For many parents, the choice between continuing to work full time and spending more time at home can be daunting.
As a soon-to-be parent or a sleep-deprived new one, there’s plenty on your mind. From caring for your baby to taking on additional financial responsibilities, it’s easy to feel overwhelmed. How will you pay for college and save for your own retirement at the same time? Should you plan for extended parental leave or return to work as soon as possible to foster your career?
While the answers to these questions are undeniably complex, one thing is certain: More women are successfully managing both parenting and a career than ever before. According to the Center for American Progress, women now make up nearly half of all workers in the United States, and 4 in 10 households have a mother who works outside the home.
And while many working parents still experience feelings of guilt, studies show that this may be unfounded. Sons of working mothers tend to contribute more to family and childcare, while daughters of working mothers earn more money and excel on the job.
Forced to Choose
Still, parents who stay home or work part time to raise children often pay a price in terms of decreased income, which in turn could affect their ability to save for college and retirement. While more time at home often improves the quality of life for parent and child, there is plenty of evidence to indicate that a longer leave decreases the likelihood of a promotion or pay raise once the leave is over. For many parents, the choice is daunting.
Today’s challenges make it clear that planning for parenthood requires special financial care. Fortunately, your advisor can develop a plan to help you reach your goals. In the meantime, here are a few things you can do to get your finances in order:
- Pay down debt and save. A nest egg that covers three to six months’ worth of living expenses is a good rule of thumb.
- Create a baby budget. This might include everything from a larger home and a safer car to the costs of baby supplies and childcare.
- Consider your needs and benefits. Take a close look at your paid and unpaid maternity and paternity leave options, and review and update your life insurance policies.
- Plan for your family’s financial future. Sure, it’s important to save for your child’s college education, but don’t forsake your own retirement in the meantime.
- Talk with your advisor about updating your life insurance, will and other beneficiary accounts.
- Learn more about your maternity and paternity benefits.
- Consider a trust for managing and distributing your assets.