This Mother’s Day, focus on your financial future -- and that of your children. By Janet Bodnar, Editor-at-Large May 3, 2010 When it comes to the financial relationship between moms and their kids, it’s all about giving -- giving advice, giving a helping hand, giving to charity. For instance, in the Thrivent Financial/Kiplinger Survey of Family Finances, 17% of respondents cited their mother as being most influential in shaping their attitude toward charitable giving, second only to faith communities (22%). At 6%, dads were in fifth place.That squares with other surveys showing that mothers are the most influential source when it comes to teaching money-management skills. A new poll by Charles Schwab found that nearly 60% of women have used the recent economic turmoil to talk to their children more about money management. At the same time, women express more anxiety about money than men do. In the Thrivent Financial/Kiplinger survey, women were more likely than men to say that they were struggling financially (37% versus 29%) and less likely to describe their financial situation as stable (26% versus 33%). Likewise, in the latest Retirement Confidence Survey from the Employee Benefit Research Institute, men were more confident than women that they would be able to save enough to live comfortably in retirement. So this Mother’s Day, maybe moms should take a break from giving and spend a few minutes taking stock of their own finances so that they can bolster their financial security and that of their children. Take these seven steps to start the ball rolling. Advertisement Talk things out. When asked in the Thrivent Financial/Kiplinger survey what they would change about their spouse or partner financially, 29% of women confessed that they’d like him to earn more. But 21% said they wished he would discuss money issues more frequently. Too shy to start what may be an awkward conversation? At least sit down together to write down your goals and see whether you’re on the same page. Or schedule a money date to discuss financial issues. Start saving for retirement. Small amounts put aside when you're young grow into great gobs of cash when you're older -- and lay the foundation for financial security and independence. Take the case of two people -- one who saved $3,000 a year for ten years (or $30,000) in an individual retirement account (IRA) between the ages of 20 and 30 and then stopped, versus another who began saving at age 30 and faithfully contributed $3,000 each year for 36 years (or $108,000) until retirement at age 66. Assuming an 8% annual return, the person who started saving earlier would accumulate about $778,000, compared with roughly $602,000 for the individual who started later (see our How Much Will Your Savings Be Worth? calculator). If you’re in the workplace, sign up for your employer's retirement plan, and aim to contribute at least enough to qualify for any employer match. You can't afford to turn down free money. In 2010, you can contribute up to $16,500 to a 401(k) or another employer-based retirement account, or $22,000 if you’ll be 50 or older by year-end. And never cash out your company plan if you switch jobs. Set up your own retirement account if you’re not covered at work -- or even if you’re a stay-at-home mom. For women, one of the great features of an IRA is that you can have one even if you don’t have a paying job, as long as your husband is employed. In 2010, he can contribute up to $5,000 of his compensation ($6,000 if you’re 50 or older) to an account for you, in addition to squirreling away $5,000 (or $6,000) in his own IRA. You can open either a traditional IRA or, if you meet income requirements, a Roth IRA (see Why You Need a Roth IRA) Advertisement 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. Buy plenty of 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 who are stay-at-home mothers and who are almost completely dependent on their husbands’ income are particularly vulnerable. 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. Advertisement To keep things both simple and inexpensive, buy term life insurance. You can buy several hundred thousand dollars’ worth of coverage for just a few hundred dollars per year. To price policies -- especially if you have medical issues -- go to AccuQuote (www.accuquote.com) or call 800-442-9899 begin_of_the_skype_highlighting 800-442-9899 end_of_the_skype_highlighting. It’s one of those financial tasks that will take you only 15 minutes (see Recipes for Quick Financial Fixes). 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. Write a will. In the absence of a will (intestate, in legal-speak), your state’s one-size-fits-all estate plan kicks in, and it may not be tailored to your needs or your children’s. For example, as the surviving spouse, you may get only a fraction of your husband’s assets, with the rest going to your children. If you and your spouse both die, the state decides who will raise your kids. With a will, you call all these shots. You can divide your property just about any way you like and design creative trusts for your children that distribute money at specified ages, for example, or tie assets to specific purposes, such as paying for college. Review your will after the birth of each child. Advertisement Choose a guardian. Think of a will as a way to protect your most precious assets -- your children -- if something should happen to you and your husband while the kids are still minors. Parents are often tempted to rely on informal guardianship arrangements -- “My sister has agreed to take care of our children if we aren’t around.” But an informal arrangement doesn’t have the legal standing of a formal guardianship. And if both you and your husband should die without having formally named a guardian, the courts will decide who’s going to rear your kids. It’s possible that a judge could choose the one relative you wouldn’t want. Worse, a family battle could ensue, and the cost of a court fight would come out of your estate -- that is, your kids’ pockets. You can avoid all of these hassles by naming a guardian in your will. Get your fair share. Just as important as setting up a will is reviewing the beneficiary designations on insurance policies, pension and profit-sharing plans, IRAs, 401(k)s, and other retirement plans. These assets go to whomever you’ve named as beneficiaries; they’re not covered by your will. If you fail to update beneficiaries, you could find yourself in the position of Caroline, who was unexpectedly widowed at the age of 32. Before Caroline and her husband met, he had named his mother as the beneficiary of his retirement account and had never bothered to update the papers after he married. When he died, there was nothing Caroline could do to get access to that money for herself and her young daughter -- except depend upon the kindness of her mother-in-law. That’s yet another reason to take financial matters into your own hands.