Often when a woman makes the decision to leave the workforce to take care of her children, her main thought is how to handle the loss of her income.
But there are more things to consider than just how to survive in a one-income family.
Here are some other financial considerations that you should consider as a stay-at-home moms:
Debt load. How much debt are you carrying? What are your plans for repaying that debt? How will living on one income affect those repayment plans?
Emergency Fund. When the unexpected happens – and it always does – how will your family be prepared to handle it? Do you have a 3-6 month emergency fund?
Life insurance. Should your spouse die unexpectedly, do you have adequate life insurance to provide for you and the kids? Depending on how long you’ve been out of the workforce, it may be difficult for you to find a job and you may not be ready emotionally for such dramatic change after the loss of your spouse. Likewise, if something were to happen to you, would there by adequate money available for your husband to cover childcare expenses on his income alone?
While no one likes to consider the possibility that a spouse could pass away, it does happen, and knowing that there is enough life insurance money to help cover expenses can provide some comfort.
Retirement. Each year that you are out of the workforce is a loss of potential earnings toward your retirement. While it is important to make sure your spouse is saving for retirement, you should also consider having your own retirement funds. Consider establishing a spousal Roth IRA to help save. The money you put into a Roth IRA can be taken out at any time without penalty.
Resume building. What things will you do to ensure that your resume doesn’t completely die off when you leave the workforce? If your situation suddenly required you to look for work, will you have any relevant experience to put on your resume or have qualified references you can use? Consider volunteering in your community or taking on some small side jobs to keep your resume alive. If you are in a field (such as teaching) that requires a current license, be sure to keep up on the requirements.
Emotional Considerations. Before you make the leap, you should also consider how you will feel about being a stay-at-home mom. Being a SAHM is a roller coaster ride of challenges and triumphs. The hours are long and sometimes thankless, and the isolation can be difficult. When you feel lonely and overwhelmed it is easy to turn to shopping and overeating as an outlet. What kinds of things will you do to ensure you take good care of yourself as a stay-at-home mom?
Being a stay-at-home is one of the most rewarding jobs in the world. Being financially smart makes it even better.