October 5th, 2010

How Does Being a Stay at Home Parent Effect Your Finances?

When you’re considering becoming a stay at home mom or dad, a lot goes through your mind. Giving up the income from your job is usually a difficult thought. Giving up time with other adults is difficult. Gaining more time with your kids… major bonus except those days where they’re really running you ragged.

The only one you can directly calculate is the impact it’s going to have on your finances. Sometimes it’s not as bad as you might think. That’s good to know if you’re going to have to do some sort of work at home job or start a home business to make ends meet.

Things That May Cost Less

Taxes – If your income as a family goes down, you’ll be paying less in taxes. How much less depends on your family’s situation.

Eating Out – Stay at home parents usually eat out less. There’s the occasional meal out with the kids, but especially if you’re on a tight budget, the ability to eat at home more should be a nice savings. Some people do eat out a fair bit even when staying home with their kids, however.

Driving – This one depends on how many activities you’re running the kids around to as well as how far you had to drive to work. Still, for many families it’s a nice savings.

Daycare – Usually, when you stay at home you take care of your own kids. There goes the money you had to pay for daycare!

Entertainment – While you may be a major source of entertainment for the kids, you won’t have the occasional entertainment and social expenses that come from working. You won’t be asked to contribute to birthday presents, for example.

Clothes – Depends a bit on your habits and what you had to wear to work. But if you had to have a professional wardrobe, you’re likely to save a nice bit, especially if you had a lot of clothes to take to the dry cleaners.

Costs That May Increase

Not every cost goes down when you start staying at home. Fortunately, the increases should be significantly smaller than the decreases.

Power/Gas for Your Home – You’re home more. That means you’ll be using more electricity during the day and heating or cooling the house more.

Groceries – Especially if staying at home makes money tight, you’ll probably be eating at home more. Fortunately, it also means you have more time to make home cooked meals if so inclined.

Activities with the Kids – Having more time with the kids may mean that you spend more on activities with them or for them, as you’ll have more time to take them to extracurricular classes or have fun as a family. Just try to remember there are free fun things to do too.

How exactly your finances are effected overall depends on your own situation, but knowing some of the things that will change can help. Try some basic calculations based on how you think things will change and you might be surprised at how little your available income may change by staying at home.

Disclosure: Some of the links in this post may be 'affiliate links.' This means if you click on the link and purchase the item, I will receive an affiliate commission.

July 13th, 2010

How Vulnerable Are You Financially?

Most stay at home moms are proud of their status, and should be. It takes a serious commitment to be there all day for your family and rely on someone else’s income. That doesn’t mean you shouldn’t have plans for the many uncertainties in life.

This is something to discuss with your husband. You should have a plan agreed upon for the many issues that can happen to a family that relies upon a single income, such as the loss of a job, death or injury of either spouse. These aren’t fun things to think about but that means only that it’s all the more important to have a plan in place.

The stay at home mom or dad gives up a lot. It’s years of work lost, which has a major impact on one’s career. It’s less money for retirement. It’s falling behind in the field that you used to work in.

Stay at home parents should take the time to limit their financial vulnerability.

Stay at home parents should take the time to limit their financial vulnerability. It’s not all about finding a work at home job either, although that can help.

Continue Your Education

Keeping up with your field is important if you want to go back to work someday, especially if you worked in an industry that changes a lot. Take classes online, through a community college or technical school.

You don’t have to stick with whatever you have experience with, of course. You can use your time to study for the career you’ve always wanted.

Pick a course that will give you the flexibility to be there for your family. You don’t want your school time to take as much time away from your family as a career would if your goal was to raise your kids on your own.

Set Up a Retirement Account

Your long term well being is important to your family.

You don’t have to rely on an employer to have a retirement account. Include this as one of your needs when you’re a stay at home mom. Your long term well being is important to your family too.

This isn’t easy in many cases. It’s incredibly easy to neglect. Do your best.

Ideally this should be a part of your monthly budget. Have a certain part of your family’s income go into your retirement fund. Your spouse probably has one through work – don’t you deserve one too?

Start Working from Home

Yes, I said it’s not all about working from home, but we’re talking about not being financially vulnerable, not only for your own sake, but for the sake of your family. Even having a small home-based income is protection against bad times.

Even having a small home-based income is protection against bad times.

How dedicated you are to earning money from home depends on your needs. If your family needs the money now, you’re going to have to be very dedicated. If it’s more to keep your work skills up, you may not need to work so very hard at it.

Even if your at home income doesn’t equal what your family needs to get by, it’s going to be a help if times get rough. It’s something you may be able to build upon if your family suddenly needs that income.

If you’re planning on working outside the home as your children get older, take that into consideration when you work at home. Do things that will look good on your future resume.

If you’re planning on staying home longer than that, find something to do that you will love doing from home for the long run. Building a home business can be a lot of fun and you never know if it will take you somewhere.

With any luck at all, you’ll never need your financial backup plans. But wouldn’t you rather have them ready?

Disclosure: Some of the links in this post may be 'affiliate links.' This means if you click on the link and purchase the item, I will receive an affiliate commission.

July 6th, 2010

What If Your Spouse’s Income Vanishes When Your Family Relies on It?

We’re facing an interesting situation right now in my family. My income is down, and my husband works for the State of California. For those not familiar with the situation here, due to the annual battle over the budget not being settled on time (as usual), they’ve temporarily cut all state employee wages to the Federal minimum wage level.

That’s lower than California minimum wage, by the way.

We’ll get the usual pay back once the budget is settled, this is just a tool the Governor is using to push the State employee unions to accept new contracts. But that doesn’t make it any less painful to deal with while so little money comes in.

We’re trying to have a sense of humor about it all. He works for the Employment Development Department, which is a long way of saying he works for the Unemployment Office. In talking on the phone to unemployed people on Friday, he was getting asked how he’s coping financially. This pay cut means that he’s earning less than many people who are getting unemployment benefits.

Getting sympathy for what you’re earning from unemployed people is somewhat amusing.

But this all brings up a very good point. No one’s income is guaranteed secure, no matter how much you rely upon it.

Layoffs happen. People get fired. Injuries happen. Health problems happen. Divorce happens. Death happens. It’s not pretty, but that’s life. Sometimes it sucks.

These aren’t easy things to prepare for. You should have an emergency fund ready to deal with as much as you can manage, but what if that’s not enough or you haven’t had enough money to save up an emergency fund?

Is It Time to Go Back to Work?

One option is to go out and find a job for yourself. This isn’t a happy choice for most stay at home moms or dads. You’re there for a reason, and it’s hard to give it up.

It’s also not an easy thing to do right now when jobs are scarce in many areas. You may not be able to find an adequate jobs, although in some cases any job will do just because it helps matters.

Can You Create a Work at Home Income?

More fun for most is to bring in more money from home. It’s great when you can manage it.

The lucky ones are the at home parents who are already earning enough that even if their spouse loses their income, they can just keep working, and the family will be fine, just living on a somewhat tighter budget for a time. That’s a wonderful feeling to know you can do that much for your family and still be right there.

When you’re suddenly the main income for your family, you need to get to that level. And fast.

This is not an easy thing to accomplish for most people. If you haven’t already been earning an income from home, you have to start from scratch, whether you pick a work at home job or a home business. You may not know how to get started.

There’s a lot of work that can be done at home if that’s what you want to do.

There are a few simple ways to earn money from home, but they mostly don’t earn a lot. You can apply to write for Demand Studios, for example. You won’t earn great amounts from each article you write for them, and you’ll have to research for them, but you’ll know what you’re earning before you get started if you select an assignment.

You can write for Associated Content. You’ll generally earn less upfront, but if you’re good at picking topics you can get bonuses based on page views.

You can find freelance work at a variety of job boards. The kind of work you find will depend on your skills.

There’s  a lot of work that can be done at home if that’s what you want to do. Your challenge is to find it without falling for a scam. That means don’t be desperate. Think before you sign up for anything.

What If You Just Need to Earn More?

In many cases, you’re already doing some kind of work at home, and just need to earn more from it. Sometimes this is easy. Other times not so much.

If you have a work at home job and can ramp up your hours to earn more, don’t hesitate. Do what you have to do.

If you can’t get more hours from your current job, is a second job possible?

It may not be so easy to ramp up a home business income. Your earnings don’t necessarily relate directly to hours worked. They can, but that’s not always the case.

You’re going to have to find a way to make it happen, and fast. You don’t have time to build slowly.

Are there any possibilities for increasing your income that
you’ve been meaning to implement, but haven’t?

The first thing to look at is what you have going right now. Are there any possibilities for increasing your income that you’ve been meaning to implement, but haven’t? It’s time to get moving on them if that’s the case.

The next thing to look at is new sources of income. You want them to be pretty certain, and to come in fast. A sudden drop in income doesn’t give you the time to deal with something that you work on through all of July, but don’t get paid for until the end of August. You probably need that money sooner.

You have a few options. Selling a product of your own is a great idea, especially if you have some ideas for it already. Make it and get that product up for sale as soon as you can. This way the income comes directly to you if you sell through PayPal, or in just a couple of weeks if you go through a program such as Clickbank.

This should be something you can market to your existing target market. It might be a supplement to information you already offer. Think about the needs of your visitors and find something that they are likely to buy.

Remember that there are no guarantees that you’ll manage to sell any copies of your product. That’s business for you. A well targeted product for an audience you’re familiar with has a fair chance of doing well. It’s up to you to make it happen.

A sudden change in income is a hard time to live through. It’s also an opportunity to learn how much more you’re capable of. Make the most of it.

As for me, I’m mostly doing the working more hours thing right now. I’ve had odd luck every other time we’ve suddenly needed more income. Income goes up for the time we need it, then *poof* drops down when the problem goes away. I’m determined to make it stick around for once!

Disclosure: Some of the links in this post may be 'affiliate links.' This means if you click on the link and purchase the item, I will receive an affiliate commission.

June 30th, 2010

How Important Should Frugality Be to Stay at Home Moms?

Being a stay at home mom has a lot of benefits. The big one is being there for your kids. But it also has a lot of disadvantages, of which the biggest is usually living on a single income. The financial stress can be tremendous.

This naturally leads to wanting to live a frugal life. But just what is a frugal lifestyle, and how important should it be to you?

Just what is a frugal lifestyle?

How Do You Define Frugal?

Everyone has a slightly different idea as to just what constitutes a frugal lifestyle. Most people don’t mean a lifestyle where they go to extremes, denying themselves all extras and most simple comforts in life. It’s also not about living as though you’re poor or completely broke.

A healthy frugal lifestyle will be comfortable for your family.

A healthy frugal lifestyle will be comfortable for your family. You shouldn’t feel completely deprived all the time. You should have different things that are priorities for you, such as preferring to take a family walk to spending $50 or more for a family night at the movie theater.

Frugal Isn’t the Same as Cheap

It’s easy to think of frugality and cheapness as the same thing. They do have similar motivations in some respects. But when you really look at them, they are not the same thing at all. I consider frugality to be more deliberate.

When you’re being cheap, quality isn’t a consideration, as a general rule. You buy the cheapest. You decline to spend money even where you should.

When you’re frugal, you’re making more deliberate decisions about how you will spend your money. Sometimes you’ll pay more for quality, because it will cost you less in the long run. You’ll have thought out your priorities.

Frugality for Stay at Home Moms

How frugal you need to be when you’re staying at home depends on the needs of your family and what your family’s income is like. Some will need to take extreme steps. For others, simpler steps will be enough.

The advantage you have is time.

The advantage you have is time. You have the time to do frugal basics such as cooking nearly all meals at home. You have the time to do coupon clipping. These simple frugal activites can make a big difference.

Whatever choices you make when it comes to living your frugal lifestyle, there are a few basics you should always include:

  • Living within your means
  • Bringing down any existing debt
  • Limiting waste
  • Knowing your priorities and sticking to them.

There’s no simple frugal path that leads to comfort with a change in your lifestyle. It’s quite likely that some of the changes you make will be a little uncomfortable for you at first. If they’re important enough to you, you will become comfortable with the changes in a short time. It’s much easier to be frugal if you don’t feel as though you’re denying a lot of wants.

Disclosure: Some of the links in this post may be 'affiliate links.' This means if you click on the link and purchase the item, I will receive an affiliate commission.

June 8th, 2010

7 Ways to Ensure Your Kids Have Bad Money Habits

Good money habits don’t come from nowhere. They have to be learned. But many parents don’t take enough time to teach their kids how to be smart about their money. Neither do most schools.

Good financial habits are a help lifelong. Not only will it help your kids to manage their money better if you teach them good habits, it will decrease the odds that they’ll keep coming to you for loans when they’re adults. Not that you can’t help out when there’s true need, but it’s nice to know they have the skills to only ask when there really is need.

Not bothering to teach them now is so much easier at the moment, though!

1. Use credit cards when you want it but can’t afford it.

Who cares that a new widescreen TV doesn’t fit in the budget? You have a credit card, and that TV would look great with the new entertainment center. Buy it now!

If this is the kind of example you set for your kids, why would you expect them to do any different when they’re old enough to have credit cards? They need that example of saving up for wants, and knowing the difference between wants and needs if they’re going to be smart about money.

2. Don’t talk about credit.

Credit cards are for fun, right? Kids don’t need to understand the finer details of how they work!

There’s a huge advantage in teaching kids as much as you can about credit cards and credit scores. A good credit score helps to get lower interest rates on major purchases such as cars and homes. It’s a huge advantage for them to understand how credit scores effect them when they reach that point in life.

At the same time, don’t teach them that having debt is a good thing. There are better ways of maintaining a credit score than by carrying a load of debt on a credit card.

3. Don’t save for a rainy day.

Rainy day, schmainy day. Why save up an emergency fund when there are so many things you could be buying instead?

Saving for a rainy day can be hard if your budget is tight, but it can keep you away from the credit cards when unexpected expenses pop up.

4. Never talk about finances.

Your kids don’t need to know anything about family finances, whether they’re good or bad, right? They’re just kids!

It always amazes me how much kids can understand about the family’s financial situation. While you don’t need to stress them with your money problems, letting them know about monthly bills, how to save when you go shopping, and in general how to manage money is a good idea.

5. Don’t encourage them to save money.

When your kids get an allowance, let them spend it as they please. They’ll figure out the rest eventually, right?

Kids love spending money. Many will spend all they have in one spot if they’re given the chance.

If you want them to learn to save, help them find a goal to save for. When they’re younger, it could be a particular toy. One of my daughters right now is saving up for a harp, and a basic, student-level harp runs about $400. It will take her a while, but she’s determined.

6. Don’t have them work for money, ever.

There’s a lot of back and forth about whether allowances should be earned or given. It’s a parenting choice, and you no doubt have your own thoughts on the matter.

But if you don’t want your kids to understand about money, just give them what they ask for, whenever. Don’t worry about why they want it or if they need what they’re asking for.

Having them do chores either for an allowance or for extra money can be a good teaching tool. So can having them run a little business, whether it’s the classic lemonade stand or babysitting younger kids in the neighborhood.

7. Never teach kids to make a budget.

Kids don’t have much money that they have to spend, so why bother with teaching them budgeting skills? They won’t need that skill for years!

That’s the key, right there. Eventually we all need budgeting skills. It’s not just about saving up for a goal. It’s about wise use of the money they have.

You can start by having the kids help with the family budget, or just a part of it. Go over grocery bills with them, and have them help you figure out how to manage it wisely. Take them grocery shopping with you so they can see how fast it all adds up.

Disclosure: Some of the links in this post may be 'affiliate links.' This means if you click on the link and purchase the item, I will receive an affiliate commission.

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