Financial Tips for Moms
by David Damm, Carolina Wealth Management
Pop quiz! Which U.S. institution employs the most workers nationwide, has been in operation longer than any other American entity, and assuredly will be in production long after many businesses have disappeared? The answer is motherhood. In reality, motherhood is not an institution and doesn’t get credit as a business or an income paying job. However, many would argue that the job of all mothers is, of course, priceless.
According to an article published on the USDA website, the average total cost of raising a child born after 2015 and up to age 17 can be estimated to be, between $233,000 and $284,000. The study was done for middle income families and it did not factor in education.
While most mothers would give their lives for their children, many do not realize how much financial security they give up as their job as “Mom.” They will spend the costs mentioned above to care for their children, but they also need to help grow and protect their family finances. With that in mind, here are some tips that mothers can take to help them achieve greater financial security.
Create a savings plan
The goal is for moms to pay themselves each month from household income as a way to save. The best example is to treat the savings like a 401k at a company. Moms will pay themselves first by setting aside a fixed dollar amount and contribute that money each month into a savings or investment account that is designed to grow money for future expenses or family fun. Unlike a 401k, the idea is not to invest in long term investments. Rather, the strategy is to create an emergency account for money that can be used in the shorter term in order to avoid credit cards.
Get adequate insurance
Make sure the family is covered for loss of future income, debt (home, cars, credit cards, etc.) and for the expenses mentioned above for caring for a child. If the spouse earns higher income, the larger portion of insurance should be on the potential loss of that income. However, single moms will need to protect their family as well. Term life insurance with a quality company is usually affordable. Long term care coverage should also be considered but it is generally more expensive.
Manage all household finances
Studies show that women are better managing money when left alone. After all, mothers are the CEO’s of most household spending decisions so why not make them in charge of all the bills? Managing all of the household finances allows the CEO to identify what are in the “must have”, “need” and “want” categories. It’s helpful to have a family budget.
Consider taking an adult education class
Mothers who want to return to the workplace or just want to learn additional skills should take the time to enroll in additional educational classes. This can be a double bonus as it provides the opportunity to make more money for the family and it can stimulate moms to learn another trade or hobby that they enjoy.
In summary, mothers should take the time to take care of themselves as well as the needs of their families. Happy Mother’s Day!
Advisory services offered through CWM, Inc. a Registered Investment Advisor. This material is for general information only and is not intended to provide specific advice or recommendations for any individual.