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Add this to the list of praises heaped on moms this Mother's Day: Mothers are more influential than fathers in teaching Americans how to manage their money. In a survey conducted for Ameriprise Financial, 50% of those responding said their mother had more influence in teaching money management skills, compared with 38% who said it was their father.
Further, about 70% of those interviewed said that Mom was a good financial role model. More than half characterized their mother as a saver, while 24% viewed her as a spender.
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Those results square with other surveys on the role mothers play in managing family finances. By margins of 60%-plus, women tend to be the ones who pay the family bills and balance the checkbook. Because they carry so much financial clout, women shouldn't hesitate to take on a leading role in providing for their family's security.
Deep in the heart of every married woman lurks the fear that her husband will die prematurely, leaving her and the children in desperate financial straits. Yet women are often reluctant to talk about their fears, perhaps because they worry that just saying the words will make them a reality. Sometimes women simply assume that their husbands have taken care of things.
But no one is born knowing how much life insurance to buy or how to set up a retirement plan for a stay-at-home mom. That's knowledge that either spouse can acquire. Much as you may love your husband, being money-smart means never depending on him alone to plan for your future or your family's -- especially because you're statistically more likely to be the survivor.
Top priority. Start by buying enough life insurance. Once you have children, life insurance becomes a family priority because your kids would suffer financially if you weren't around to provide for them. Women are particularly vulnerable if they are stay-at-home mothers who are dependent on their husbands' income. But even working moms could be at a serious financial disadvantage if they were left to bring up a family alone.
As a rough rule of thumb, figure that insurance coverage should equal eight to ten times your total household income, including any coverage you have through your employer. (For a more precise estimate, use our insurance calculator.)
Although women are most often the ones who benefit from life insurance, don't underestimate your own importance and value -- financial and otherwise -- in supporting your family. If you have a paying job outside the home, add together both your income and your spouse's to figure your total need for coverage, and divide it proportionately between individual policies on each spouse.
Even if you are a stay-at-home parent, your loss could be a financial blow to your family. Salary.com estimates that if the typical stay-at-home mom were paid for her work as a housekeeper, cook and psychologist, among other roles, she'd earn more than $138,000 a year. And a mother who works outside the home would earn an additional $86,000 for her at-home work.
To keep things both simple and inexpensive, buy term life insurance. Premiums have been dropping so precipitously that you can buy several hundred thousand dollars' worth of coverage for just a few hundred dollars per year. To price policies, go to Insure.com or AccuQuote.
Recalculate your life insurance needs at various points in your life. You may need more coverage, for example, if you have another child. On the other hand, once your children finish college and are less dependent on your income, you may need less insurance -- or none at all.
Retirement for stay-at-home moms. For women, one of the great features of an individual retirement account is that you can have one even if you don't have a paying job, as long as your husband is employed. In 2007, he can contribute up to $4,000 of his compensation ($5,000 if you're 50 or older) to an account for you, in addition to putting $4,000 in his own IRA. You can open either a traditional IRA, or, if you meet income requirements, a Roth IRA.
Not only does this give stay-at-home mothers their own retirement stash that they can invest and control, but it also doubles the tax breaks and savings power available to you as a couple.
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