Fellow Mamas, I’m not trying to scare you, but too many of us are vastly unprepared for the financial mess that can come with a massive life change. What do I mean by life change? Divorce. Death. Sudden illness. Unexpected unemployment. Any one of these things can completely derail a family’s finances, but with a few steps, you can have financial protection for yourself and your children.
Make sure you can trust your partner.
For me, deciding to stay home was terrifying. For the first time since I was sixteen, I was unemployed. I could not have taken this step if I didn’t trust my husband implicitly. As rewarding as it is, staying at home is a risk. I voluntarily removed myself from the workforce, and put all of my family’s eggs into one basket.
While you can’t plan for everything, for your financial protection there are red flags you should be aware of before making yourself and your children financially dependent upon another person. You can always leave a job. You can’t always get it back. If you’re not comfortable quitting, don’t quit.
Be aware of the finances.
My husband works in the finance industry, so it seems entirely natural to allow him to manage our household finances. I’m not particularly interested in the accounting stuff, but I realized I needed to pay attention. Why? If he were suddenly removed from the equation, I would be in deep trouble. Who do I pay? When? How much?
Sitting down to discuss the budget and keeping the recurring payments (mortgage, student loans, etc.) in a spreadsheet will enable me to take over if I ever have to. It also helps to protect me from potential financial abuse. Mama, for your financial protection, it is essential to know where the money is going, even if you aren’t the one bringing it in.
For your financial protection, put the big things in both names.
We bought our home and car after our first was born. At this point, I was staying at home, and added nothing on paper but student loan debt. As a result, we received a better interest rate by having our mortgage in my husband’s name only. Ownership, however, is an entirely different ball of wax.
Wisconsin is a community property state, so anything we earn or purchase during our marriage belongs to both of us. This includes our house. This only applies to married couples, however. Common law arrangements, even if you have been living together for years and have children together, do not guarantee your rights in Wisconsin.
But even for married couples, there are exceptions. Inheritances given to only one spouse or items purchased by one spouse before the marriage are considered individual property. If you’re not sure if you have rights to your home, check. Getting your name on the house or lease usually requires a single sheet of paperwork and five minutes in front of a notary. Better safe than on the street.
Insurance and Social Security are key to financial protection.
Insurance in all forms is non-negotiable in our house. My husband’s earnings are higher than mine would be if I went back to work. A major life change would be traumatic enough without my children having to leave the only home they have known. For less than our cell phone bill, we have enough life insurance to knock out our remaining student loans, pay off the mortgage, and seed their college funds. We would not lose the house. This is solid financial protection for a worst-case scenario.
We also have disability insurance in the event my husband is unable to work, and I know what his social security benefits would be. I hope to never receive any of these payments, but they are a part of the conversation about financial protection.
One aspect of financial protection we didn’t think of, however, is that we need life insurance and disability insurance on me, too. I do not contribute financially, but what I do is important. My husband could not do his job without proper child care for our children. If something happens to me, we need to be able to cover that expense.
Get the paperwork in order.
Once we had children, knowing we had a will and trust set up was imperative. My husband’s employer includes a few hours with an attorney as part of his benefits. Sitting down with them to ensure our children’s welfare and financial protection was immensely helpful. If you cannot afford the attorney, at least having a document that outlines your wishes for your possessions and children’s custody in the event of your deaths is a good first step. You can have a notary witness your signatures for free at your bank.
Have a file with the important papers. Birth certificates. Deed to the house. Car titles. Social security cards. Have a back up copy or two. If there are any concerns about abuse, make sure a backup copy is somewhere your partner is unaware of, like a trusted family member’s home.
While these tips are relevant for stay-at-home parents, every mom should carefully consider how well she is financially protected. It’s not the most exciting or easy thing to discuss and think about, but the consequences to avoiding the topic are dire.