I was a financial planner and wealth advisor for over a decade before I decided to pause work and be a stay-at-home mom. While it was a hard decision to make, I knew it would be temporary. It was time to support my husband more in his career and that included moving closer to his company headquarters. With a new move, no nearby family, my kids being young, and the cost of childcare, we decided I would stay home with the kids. Financially, we knew we could afford it for a little while and work would be waiting for me when I was ready to jump back in.
As a stay-at-home mom for two years, I cherished the time I spent with my children, but it also came with a financial trade-off. My husband and I split our tasks according to our skills, preferences, and time. He worked, sometimes traveled, and handled the cars and lawn care. I took care of the kids, their activities, cooking, and the laundry. Oh, the laundry!
With so much to do, I barely had time to check my email or phone, let alone manage our personal finances. It felt like there weren’t enough hours in the day to accomplish everything. Since my husband earned the income, I depended on him for information about our cash flow. Our health care, income, and most other financial matters were linked to his accounts. I could have accessed the finances if I wanted to, he would have gladly shared them with me, but it seemed too inefficient and time-consuming for me to investigate.
The irony is certainly not lost on me. Even with my financial education, training, and work, it was all too tempting to let my husband do the “heavy lifting” in tracking our finances.
Stay-at-home moms need to stay connected to their finances
As a stay-at-home parent it’s easy and understandable to delegate financial tasks and decision-making to your spouse. However, this can be a costly mistake. While more men are now stay-at-home dads, women still make up the majority of stay-at-home parents. Numerous studies show that women fall behind men in financial education and confidence. It’s never too late to learn about your family’s finances and how to manage your financial plan. Here are some tips to get you started:
1.Don’t skip meetings with your financial advisor
Be there to listen and learn. Many people feel overwhelmed with finances because it can sound like a different language, but don’t let this intimidate you. Use the meetings to gain financial literacy and understand how your financial plan works, along with what accounts you have and how to access them if needed. It’s a good idea not to just know about your finances, but to make sure you and your spouse are on the same page about your financial goals like day-to-day spending and how much is being saved for your retirement nest egg to support both of you after retirement. Don’t hesitate to ask, and remember, there are no bad questions.
2.Know your net worth statement or balance sheet
Before computers, most of my clients always knew where their money was. Now, with more technology, I find that more and more of my clients don’t keep track of their assets. Whether you use technology or not, it’s important to keep track of your assets and review them on a quarterly basis. Do you know much money you have together and where it’s located? Do you know your net worth?
3. Be familiar with your spending plan
This information can help give you freedom and confidence even if you are in a good financial state and generally don’t need to worry about a budget or your spending. You do not need to track every penny, but you should have a good idea of what it costs to live your lifestyle and how to not let your spending get out of hand. This is a key part of any financial plan, and your advisor can help you with this number.
4. Protect your assets
In a one-income family, the greatest asset is oftentimes the earned income. Be sure to protect it with disability and life insurance in the event something happens to your spouse. Even if you aren’t earning any income, you should have a life insurance policy to help your spouse with additional costs if anything happened to you. The same holds true regarding the spouse providing the primary income. With life insurance and a large enough policy, you would be able to live the lifestyle you are accustomed to should you lose spousal income due to death. I know this isn’t a pleasant topic, but an advisor’s job is to make sure clients are prepared for anything. Let your advisor handle this for you so you can rest easy. Learn more on why life insurance matters.
5. Build an emergency fund
Single-income families may need to save more than dual-income families. Your emergency fund should cover one year of expenses, plus potential medical expenses and moving costs. This acts as a cushion in case of emergency.
6. Establish credit
Make sure your name is on the title for all accounts, and that the beneficiary information is regularly updated. Also, consider having a credit card in your name. Use it for purchases and pay it off every month. This will help maintain a good credit history.
7. Save for retirement
Open and contribute to your own retirement account. Even if you don’t earn taxable income, you can contribute to a spousal IRA account. For example, depositing $6,000 a year to a Roth IRA for 35 years, earning 6% annually, can potentially grow to $668,609. A Roth IRA calculator can help you plan your contributions and potential growth. Ask your advisor what options you have based on your situation.
8. Save for education
If you have children, start saving for their education as soon as possible. As every parent knows, time flies. College costs are astonishing, and they keep rising with the average cost at $23,630 for out-of-state public universities, $10,662 for in-state, and 42,162 for private universities in the 2023-2024 school year.[1] Even if you think you don’t want to save much, do more than you think you want or need to, because the early years can make a big difference.
9. Explore volunteer work
If you have time and are looking to fill your day or prevent resume gaps, you can think about volunteering. Whether at your children’s school, organizations, or in your community, there are many places to keep you busy and social. You can volunteer at a job in your field of work and continue to gain skills until you are ready to join the workforce. If you want to make extra income, you can also take on part-time or freelance work. Just make sure to document and keep track of your payments. Tell your advisor about it too.
There’s a lot of pressure on families today, particularly for those who live on one income. It’s important to stay up to date with your overall finances. While it’s tempting to procrastinate and put off some of these tasks, I encourage you to engage with an advisor to help you stay on track.
Advisors work with clients to understand their financial situation and offer tangible ways for them to help achieve their goals. Maintain an open and honest line of communication with your advisor. Rely on Mercer Advisors to connect the dots in your financial plan so you don’t need to worry about your future. We are here to help you make informed decisions. If you’re not already a Mercer Advisors client, feel free to set a time to talk to an advisor.
1 Nesbit, Josephine “How Much Does It Cost to Attend One of 2024’s Best Colleges?” GO BankingRates, Nasdaq, 3 January 2024.
