A lot of women fall into the stereotype of caring for others first and themselves last.
Some women let this go as far as ceding control of the household finances to their spouse and not worrying about their own situation.
It doesn’t matter if you aren’t the breadwinner and have a single income family. As the saying goes, “a man is not a financial plan.”
Stay-at-home moms need to be involved in the family finances and take the lead on managing their own future. In fact, I’ll go as far as saying women shouldn’t allow their spouses to take care of all the finances (and vice versa).
I’ll let you in on a little secret: the more ownership you take in your finances, the more confident you become. You’ll have more clarity planning for the future.
And we women need it. Chances are we’ll outlive our spouses plus we’ll need to figure out how to balance saving for retirement, saving for kids’ college, and caring for aging parents.
Managing your Money as a Stay-at-Home Mom
So, if you haven’t taken an active role in your family finances yet, where should you start?
Have a credit card in your own name
I am of the belief that credit cards are not bad and that every woman should have one in her name and her name only.
You should be able to qualify for a card based on family income (your spouse’s) as a stay-at-home mom. If you have trouble controlling your spending or don’t qualify for a card, then try a secured credit card.
One reason to have a credit card in your name is to build credit for yourself. If you end up divorcing (about a 50% chance) or your spouse dies, it will be your credit that determines the rate you pay for loans, if you can even get one.
It’s your credit that shows up on background checks for jobs or if a landlord does a background check.
Having good credit in your own name also provides a bit of peace of mind if your spouse’s finances take a turn for the worse. Or when you become a widow.
Have your own savings account
It’s good to have a joint savings account, but you should also have one that is in your name only.
You can build up the account with gift money, cash earned from side-hustles, or whatever. The point is to have a little safety net in case things go sideways.
Set up an IRA account in your name
If your spouse has a retirement account such as an IRA in his name and you don’t, then it’s time to fix that! You can, and should, set up an IRA in your name and you qualify to do so with a spousal account. This means if your spouse earns enough to contribute to both accounts and you file “married filing jointly,” then you can have an IRA in your name.
Note that this doesn’t mean you look for an account type called “spousal IRA.” It’s just lingo that signals how you qualify to contribute. You just literally open either a Roth IRA or a Traditional IRA account.
As to whether you choose a Roth IRA or a Traditional IRA depends on your family income (the Roth has income limits) and when you want to pay taxes.
For 2020, you are eligible to contribute up to $6000 in an IRA or up to $7000 if you are age 50+. This means if you are a single income family and have the budget to do so, you could put away $12,000 in IRA accounts per year, combined (or $14,000 if you are both over 50).
Have life insurance
As a stay-at-home mom, you should absolutely have life insurance (and so should your spouse!).
Think about all the work you do at home.
You cook, clean, care for the kids, run errands, and more. A working single parent will have a hard time doing all of that, let alone doing it well. So consider the cost of a weekly housekeeper, daycare (which is as much or more than college per year), and delivery services. Once you figure out that annual cost and multiply it by the number of years the children are at home, you’ll know the minimum amount of life insurance you should have covering you.
And as a stay-at-home mom, make sure your spouse has enough life insurance to see you through to retirement including the cost of training to re-enter the workforce along with helping handle other household expenses like housekeeping and daycare.
Make sure family assets are in both names
Make sure the deed to your home is in both your names or is considered community property if you live in one of the nine community property states.
Do you have a family car, or a car for him and one for her? The same idea goes for your vehicles – if it’s a family car, then you likely want to be listed as a joint owner.
Knowledge is power
I’ve heard from too many women who say they don’t know anything about the finances in their family and that they let the husband handle everything.
Later, some of them tell stories of how hard it is to recover financially from divorce, get credit, or that there were debts they weren’t aware of. It is so sad.
The best thing you can do is learn how to handle the family finances. Not sure where to start? There are lots of great books available (and many have audiobook versions as well).
Learn what accounts are where, start saving, and take the lead in securing your own and your family’s future.