Smart Mom, Rich Mom

How to Build Wealth While Raising a Family

 Smart Mom, Rich Mom

Author: Kimberly Palmer
Pub Date: June 2016
Print Edition: $14.95
Print ISBN: 9780814436806
Page Count: 256
Format: Paper or Softback
e-Book ISBN: 9780814436813

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Excerpt

Introduction: Into Motherhood

As I sat facing the wood-paneled bar of one of Washington, D.C.’s most upscale restaurants, my two dining companions, editors of a prestigious investing magazine, explained why they focus their financial coverage exclusively on older men. “They’re our readers. Women aren’t,” they said. That’s why, they continued, they don’t cover topics that women investors might find of particular interest. The circular nature of this approach did not seem to bother to them. Perhaps if they wrote about how to continue investing while you’re taking a break from the workforce after the birth of a child, or how adding another child to your family might impact your financial goals, they might find that their publication pulled in a few more female readers.

As I carefully cut my roasted cauliflower while balancing a linen napkin on my lap, I wondered if our conversation represented a bigger problem in the financial industry. Historically, the industry has largely ignored women: Advertisements tend to feature older, graying men, with women serving as the arm candy. Fewer than one in four certified financial planners are women. In most investing and personal finance books, moms get nary a shout out, and in the books that are written for us, which you can spot from their gleaming pink colors, the focus tends to be on how to shop less or coupon harder. It’s insulting, really, when you start to think about it. Why do men get magazines and books on investing and getting rich while women get lectured on pinching pennies at the grocery store and cutting back on our shoe collections?

These messages fit us about as poorly as even the best pair of mom jeans. The reality is that we women – and moms especially – are handling a lot of money on a daily basis, and we’re making financial decisions that affect not only us, but our families, too. Indeed, study after study finds that women and moms in particular have oversize power when it comes to family money: According to Fidelity, the vast majority (85 percent) of consumer purchases are made by women while we influence 95 percent of purchases of goods and services. By 2020, women will control two-thirds of the country’s wealth, and 90 percent of us will be handling our finances on our own at some point in our lives, often as a result of death or divorce. We’re bringing home more of the bacon, too: The Pew Research Center reports that in four out of ten households with children, moms are the only or primary breadwinners. Similarly, the rise of blended families, single motherhood and same-sex parents all contribute to the growing importance of women as the earners, savers and investors within families.

At the same time, industry surveys show just how unhappy we are with the way the industry speaks to us. A report from the Boston Consulting Group found that most women are dissatisfied with the level of service they are receiving from their financial services provider and that many report feeling like they are being talked down to by male advisors. I was not that surprised when a friend and (male) financial advisor recently told me, over coffee, that he overhead one of his young advisors talking directly to the husband while referring to the wife in third person – even though she was sitting right next to him. Given that kind of treatment, it’s no surprise that 70 percent of women promptly replace their financial advisors within a year of becoming single. If you don’t treat us like the financial powerhouses we are, we’ll find someone else who does.

How exactly to do that, though, is complicated. I know from my own life and the experiences of my friends that moms face lots of unique financial concerns. Hardly a month goes by without at least one friend calling me to review salary negotiation tips in advance of an anticipated job offer, with rising child care costs always part of their budget calculations. My close girlfriends from college and I spent hours debating how much time to take off from work after each baby was born, in what capacity to return to work, and whether to continue to climb the career ladder as ambitiously once we are moms. (Each of us arrived at different – constantly changing – answers to that question.) Knowing I write about personal finance topics on a daily basis, my friends often email me all kinds of financial questions: How much life insurance do they need? Should they keep a separate bank account from their husband? How much money should they be saving?

When new babies arrive and families expand, the questions only grow more intense. As my younger sister, a family doctor in San Francisco, prepared for the birth of her son, she had more questions about money than about birth. His arrival motivated her and her husband to review their retirement savings, decide whether or not to buy a house and tackle other grown-up topics like writing a will. As she experienced, along with so many other moms, the moment you become a parent, your entire outlook, including on financial matters, changes. Suddenly, you’re much more concerned with making sure your household is financially stable, that you can pay all of the monthly bills (including the new ones related to your baby), that you’re saving for big future goals like college tuition and that you’ll be protected in the event of unexpected events, like a layoff or illness.

Even though I am immersed in these topics through my job, I frequently find myself stumped when it comes to certain financial questions myself, like how to afford child care once a second child arrives and how to financially prepare for an unpaid maternity leave. Once our son joined his big sister in our family, my credit card bills each month almost doubled. Between diapers, baby food and random incidentals like baby sunscreen, I could hardly keep up with all of our new expenses. I also knew I needed to address bigger financial goals, like finding a way to grow my own income, as well as save for college and retirement amidst the strain of those day-to-day expenses.

As any new mom can tell you, bringing home a tiny baby releases a rush of protective impulses: Did that sniffle indicate a major illness? Is the crib safe enough? Is the baby getting enough milk? Those impulses can and should extend to financial security, too. As moms, we have so much power to shape our families’ wealth, both now and in the future, as our families grow up and get older. This book helps you make choices that lead to wealth, for yourself and your family. Together, we’ll explore the specific questions and challenges that moms have and how to handle them, from working to saving and investing to teaching your children financial smarts from the beginning. We’ll get to know the strategies and secrets of dozens of smart moms, who are making savvy choices for themselves and their families. The chapters and handbook in the back of the book include checklists, templates and action steps.

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