Your Financial Future as a Stay-at-Home Parent
The decision to stay home with your children is a difficult one. It is something that needs to be made individually. This is not an article designed to get into the Mommy Wars, but rather to look at the things a stay-at-home parent needs to do to protect their financial future while staying at home with the kids. It is important that staying at home is a benefit for your family, and that you can really afford to be home. It may be a temporary choice and you may return to work after your children return to school. You need to create a solid family financial plan before you make this decision.
Retirement Planning for the Stay-at-Home Parent
A stay-at-home parent still needs to plan for retirement. Often the plan is simply to live on your spouse’s retirement funds if you plan on staying at home while you have children in the home. However, this can backfire if you end up getting divorced or something else happens to you.
If your partner is working, you can still have an IRA even though you are not working. One way to protect your future, and to increase the amount you can contribute to retirement accounts, is to have a spousal IRA set up for you. This will go with you if you divorce, and it will be extra money to draw on when you retire. It will benefit you no matter what happens.
There may come a point where you want to reenter the workforce. It may be after your children are in college or you may go back once they start school. When you first have a child you may not be thinking long-term about your career, and how the decision to stay home is going to impact it, but it is something you should definitely consider. The truth is that it may be more difficult to find a job after taking a career break than it was after you graduated from college.
You may want to work very part-time to keep up your skill set or to have an active employment history, especially if you are eventually planning on going back to work. If you have a license for your profession, you may want to keep the license active through working minimum hours and maintaining your education credits so you can go back quickly if you need to. Another option is to consider becoming self-employed, which may allow you to work from home and keep up your current job skills.
Make Staying at Home Financially Beneficial
One of the big reasons many people choose to stay home is because it is too expensive to work with the cost of childcare. The truth is that a stay-at-home mom can save more money than just the cost of daycare, but it does take a conscious effort to do so. You will need to make a commitment to work on bringing the bills to a lower level. The food budget is one big area where you can save money. You can save money on other things you need around the house by shopping sales or doing some tasks yourself. You can help support your spouse’s career by taking care of things at home. You need to master these basic financial skills to make staying at home possible. Working while staying at home can also bring you financial independence.
Think About the Assets
Another important aspect is to consider whether or not you have the assets put into your name. Each financial relationship is slightly different and in some households, the working partner doles out a monthly allowance to the partner staying home, but all other financial decisions such as investing, retirement, and homeownership are handled by the working partner.
It is important that you both share ownership of the assets. This will protect you in the future. This means that both of your names should be on the deed to the house, to the cars, and to major financial accounts. You are a contributing member of the family. The work you do is valuable, and you should not allow yourself to be shortchanged just because you are not bringing in a paycheck. You will also need to be sure to protect yourself financially in the event of a divorce.
Consider Working from Home or Part-Time Work
If you find that you cannot afford to stay home, you may want to consider working a part-time job that helps you to make ends meet, but still allows you to be at home with your children. Working from home can also give you flexibility and the opportunity to spend more time with your children. These options may give you the flexibility that you want while allowing you to help provide for your family. There are so many options available and each solution will be unique to the different situations that are out there.