New to Motherhood? Financial Tactics for Different Scenarios
I recently came across an interesting article in MarketWatch that highlighted the financial and lifestyle stressors that many new mothers experience. The “mommy effect,” as the author calls it, is something many young women may experience – being new to motherhood, trying to juggle a career, an expanding family, and even their changing views on employment.
While reading the article, I thought about how the overall cost of raising a child has risen (and therefore, stressors), and the financial and lifestyle challenges many women face in different household scenarios (divorced new mom, working part time new mom, and a household with two parents). Below are some tips that might help new moms strengthen their finances before and after having a baby.
Keep in mind that the tips are not specific to each scenario, but rather are important things to consider when it comes to each individual’s situation.
- Stay at home new moms. Daycare can be a serious expense. If a mother decides to forgo her career in order to stay home with the new baby and offset costs, going from two incomes to one is a serious adjustment. Couples should have open and frequent conversations before the baby is born about what financially makes the most sense. If it means becoming a stay at home mom for an extended period of time, then a couple should understand that budgeting is critical for their individual and shared financial future. Also, with no income coming in from one partner, this is a prime opportunity for the new mom to open and contribute to a spousal IRA. This can provide some cushion for future savings and security.
- Working part-time or going back to work new moms. It’s increasingly difficult for young moms to stop working because, for the most part, couples need dual incomes. Juggling a new baby and going back to work after maternity leave can be stressful, so it’s imperative for couples to have open dialogue and manage the workload together. It might also be an ideal time to consider working with a financial advisor to help take the pressure off yourself. You can rely on a financial advisor to look at finances, provide guidance on adjusting your budget for your new lifestyle, help with estate planning (especially important with new baby!), and determine if you are on track toward a solid financial future.
- Divorced new mom. Budget, budget, budget! I cannot stress this enough for moms in this situation. I know from personal experience how difficult this scenario can be financially, but what worked for me was knowing my net income, and truly knowing (and paring back) monthly expenses so I wasn’t blindsided by bills or unexpected expenses. Focus on your financial future as well – contribute as much as possible to your 401(k) plan. “Pay yourself first” and then you can budget around the rest of your take home pay. It might be difficult, but you’ll be amazed at the power of compounding.
No matter any woman’s situation in motherhood, the first year is always a transition, but don’t forget to focus on your finances, and ultimately, your future.