Empowering Stay-At-Home Moms with Financial Knowledge
- As a stay-at-home mom, it’s tempting to delegate financial tasks and decision making to your partner, especially if you don’t feel confident or knowledgeable about money.
- But opting out of learning about your finances can prove costly. Fortunately, there are several ways you can empower yourself to take control of your finances.
In most marriages, there is a division of labor to maximize efficiency. When my children were younger, I never felt like there were enough hands and adults to do all the things that a day required. For two years, I was a stay-at-home mom. I treasured these years, but they came at a huge financial cost.
During that time my husband and I divided up our tasks based on interest, competency, time, etc. For my family, this translated to my husband going to work (sometimes traveling for work), doing any and all activities that required heavy lifting, and dealing with the cars and our lawn. My job was to take care of the children, shuttle them to and from their activities, prepare food, and do the laundry. There was, and still is, so much laundry!
Considering time overall: there was hardly enough time to check email or answer incoming calls, let alone effectively manage our personal finances. Plus, since my husband was the primary breadwinner, if I wanted to know anything about that side of our cash flow, I would need his help. Our health care benefits, our income, and most other financial matters—they were all tied to him. I couldn’t log into my husband’s accounts or access his payroll and stock grant information. Actually, I could have—my husband would have happily accommodated my requests. But honestly, it all seemed very inefficient and time consuming for me to look at it.
I admit this to you. With all my financial planning education and training, and 20 years of working as a financial planner, I admit this. The irony is certainly not lost on me. Let’s face it—it’s all too tempting to check out for a couple of years and let the other person do the “heavy lifting” in tracking your finances.
Stay-at-Home Moms Need to Stay Connected to Their Finances
As a stay-at-home parent it’s easy, and understandable, to want to delegate financial tasks and decision-making to your spouse. Unlike other duties though, this can be a really costly mistake. While trends may be shifting to more dads staying home full-time, the reality is that women are still the majority of stay-at-home parents. And numerous studies have shown that when it comes to financial education and confidence in managing their finances, women lag behind men. Check out our Women and Wealth page to learn more.
It’s never too late to learn about your family’s finances and how to manage your financial plan. Here are some recommendations to get you started:
- Don’t skip the meetings with your financial advisor. Be at the meetings to maintain literacy. 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 obtain financial literacy and understand just how your financial plan works. Each Mercer Advisors meeting is designed to educate you. Don’t be afraid to ask questions. Remember, no question is a bad question.
- Know your Net Worth Statement or Balance Sheet. Before computers, most of my clients always knew how much was where. However, with more technology use, I find that more and more of my clients don’t keep this mental accounting in their heads. Whether you use technology or not, it’s important to keep track of your assets and reassess on a quarterly basis. How much money do you have together, and where is it?
- Be familiar with your Spending Plan. This information can give you great freedom and peace of mind. In my situation, because I was not watching the finances, I let our spending get a little out of control. It’s amazing how quickly you can lose sight of this if it’s not an enforced habit. Amazon.com and Diapers.com did not help. You do not have to track your every penny, but you should have a good idea of what it costs to live your lifestyle. It’s a fundamental piece of every financial plan, and your advisor should be able to help you with this number.
- Protect your assets. In a one-income family, the greatest asset is oftentimes the ability to earn income. Be sure to protect it with disability insurance and life insurance. My job as an advisor is to analyze the impact of a sudden death or disability to make sure my clients are prepared. No one enjoys going down this road. Make your advisor do it so you can sleep at night.
- Cover yourself (for emergencies). Single-income families may also need a larger emergency cushion than dual-income families. This emergency cushion should cover one year of expenses, plus potential medical expenses and moving costs.
- Get credit. Make sure your name is on title for all accounts, and that the beneficiary information is up-to-date.
- Open and contribute to your own retirement account. Even if you are not earning taxable income, you can contribute to a spousal IRA account. For example, contributing $6,000 per year to a Roth IRA for 35 years, earning 6% annually, can grow to $668,609. A handy calculator can help you determine your contributions and potential growth. Ask your advisor what is available to you based on your situation.
- Consider part-time gigs. If you take on part-time or freelance work, document any income you make, and make sure you tell your advisor about it. Working part-time can help you stay relevant and current in case circumstances change and you decide to re-enter the workforce.
- Pay attention to your credit history. In addition, consider having a credit card where you are the primary account holder. Use it for expenses, and pay off the balance monthly.
- Start saving for education. If you have children, start saving for education as early as you can. Every older parent I know tells me, “The days are long and years are short.” College costs are astonishing, and they keep rising. Even if you think you might not want to contribute a lot, do more than you think you want to, because the early years are more powerful than those down the line. 529 accounts are incredible savings tools, especially when they have time to grow.
There’s a lot of pressure on families today, particularly for families who live on one income. It’s easy to procrastinate and push aside some of these not-so-fun duties (again, I have been there), so I encourage you to engage with an advisor to keep you on track.
As an advisor, I work with my clients to identify their financial goals, write their goals down on paper, and offer tangible ways to meet their goals. Be sure to maintain an open and direct line of communication with your advisor. Lean on your wealth team to do the heavy lifting and distill the tremendous amount of information that is out there. We are here to help you make informed decisions.
We have many resources to help you on your path to economic freedom:
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