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Money tips for stay-at-home moms

Sharon Epperson, author of  "The Big Payoff," shares financial advice for women who take care of their kids full-time, or are thinking about making the switch.
/ Source: TODAY

You’re working harder than ever. You gave up the commute, deadlines and office politics to navigate a job that is often even more difficult and demanding: being a stay-at-home mom.

Between taking the kids to school, doing the laundry and grocery shopping, picking up the kids, driving them to soccer practice and dance lessons, cooking dinner, making lunches and trying to keep the house clean, you’re likely strapped for time.

But don’t neglect another major job responsibility: managing your money.

If you haven’t left your job yet, make sure you’ve thought through and planned emotionally — and financially — for what your stay-at-home life may entail.

Do a dry run, and live on one income for three months. Before you join the nearly 6 million other stay-at-home moms in this country, learn all that you can about your new “job” and the financial impact it will have on your family.

Live on one income for three months. Stash the other salary and use those funds to turbocharge your savings. Sure, a stay-at-home mom’s job has significant value. (the online salary data provider) calculates that the average stay-at-home mom’s services (housekeeping, cooking, laundry, etc., and a huge amount of “overtime” hours) would amount to an annual income of $138,095. But the reality is that when you are living on one income, all of the expenses and savings will come from one check. Get used to how that will work.

Have a financial plan and review it regularly. Come up with your own financial plan, for yourself and your household. Every couple, every individual, needs a financial plan. Now that you’re not working outside of the home and are relying on one income, having a roadmap to help make money decisions will be critical to ensure you reach your financial goals. Make sure you and your husband know what’s in the plan and talk about your finances regularly. Discuss the big picture (retirement and college savings) and short-term money issues (hiring contractors or buying birthday party gifts).

If you’re just doing a dry run or already are at home full time, here are five steps to help you manage your money:

1) Set a budget. Coming up with a spending plan or household budget is extremely important, whether there are one or two paychecks coming in. However, it’s essential when everything you pay for — and save for — comes from one income. A single salary must cover the household expenses AND contribute to savings for emergencies and for retirement (for both of you). Don’t know how to divide the pie? Try the “60% Solution” as a guide to help you decide how much of your household income to spend and save.

Here’s the breakdown based on the household income:

— 60% of the gross income goes to committed expenses (all taxes, including taxes withheld from pay, mortgage, utilities, car loans, credit card debts, etc.)

— 10% to short-term/emergency savings (goal: to cover three to six months of living expenses)

— 20% to long-term/retirement savings (including 401(k)s, IRAs, college savings plans)

— 10% for “fun money” (spend it on anything you want)

It may be difficult to keep your committed expenses to just 60% of your gross income, especially if you have a huge mortgage or significant credit card debt or student loans, but it’s a worthy goal.

2) Maintain separate accounts. A joint checking account for household expenses probably makes sense for most couples, but separate your “fun money.” It’s important for a stay-at-home mom to have a bank account in her own name — and a separate credit card, too (just make sure to pay the balance in full each month). If you’re following the 60% Solution, try allocating 5% of the gross household income into a “fun money” bank account for you and your husband. Money fights can be kept to a minimum when you don’t have to account for personal purchases. Set a limit and stick to it. 

3) Continue to save for retirement. When it comes to savings, definitely make sure you have your own account. If you have a 401(k) from your previous job, it’s already in your own name and should be put into a Rollover IRA after you’ve left the company to give you more flexibility with your investments. Just because you’re not working outside the home doesn’t mean you have to forgo your retirement savings. Keep socking money away in your retirement nest egg. Open a Spousal IRA. You can contribute up to $4,000 this year ($5,000 if you’re 50 or older) to a Traditional or Roth Spousal IRA.

4) Make sure you’re adequately insured. Don’t forgo buying life insurance just because you’re not working. Figure out how much money your family would need to cover child care costs, housekeeping, cooking, etc. if you weren’t around. Estimate how much life insurance to buy. Term life insurance is relatively inexpensive. Go to to get quotes.

Apply for an independent disability insurance policy before you leave your job. Your group disability plan at work is not “portable”; you cannot take it with you when you quit. But you may be able to get supplemental insurance based on your paycheck. The policy will remain in effect while you’re out of the work force as long as you keep paying the premiums.

If you’re already at home, make sure you have saved at least three to six months of living expenses to cover household needs if you were sick or injured.And check to see if your husband has adequate disability insurance coverage.

Also make certain that your husband’s health insurance policy (if one is provided by his employer) adequately covers you and your children. Consider a high-deductible insurance plan that allows you to open a Health Savings Account. An HSA lets you set aside pretax earnings and make withdrawals tax-free for health care costs. Go to to open an HSA online. If offered by your husband’s employer, definitely take advantage of their Flexible Spending Account, which allows you to put pretax dollars away for co-payments, prescriptions and over-the-counter medicines. Put money in a Dependent Care Account; the pretax dollars can cover child care costs, including summer camp.

5) Stay connected. Don’t forget about the professional organizations and contacts you’ve made over the years. You never know when you might want to return to the work force. Volunteer or consult on projects to build your resume for the job that you want to have down the road. Also, develop connections with other stay-at-home moms. You may find another budding entrepreneur or consultant in the group.

Find other moms who are staying at home, working flextime or taking an extended maternity leave through organizations like Mothers & More (, an international network with 7,500 members, and MochaMoms (, a national group for women of color. Money is often a taboo subject, even among the best of friends, but you may get some tips from other moms on how their families have adjusted to living on one income.

CNBC personal finance correspondent Sharon Epperson is the author of “The Big Payoff: 8 Steps Couples Can Take to Make the Most of Their Money — and Live Richly Ever After" (HarperCollins).