my time with my family. For our family, it would not work for me to have a job if it meant I was away from the home 40+ hours per week. Our family dynamics can't support that. On the flip side of that, our finances really can't support me not working.
I'm very lucky to have the job that I do, because I can still be as involved in my family's lives as I want to be, breastfeed, be active at the schools, take part in my oldest daughter's care and meetings with the agencies that work with her, etc. I know this is a charmed situation and I am definitely not taking that for granted. It took me 11 years to find the right place to work, and I am definitely excited about it now. :)
Even with me working, we're not making any changes in our style of living. Our spending is staying the same (which is practically nil). Our bills are staying the same, except that we're trying to pay off some things we haven't been able to attend to like we needed to. Hopefully our car will be paid off within 6 months. The only thing that changed is that we finally were able to get car insurance. I know it isn't a luxury but on our budget it had to be. We're hoping to be able to buy insurance for my youngest daughter and myself too, since everyone else is covered through various free plans. We do have long term goals (eventually building an earth home on property we don't yet own, and building up retirement over the next 20 years at 2 jobs), but that is LOOOONG term. Nothing in our situation is going to change anytime in the next few years, even with me working. Other than that, we're just wanting to make ends meet - not be "wealthy." (HA!)
That said, it sounds like your situation is working for you too, Tillymonster. You're working, and still able to spend time with your family, and avoid having to use full time childcare, etc. Your quality of life is what you want it to be, based on the options available to you.
Of course we would all love more money, and we would all love more time. We just have to choose the balance that works in our lives for our families. You're doing a great job holding on to what matters most to YOU.