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5 Smart Money Moves for Stay-at-Home Parents

The following post is from Christina of Northern Cheapskate: 5 Smart Money Moves for Stay-at-Home Parents

Saving money
source: 401(K) 2012

I left my job to stay home with the kids when my twins were infants and my oldest was 2.  I was so focused on all of the financial aspects of how to become a stay-at-home mom that I hardly gave any thought to what that meant for our family’s overall financial picture.

Sure, I’ve had to learn how to be smart and economize, downsize, and squeeze money from every last corner of our budget over the past five years.  But I’ve also learned that there’s more to managing your money than just clipping coupons and making your own dryer sheets.  I’ve learned that you have to remember to look at the whole financial picture of what one-income living means for you and your family, not just the logistics of running the household.

If you choose to check out of the career world for a bit while you raise your children,  consider these five smart money moves for stay-at-home parents:

1. Educate yourself on the family finances.

When you’re not the one bringing in the paychecks, it can be incredibly easy to stop paying attention to your finances.   There are things every person should know about their money, and just because you’re not the breadwinner, doesn’t mean that changes.  You need to know what your budget is and how the cash flows in your household (or if it doesn’t!).  You need to know where your money is saved and how it is invested.  Just because you may not leave the house for a 9 to 5 job doesn’t mean you are not a partner in the family business.  You and your spouse should be a team when it comes to your finances.

2. Be sure to have adequate insurance.

Buying insurance is not fun.  No one wants to think about bad things happening to a loved one. And no one enjoys paying the premiums no matter how reasonable they are.  But things happen.  Determine how much life insurance you need.   You’ll need enough to cover funeral expenses, household expenses, and daycare for children while the surviving spouse returns to the workforce.   Make sure the stay-at-home parent has adequate insurance, too.   Their “job” is just as vital to your household as the traditional job is.  If your stay-at-home spouse was gone, an adequately funded insurance policy can help cover the cost of childcare or housekeeping.

Check with your spouse’s employer for affordable insurance options, as well as long-term disability insurance options, too.

While it can be very tempting to cut corners when it comes to insurance, all it takes is one accident to drastically change everything.  You don’t want to add financial pressures to an emotionally devastating situation.

3. Contribute to your own retirement plan.

If your household income is below $173,000 (married, filing jointly), you should consider investing in a spousal Roth IRA.  You can contribute up to $5,000 annually.  I like Roth IRAs because you can withdraw the money you contributed before you are age 59 1/2 without paying a penalty.  (So it’s like a little extra emergency fund if you need it!)  I also like Roth IRAS because when you are finally eligible to tap into them for retirement income, you do not have to pay taxes on what you withdraw.  They’re excellent vehicles for saving money.  Be smart and find money in your budget – even if it’s only $25 a month, to fund your Roth IRA.  When it comes time to retire, you’ll be happy you have your own fund set aside.

4. Make sure to socialize.

It is very easy to become isolated when you are busy chasing little ones and changing diapers.  But having friends to rely on – for everything from emotional support to occasional babysitting – is good for your finances.  Find frugal friends, and you’ll be able to share money-saving tips.  Connect with new people you meet in the community and show them the awesome person you are.  You just may find that the connections you make lead to money-saving or money-earning opportunities in the future.  The person you chat with at the community picnic may be in a position to help you get a new job when the kids are in school.   Oh, and socializing helps you keep your sanity, too.  That’s good for keeping the costs down on shopping therapy.

5. Keep up on your marketable skills.

If you left a career (like teaching) that required licensing, be sure to keep that license up-to-date.  If you were in a tech field, be sure to keep up with developments in technology.  It’s important that you continue to develop useful skills for the workplace. Keep your resume alive and build references in your community through volunteer work or freelance jobs.  You never know when a spouse could lose a job or be unable to work, and you may need to step in as a breadwinner.  Having some current marketable skills will make looking for money-earning opportunities easier.

Being a stay-at-home parent is one of the toughest jobs you’ll ever love.  Make it even better by making sure you take good care of your finances, too.

Are you a stay-at-home parent?  What financial advice would you give?


Christina Brown is the creator of Northern Cheapskate, a blog dedicated to frugal living through coupons, freebies, and money-saving ideas. She lives in the rural north woods of Minnesota where she clips coupons, pinches pennies, and chases her three boys (a 7-year-old and twin 5-year olds) as a stay-at-home mom.