Mother’s Day is just two days away and I thought it would be appropriate to post some financial suggestions just for Mom’s. If you are a mom and completely control your own finances in your family, well congratulations, you may not need any of this advice. However, many women might be similar to my family and my parents where the “man” in the family “handles’ all that financial and tax stuff and the mom’s aren’t really involved. Women these days can be very busy and as duties may be allocated to another spouse their need for financial understanding is critical.
Here are my Mom’s Suggestions:
- Get involved, at least to the point where you have an accurate and updated list of all financial matters within the household. Check out the “In Case of Emergency Document” article I last updated HERE. I literally update this document monthly, there are always new debit card numbers, new services you sign up for and so forth. Your income tax planning changes almost every year. Every few months I quickly review this document with my wife and adult daughter. God forbid something happens to me I want them to be as prepared as possible, with step by step instructions and all the details required to carry on their lives. This is the biggest gift I can give them.
- Since many women work these days and most have company 401K plans or personal IRA’s. It is imperative that you designate the proper “beneficiary” on these plans. Always keep it up to date as situations change in life. A very common mistake is to just think that you already have a will or estate plan and you don’t need to name a beneficiary. Please keep in mind that the named beneficiary on a 401K plan takes precedent over any instructions in a will or estate plan. If you don’t have a simple will get one immediately! You just can’t be a mom and not have a will. If you have special needs children, or special situations in your family, you may want an estate plan that includes a Revocable Living Trust, individual Wills, Durable Powers of Attorney and Healthcare Surrogate. Here is more information on that topic.
- Save and Invest. Learn how to make financial choices. Develop a budget that includes not only expenses but a savings and investment plan. I can assure you, nobody cares more about your money than YOU. You can trust your spouse, a relative, paid advisor or friend to help but no one cares like you do. I have friends that wanted to be “safe” and went to well-known national banks and found a financial “advisor” to help them manage their investments. In almost all cases they were not only disappointed, but in many cases lost a fair bit of money. There are really simple thinks moms can do to completely protect their investments, just take warren Buffet’s advice, put your money in an inexpensive S&P 500 Index fund or ETF and leave it there. You will automatically beat 90% of the “talking heads” on TV that are stock market “experts”. For example, Schwab® S&P 500 Index, or Vanguard Total Stock Mkt Index.
- Get out of debt and stay that way. The single biggest reason why people struggle financially is not because of their income or routine expenses, it is because or huge interest payments on debt. Forget about the stock market or any other investment, NOTHING pays you anything remotely close to the costs of debt. Credit cards charge you 20+% if you carry a balance. Car loans, consumer loans etc. can carry very high interest rates. Pay off all credit card debt and other loans BEFORE your next vacation, or wardrobe “enhancement” shopping trip. Here is more on debt reduction.