Preview: This article provides strategies on how to protect yourself financially as a stay at home mom. Economic dependence is risky and making financial choices while raising kids is crucial.
In a creaky rocking chair I cradled my six-week-old son. His white-blonde hair glowed from the July sun beaming into the windows of the apartment, making him look even more angelic.
Tears streamed down my face, just the thought of returning to my job flooded my body with anxiety and grief. I’d loved my job, but now? Everything had changed.
25 years later, I can remember the intensity of those heady postpartum weeks. Circumstances vary, and choosing to become a stay at home mom might feel right emotionally. But the fact remains that being a stay at home mom will hurt your long-term finances.
When parents leave the workforce, they lose much more than their annual salary, the cost of this decision follows them for life. After taking into account the potential wage growth and lost retirement savings over time, a parent who leaves the workforce loses up to four times their annual salary per year.
AmericanProgress.org
(If you click the link above, you can calculate the true cost of leaving the workforce.)
Even if you are at home for a short time, you will face difficulty getting rehired. If you stay at home you give up professional advancement, money, retirement contributions, social security contributions, and perhaps most importantly? You lose power over the money and decision making in your relationship. The decision may also impact your self-esteem.
[Note: Since in the US, stay at home moms outnumber dads by nearly four to one, and I’m a woman, I’m addressing this post to mothers. However, this information applies to anyone, male or female, who opts out of the work force to be a primary caretaker of children.]
Table of contents
Why Do Some Moms Stay at Home?
Women decide to become stay-at-home moms for a variety of reasons. These can differ based on individual circumstances, personal preferences, and cultural factors. (I also acknowledge that the ability to stay at home assumes privilege.)
Some common reasons include:
- Childcare Preferences & Lifestyle Choice: Some choose to stay at home to be the primary childcare giver. They believe that being actively involved in their children’s early years is crucial for their development.
- Financial Considerations: In the USA, the cost of quality childcare is high. After factoring it along with other less obvious costs (transportation, clothing, etc), some mothers find that their salary doesn’t cover the expenses.
- Work-Life Balance: Balancing a career and family life can be challenging, and some mothers think they can’t juggle both.
- Health or Special Needs: If a child has health issues or special needs that require extra attention and care, a mother may choose to stay at home to provide the necessary support.
- Spousal Support: Some mothers have the financial flexibility to stay at home because their spouses have stable and sufficient incomes.
- Career Dissatisfaction: Some mothers may not find their current careers fulfilling.
- Temporary Circumstances: Some mothers may decide to stay at home for a period of time due to circumstances such as maternity leave, a spouse’s job relocation, or personal health reasons.
Of course, just because there are valid reasons a mother might choose to stay home with her child doesn’t mean there isn’t a steep cost.
“… when media coverage focuses on the financial consequences of staying home, it almost never considers the woman as an individual whose needs may someday diverge from those of her partner…”
Leslie Bennetts, The Feminine Mistake
You in Danger, Girl
What is the financial danger to stay at home moms? In her 2007 book The Feminine Mistake, author Leslie Bennetts includes the following statistics.
- Over 60% of child support cases are in arrears
- The average age of widowhood is 55
- When a couple divorces, the woman’s (and her kid’s) standard of living drops by 30% – while the man’s goes up by 28%.
- Women are twice as likely as men to live below the poverty line in their old age
- Young women living today are likely to live into their 90’s (are they prepared?)
- 60% of women aged 60 and up are without a partner
- When a woman opts out of the workforce for as little as 3 years, she experiences a 40% reduction in income over her lifetime. Ouch!
This list only speaks to financial risk.
But wait, there’s more!
Non-Monetary Sacrifices
There are several emotional challenges that a stay-at-home parent might face when leaving the workforce, even when financially supported by their partner.
These could include feelings of loss of identity and independence, a sense of isolation, a perceived devaluation of her skills and contributions, and a struggle with self-esteem as societal expectations and personal goals undergo a shift. The stay-at-home parents may also suffer a loss of power and equity in the relationship.
“Sometimes, the primary breadwinner feels that he (or she) has more right to make what should actually be a joint decision. Due to a loss of a paycheck, and a loss of professional identity, the SAHM often feels the same way. She slowly begins to defer to the wage earner. She starts asking for permission rather than making decisions alone or together. “
Those things matter.
One of the premises of the book The Nordic Theory of Everything is the “Nordic Theory of Love“, which is the belief that Scandinavians hold. In a nutshell, it says that only when two people are fully autonomous in terms of economics and survival can they form a truly healthy, loving relationship. (See my review of the book here.)
Because this post is how stay at home moms can protect themselves financially, I’ll focus on that. But suffice it to say, there are other sacrifices worth considering.
First Comes Love
In her book the Fiscal Feminist, author Kimberlee Davis advises creating a separate property trust before marriage.
If you do get married or cohabitate at some point, the existence of your separate property trust will allow you to create a prominent line in the sand as to what is your separate property, so that it does not get commingled with marital or joint property.
The Fiscal Feminist: A Financial Wake-Up Call for Women
My SAHM Story
While I don’t regret my decision to quit my job after my first child was born, I know that one of my biggest money mistakes was failing to protect myself financially while raising little ones.
If I had a do over, I would do things differently. Especially if I knew I’d be divorced and living as a single mom eventually.
The information in this blog post is provided for general informational purposes only and is not a substitute for professional advice. I am not a certified financial planner or attorney. While the content is based on personal experiences and research, it may not be suitable for your individual situation. Always consult with qualified professionals before making financial or legal decisions. I do not assume any responsibility for errors or omissions in the content, and any actions taken based on this information are at your own risk. Verify the information and seek tailored advice to ensure your financial decisions align with your specific circumstances.
So, what would I do differently if I had Doc and Marty’s DeLorean and could travel back in time 25 years?
Plan Before Becoming a Mom
The ability to pay your bills with just one parent’s income is crucial to the decision to stay at home with the new baby. But it’s not the only number crunching required.
Create a budget based on the working partner’s take home pay. (Note: If you struggle with this, it’s a great task to outsource to A.I.)
Your budget should include regular contributions to a separate savings account and a retirement account in the stay at home mom’s name.
It’s important to establish credit in your name. Have your own credit card and know how to leverage it. Learn about cash back reward cards, points, annual fees, perks and bonuses. My favorite two cards for cash back and travel rewards are Chase Rewards and Capital One QuickSilver.
Note: this is a reader-supported site that contains affiliate links, including Amazon associates links, meaning if you click through and make a purchase, I earn a small commission. Thank you!
Use a free service such as Credit Karma (your bank may offer this too) to keep track of your credit score and work to improve it. Consistently make on-time payments, reduce credit card balances, and regularly monitor your credit report for inaccuracies. You can get a free annual credit report here.
Open a checking account in your name and a high yield savings account. My favorite for both is SoFi.
Before quitting your job, ensure you’ve met minimum work credits to qualify for full social security later on. You can do this at SSA.gov
Photo by Collov Home Design on Unsplash
Once Baby Arrives
Many women underestimate how dramatically their lives change once they have a baby. Emotionally, physically, mentally – a woman is never the same once she becomes a mother.
As mentioned above, one reason some women choose to stay home is because they feel incapable of balancing career and motherhood. While many women do this beautifully, everyone is built differently. Some new moms may prefer to work part-time or pursue remote, flexible, contract or other work options.
It’s important to keep in mind that feelings and circumstances can and likely will change.
Personally, I found that once my hormones settled back to their pre-pregnancy state (especially after my baby was weaned), my feelings about full-time motherhood evolved.
One of my regrets during my earlier mothering journey was that I didn’t focus more on my earning potential. If I had to do it over again, I would have kept a foot in the workforce on a part-time basis.
I’m Booooored
Some women report feeling somewhat bored or stifled by their role as a full-time caregiver. It’s hard for moms to admit this, because some people will judge them as being bad mothers.
However, it’s normal for adults to crave adult interaction and the intellectual stimulation that employment gives them. These are valid needs.
Continue your education.
The availability of online classes make this a possibility even while caring for an infant full-time. There are scholarships available for older students and those making career changes, especially at community colleges. These cater to older people and those with non-traditional education or career paths.
As of September 2022, a majority (over half) of states offer two years of post-high school education grant programs, generally as part of a community college program.
Money.Slickdeals.net
Many companies offer tuition reimbursement to part-time employees.
Keep it fresh.
Your skills, that is!
It’s important to know not just what’s going on in the industry you previously worked in, but also with technology in general. There are many ways to learn new skills online for free with Google Certificates, YouTube and Khan Academy.
Personally, I think learning how to write good A.I. prompts should be on everyone’s to-do list, regardless of employment status.
Maintain your resume.
One of the mistakes I made during my unemployed years was not listing volunteer work I did with La Leche League, and other unpaid work with transferable skills, in a resume. When I needed to update my resume, I couldn’t remember the information.
This article has tips on writing your resume as a stay at home parent.
Does SAHM = Sad?
Depression may be more common among stay-at-home parents.
While working parents and stay-at-home parents both face their own unique challenges, stay-at-home moms are significantly more likely to experience worse physical and mental health than those who work, according to a study published in The Journal of Health and Social Behavior
Forbes.com
This may be due to isolation from other adults and loneliness, loss of a sense of identity that paid work provides, and burnout due to the endless nature of parenting tasks.
One way to combat this challenge is by working part-time.
Part Time
Parents may decide on a split-shift schedule, where the stay at home parent works on a weekend day or occasional evenings. Substitute teaching or nursing are great options for moms already in those professions. Working in the school system part-time is a great option once the kids are old enough to be in school, since the hours match the childrens’, making childcare unnecessary.
One option that works for many mothers is contract, freelance, or consulting work in their field. This allows for a flexible schedule, possibly a higher hourly rate, and prevents gaps in employment history.
If you have a professional license, such as cosmetology, esthetics or massage, could you keep up your certification? A makeup artist could do the occasional wedding or prom, a photographer could continue doing wedding or newborn photos when her spouse is available to care for the children.
Consider a part-time volunteer or intern position that could lead to employment down the line, if needed. Places to look: local museums, botanical gardens, non-profit organizations. Check VolunteerMatch.org for opportunities near you. Some volunteer positions require transferable skills such as accounting, web design, people management, event planning, etc.
Moms have found part-time work at local gyms or yoga studios. Some of these offer free childcare. If the position is unpaid, it might come with free membership, and the experience looks good on a resume. Word on the street is that daycare centers look for part-time break coverage for 2-3 hours during the day at nap time.
Since oftentimes, jobs are found through word-of-mouth, continue networking to keep your contacts list fresh. Attend conferences in your field or area of interest and schedule time in your calendar to check in with people to keep relationships warm.
Take online courses – many are free or inexpensive. MOOCS, webinars and online tutorials can keep skills sharp.
Mind Your Business
Some stay at home moms opt to start their own business.
The possibilities for this are virtually endless, and would depend on the individual’s skills and interests. Being self-employed might be ideal for a stay at home parent, because it means total control over one’s hours and productivity.
A few options: writing ebooks for Amazon, sitting, boarding or walking pets with Rover, providing childcare to other children while caring for your own baby, selling crafts, printables and other items on Etsy. Offering consulting and other services remotely on Fiverr and similar sites. Direct sales has been my primary income source for the last seven years. Read more about becoming a Beauty Society advisor here.
A SAHM could learn about credit card and bank account churning to make a little extra money to set aside for retirement or savings in their own name. Since these are based on household income, you can often get approved without paid employment of your own.
Stay at Home Moms and Divorce
Divorce affects roughly 50% of married couples. Women who sacrifice their incomes to stay home with kids are sometimes given dangerous advice that ignores this fact.
Often, their families, religious community or friends will imply that a mom safeguarding her financial future is akin to having one foot out the door of the marriage. Or they’ll be gaslit with messaging to “focus on their marriage“. Society doesn’t tell men to do this.
This propaganda is nonsense and speaks to the fact that in patriarchy, women’s work isn’t viewed as work at all, much less worthy of compensation. And all the sacrifice and care in the world won’t stop an abusive, cheating or closeted partner from doing what they will.
The trad wives telling their stories online have woken many to the delusion that being a good wife and mom means financial security. (In addition, the trad wife social media accounts are lying. They hide the fact that they have a staff, and some of them are uber rich.)
Maybe my cynicism is statistically driven. Women are three times as likely as their male partners to end up in poverty after a divorce (tradwives like Estee have a simple solution for this pesky issue: “Just marry the right man!,” ignoring the truth that any man who’s chomping at the bit to financially control you is, by definition, not the right one). One in six women have experienced financial abuse. One in three admitted remaining in a relationship because they were financially unable to leave.
Katie Gatti Tassin, Money With Katie
Safeguards
The household budget should include contributions to a spousal retirement account, such as a ROTH IRA in the SAHM’s name. As long as you meet the income requirements or fund a back door ROTH, you can at least contribute $7000 per year (current as of 2024).
A stay at home mom should be deeply involved in managing or at least carefully tracking all the financial activity in the household. Their name should be on kids’ college fund accounts, deed and mortgage for any property (including cars).
Her name should also be on at least some of the utilities. Keep term life insurance policies on both parents. Family’s assets can quickly become “his money” that you’re trying to steal from him if/when things start to go wrong.
It’s important that a mom keep checking and savings accounts in her own name as well.
Reentry
What if it’s too late and you find yourself like many – an underemployed single mom? Here are some things to consider.
Try speaking to someone at a local unemployment office. Some counties even direct funds for helping their citizens learn new skills or offer advice re-enter the workforce after a long absence.
As mentioned earlier, look into community colleges that may have programs to assist older adults.
Lower your expenses as much as you can. If you have debt, do whatever it takes to pay it off. If you own a home or are in a position to buy one, consider house hacking to pay your mortgage.
For more information:
- Work at home moms aren’t making the feminine mistake – this post includes a review of The Feminine Mistake: Are We Giving Up Too Much?
- The Fiscal Feminist – chapter 9 in particular has excellent information for stay at home moms, including questions to ask before leaving paid employment and how to protect yourself from financial risk
That six-week-old son I cradled is nearly 26. I now have four adult children, and three will be adults in the blink of an eye. The intense days of motherhood are behind me. My goal with this post is to help moms who are in the early days to learn from my mistakes.
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It’s so important for women to secure their financial future. These tips are so amazing.