A few months ago, we asked you what questions you have about money. Nearly 1,000 responses were received, and one theme that came up again and again was the financial challenges of being a stay-at-home mom. Today we looked at: certified public accountant Ariel Lafont To answer a reader’s question about maintaining security and independence as a non-income spouse…
CoJ Reader: I have been a stay-at-home mom for eight years since my first child was born. I made this decision. My husband has always been 100% supportive of whatever choices I make regarding this matter. Although I feel this setup is still the best for our family, I am now completely dependent on his income. And if something happens to him, I don’t even know what to do. I don’t like this feeling, but I don’t know how to avoid it. I am the primary parent and am responsible for getting the kids to school, caring for them when they are sick, dealing with sports practice, homework, play dates, and taking on most of the household and emotional burdens. Given these considerations, there isn’t much room for a job that pays more than “entertainment money.” Did you dial the wrong number? Help!
Ariel: Actually, there are no “wrong” calls here. For many families, and for a variety of reasons, it makes sense for one parent to stay home. Depending on your individual income, this is often the most cost-effective route. But in the long run, you need to strategize and often consider uncomfortable “what if” scenarios. In an ideal world, all prospective parents would flush out these details before their children became a problem. In reality, no one wants to talk about it.
In other words, you’re not (at all) alone. Many stay-at-home parents find that these concerns creep in after a few years. For that matter, many dual-income spouses do the same. This is a family matter and requires both partners to be involved. When couples come to me for advice, I say:
Step 1: Chat. Partners should have a clear picture of the family’s financial situation, whether they are working or not. If not, there’s no need to panic (even if it feels like it). Instead, try leading with curiosity. It’s tax season now. There’s no better time to say, “How did you do last year? I want to understand more.” Just knowing what you have is a great first step. “I want to be more involved. Some people have lost a spouse and aren’t ready. We want them to feel safe.” Talking about money can be stressful, but it’s part of life and marriage. Approach it with a team-oriented attitude. Because that’s who you are: a team working towards the same goal.
Step 2: Have checking and savings accounts in your name. If you are, or are planning to become, a partner with no income, you will also need a plan to set aside some money in an account that only you have access to. There can be various reasons for this. This is because even in a shared account, you may temporarily lose access to your money. There’s no need to go down every rabbit hole of possible scenarios (medical incapacity, shipwreck on a deserted island, etc.). Are you still scared?). Make sure you can pay the bills if or when something happens to the person whose name is on your payroll check. You will both sleep better!
Step 3: Create full visibility and a routine to maintain it. Please be sure to know that how To pay the bills. Many people tell me they have no idea how their mortgage or rent is actually paid. Both partners should have a clear view of the family’s daily expenses and income. I suggest meeting once a month just to review bank statements, bills, etc. Know your login information and what will be paid out of which account. Be sure to understand your partner’s salary and any changes that may come with it. At the risk of stating the obvious: Just because you’re the partner without an income now doesn’t mean you’re not responsible for the household finances. Don’t give up your position.
Step 4: Purchase life and disability insurance. This is another scary job that no one wants to do, but you should definitely have life and disability insurance. While a policy for both the earning and non-earning spouses is ideal (families often need emergency child care due to the death or injury of the primary parent), everyone’s situation is different. If you can’t afford to insure both partners, it’s usually a good idea to prioritize the earning spouse. Many employers offer life insurance, but not all policies are created equal. Read the details and consider whether you need to take out additional insurance to make sure you’re truly covered. Again, it’s not everyone’s favorite task, but trust me, you’ll breathe much easier once it’s done.
Step 5: Create a retirement plan (for yourself). It’s easy to forget about saving for retirement when you quit your job, but the good news is that starting over is easy and financially great for the whole family (team spirit, right?). A spousal IRA allows the working partner to contribute to the non-working partner’s retirement account. I think some people find the idea of ​​“receiving money” from their spouse uncomfortable. But contributing to a retirement account means adding tax-free money to your family’s pot. And if the end goal is to live a comfortable retirement together, this is truly an all-around win.
Finally, if I were to suggest one optional step 6, it would be: Don’t waste your “fun money” work. It’s not about the income, it’s about the potential value of keeping your foot in the door. By the way, you may find that you don’t even have the bandwidth. that If so, that’s completely legitimate. Let’s be real. Full-time parents often have more difficult jobs than employed parents, especially at certain stages of parenting. But if you find that you have the energy and inclination to engage in the workforce in some small way, whether it’s maintaining a qualification, working on a short-term project, or just having coffee with an old colleague, it may strengthen more than the sense of independence you’re missing. Plus, it means there’s one less barrier to entry if you decide someday to start working outside the home full-time again.
That doesn’t mean you have to or that there won’t be other opportunities in the future. This is another option to consider. That’s the key takeaway from all this advice. It means “you have a choice.” You didn’t make the wrong call, you made the wrong call. be phone. Now you can do more.
Ariel Lafont is a certified public accountant, fractional CFO, and tax planning expert who advises both businesses and individuals on financial growth. She also writes a newsletter stupid rich manshares advice and explanations on all things finance. She lives in New York with her husband and rescue dog Lucy.
Thank you very much, ariel! Have a question about money? Let us know in the comments.
PS The 30 second habit that helped me stick to my budget. Do you talk about your salary with co-workers?
(Photo credit: Alina Hvostikova/Stocksy)
Source: Cup of Jo – cupofjo.com
