Personal Finance

A Must-Read for Moms: 5 Financial Tips

May 10, 2019
Judith Ward, CFP®, Senior Financial Planner
It’s important for women, especially at-home moms, to plan for the "what ifs" when it comes to family finances.

Key Points

  • A lifetime earnings gap is most prevalent with women who leave the workforce to take care of others.
  • Plan for the “what ifs” to guard against financial disruptions.
  • Funding emergency reserves and having adequate life and disability insurance can help to support the family.
  • Understanding the family finances and improving investment acumen is a necessity.

Women face a number of gender-specific risks when it comes to money. According to U.S. Census Bureau research, women earn roughly 80 cents on the dollar compared with men. In addition to the disparity in our paychecks, there is a far more significant lifetime earnings gap that is most prevalent among women who take time away from their career to raise children or take care of others.

Of course, the mantra in a primary earner household is “what’s mine is ours.” The income is meant to support the household. And that’s great—until it’s not. Life events and financial shocks can wreak havoc on the best-laid plans. The biggest disruptors are divorce, disability, unemployment, and widowhood. An at-home mom may find herself suddenly single. Even a working woman may have to leave the workforce prematurely to be the primary caregiver for her spouse or aging parents.

Planning for the “what ifs”:

  1. Emergency reserves: We suggest having savings that can cover three to six months of expenses on the side in an easily accessible account. In a household with a primary earner, leaning toward the higher end—an amount that can cover six months of expenses­—is a good idea. Should the primary earner become unemployed, the household can weather this period of uncertainty without having to scramble to find other sources of income or consider drastic cuts in spending.

  2. Insurance: Make sure the primary earner has enough life and disability insurance to support the family should something happen. After all, that’s the income the household is relying upon. At the same time, consider the insurance needed to replace the contribution of the at-home spouse who runs the household but doesn’t earn a check. There would definitely be costs associated with these activities if they had to be outsourced.

  3. Family finances: In some households there might be a division of labor. One spouse may be responsible for the day to day: paying the bills, balancing the checkbook, and managing schedules. The other spouse may be responsible for overseeing the investment and retirement accounts and household assets. It’s extremely important that both spouses understand the financial position of the household­—what is owned and what is owed. What are the household debts? What are the savings and investments intended to help achieve future goals, and how is the family tracking to meet those goals?

  4. Investment acumen: An at-home parent is most likely relying on someone else to support the household; however, building financial acumen is a necessity. Learn how to save and invest or, better yet, put it into practice. Open your own savings and investing accounts to learn the lingo and gain experience. A spousal IRA may be a great place to start. Don’t forget to monitor your credit history, too. If you ever need to support yourself, you’ll be ahead of the curve.

  5. Earning potential: When women leave the workforce, they may be at home during their peak earning years. This career gap may make it difficult and even scary to reenter the workforce. Consider keeping a foot in the door. Part-time, contractual, or consulting work will not only contribute to the household, it will help keep your skills sharp and your future hiring prospects brighter. Volunteering to maintain professional skills and engaging in supportive networks is also helpful. Continuing your education to advance a future career can be extremely rewarding. If you find yourself in a situation where you have sole financial responsibility, you will have the confidence to make the most of potential opportunities.


This material has been prepared by T. Rowe Price for general and educational purposes only. This material does not provide fiduciary recommendations concerning investments, nor is it intended to serve as the primary basis for investment decision-making. T. Rowe Price, its affiliates, and its associates do not provide legal or tax advice. Any tax-related discussion contained in this material, including any attachments/links, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this material.

View investment professional background on FINRA's BrokerCheck.



Next Steps: