1. Don’t let your kids destroy you financially. As parents we make sacrifices for our kids. That’s part of the job, but there comes a time when adult kids need to stand on their own financial feet. Helping them out from time to time or treating them to a special gift is one thing. Creating a lifetime habit of going to the mommy bank is another.
Acting as a financial safety net for your kids is a big risk to your financial security in retirement. The goal is to be the bank of last resort, not the first place your kids run to when they need cash to pay the rent. Again.
I know it’s difficult to say “no”, but if you sense that this could be a problem for your family, start exercising some tough love now. Don’t make it easy for them.
Even a little motherly guilt goes a long way. One time when I was in my early-twenties and just getting started in life, I asked my mom for $50. She started crying. I never asked my parents for money again.
2. Be engaged in the family finances. It’s an stereotype to assume that the man in the relationship runs the family finances. Most of the time that is not the case. Nevertheless, in some families, and for a variety of reasons, Mom isn’t fully engaged in the family’s financial matters.
Mom doesn’t have to pour over every mutual fund prospectus or analyze the monthly spending on a spreadsheet, but she should have a basic awareness of income and expenses, as well as the family’s long-term goals and progress towards reaching them. A monthly review of the checking account and credit card statements, as well as a quarterly or annual review of your financial statements and financial plan should do the trick.
3. Make sure your spouse has enough insurance. I am convinced that the surest way to a lifetime of poverty is to start a family and then experience the loss of a major breadwinner.
How much insurance to have and what type will differ for each family. At a minimum you want to have at least a term insurance policy that you own outside what your spouse may have at work. Private insurance policies will be there for you even if your spouse leaves their job in the future. In some cases, permanent insurance that has a cash value makes sense as well.
How much insurance? Consider your mortgage and other debts, estimate what you will need to pay for college and other major expenses, then add in a generous lump sum to cover living expenses for at least a year or two – probably longer if your husband contributes 50% or more to the household income.
While you are at it, review your own life insurance benefits. Like many women you may have inadequate coverage that could fail to meet your family’s needs, if you were not there to do so.
Talk to your insurance agent or financial advisor for how much and what type of insurance is best for your family.
4. Review your beneficiary designations. Make sure you are the beneficiary on all life insurance policies and retirement accounts. It’s not unusual to see a 401(k) or retirement plan that lists no beneficiary – or worse, it lists someone else.
At a minimum, the wrong beneficiary designation can trigger an unnecessary tax bill when your spouse dies. At worst, the entire 401(k), IRA or life insurance policy could go to someone other than you – like your husband’s ex-wife, for example.
Beneficiary designations are easily fixed while the account owner or person being insured is alive. They are nearly impossible to fix after they die.
Review and update your beneficiary designations now.
5. Schedule some time for yourself once in a while. A lot of Moms do without so their kids can have more, but when taken to the extreme this kind of personal sacrifice can do more harm than good.
Treat yourself to a manni-pedi (one of my wife’s favorites), plan a girls’ weekend, or schedule some time on the golf course or bike trail. Heck, even some alone time with a good book can be hard to come by.
Put it on your calendar and make it happen. Despite what some in your family may think, you get to have a life too.
Happy (belated) Mother’s Day.