Moms and Money

 

The distractions, responsibilities, and pressures of motherhood can encourage some of our worst financial habits. Here are five of the most common – and avoidable – money mistakes you may be making, plus expert advice on how to sidestep them.

 

Packing plastic

Credit cards are definitely convenient. No unplanned runs to the bank, no scrabbling in your pocketbook for that extra dollar. It makes sense that busy moms often depend on plastic to get through the day. Unfortunately, this can lead to big problems.

The first is overspending. "Studies have shown that people spend 30 percent more when they use cards instead of cash," says Mary Hunt, a syndicated columnist and author of 16 books on personal finance.

That's true of debit cards as well as credit cards – even though debit cards are linked to your checking account and don't let you spend money you don't have, they're still cards. And when you're using plastic instead of forking over your hard-earned cash, it's easier to ignore how much money you're really burning through.

Cards can not only wreak havoc on our budget but also set a bad example for our kids. As Hunt explains, "We're raising a 'plastic generation.' You go to the store, load up the cart, hand the cashier your card, and then you get it back. You get to keep everything you bought, plus you still get to keep the card!"

In your child's eyes, you haven't exchanged anything for your purchases. Children need to understand that when we buy something, the money we've spent is actually gone.

What to do: As inconvenient as it is, start using cash for your everyday purchases, advises Hunt. In fact, the inconvenience can be an advantage, serving as a spending deterrent. Hunt suggests leaving your credit card at home, or at least sealing it in an envelope with "Do Not Use" written across it in big letters. You'll find yourself spending less, and your children will get a more realistic picture of how money works.

Using paper instead of plastic money also gives you a tangible way to track expenses. If you've spent your available cash and need to reach for your credit card, you know you've gone over budget. "You have to know what you have coming in and going out each month to prevent you from overspending," says Cary Carbonaro, a registered investment advisor and partner with Stonegate Wealth Management, based in Fair Lawn, New Jersey.

Birthday burdens

Presents, cards, and gift wrap seem like innocent purchases. But these happy items can add up to a hefty sum when you consider the multitude of kiddie birthday parties you'll probably attend. Plus, it's easy to go overboard on presents, choosing fancier ones than you can really afford.

"Too often, parents view the gift itself as a message, as if the money they spend reflects something about them – their value as parents or their feelings for the other family," explains personal finance expert Hunt. Her bottom line: "Parents spend too much on birthday presents for their children's friends."

Of course, the money we spend on other children's gifts is a drop in the bucket, compared with what some of us spend on our own children's birthdays. In a poll, more than 20 percent of parents spent more than $500 on their child's first birthday – and the costs tend to rise from that point on. There's even a citizen action group, Birthdays Without Pressure, devoted to reining in out-of-control spending on parties and gifts.

What to do: "Take yourself out of the spending game. Try not to worry about what other people think," Hunt counsels.

Consider homemade gifts. "Make something so special, you can't even put a price on it," says Hunt. There are dozens of presents you and your child can create at home – check out craft websites for ideas on making knitted scarves and hats, jewelry, picture frames, and soap.

You can also cut expenses by using homemade cards. Instead of forking over $4 for a store-bought card, help your child draw or paint his own. And Hunt has a great tip – get your child's homemade card laminated inexpensively at the library or copy store before giving it to the birthday boy or girl.

For the noncrafty, Carbonaro suggests stocking a gift closet. Even if there's no party on the calendar, keep an eye out for great prices on potential presents. Next time your child gets an invitation, you can choose from your bargain stash.

Finally, try creative alternatives to store-bought wrapping paper. Hunt suggests using the Sunday comics, for example. Not only is this "gift wrap" original and fun, but it's environmentally friendly, too.

When your own child's day in the sun arrives, you may want to consider hosting a no-gifts birthday party. If your guests balk, suggest that they make a donation to a local charity or give your child a certificate for a special playdate or sleepover instead.

In addition, try to avoid caving in to the birthday party competition blitz. Does your child really need an expensive clown, or could a relative dress up in a silly outfit and entertain everyone with water balloons? There are many fun, low-cost activities that your child and guests will enjoy just as much (if not more) than the high-dollar ones.

Living for today... and only today

We parents are often told to focus on the here-and-now to better enjoy the fleeting years of our children's youth. But when it comes to money, being a little less "in the moment" is probably in order.

Matt Pohlman, a financial adviser whose client base includes many families, notes that parents' tendency to neglect saving is rampant – and it cuts across all income groups.

"Parents think, 'We're young, our kids are young, and we have short-term critical needs. We can worry about saving later,'" says Pohlman. "But the reality is, this is the most important time to build a cash reserve. If you get in a pinch, you can dip into your savings. It's a lot better than taking on debt with interest."

What to do: Make saving a habit. Pohlman advises families to have some of their income automatically deposited into savings – both short term and long term – every month. Even if you can manage only a small amount right now, it will add up.

Aim to build an emergency fund of three to six months' worth of living expenses in cash or cash equivalents, suggests investments advisor Carbonaro.

It helps to be careful and thoughtful about your spending. 

"Try to sort out whether a need is real, or whether you just perceive it as real. If it's the latter, consider allocating the money to savings instead," Pohlman suggests. Does your child really need that smocked dress or another educational toy? Is a state-of-the-art changing table (or a changing table at all) truly necessary? 

Pohlman cautions against letting your self-worth as a parent get tied in with what you spend. In other words, don't evaluate your parenting skills based on how well stocked your nursery is.

Mixing up priorities

Many moms and dads also neglect long-term savings, such as retirement and college funds, says financial advisor Pohlman. Waiting until "later" to start these funds is a bad idea, because you want that compounding interest to kick in as early as possible. Saving now can yield a big payoff later.

But even forward-thinking savers often make another mistake: building their child's education fund by skimping on their own nest egg. That may seem the logical order – after all, your child will enter college long before you retire – but financial advisors are quick to point out this fact: Your kids can borrow for college, but you can't borrow for retirement.

In fact, if you stash more cash in your nest egg, you may improve your child's eligibility for college loans and scholarships. When calculating need-based financial aid, schools don't count money that's invested in retirement accounts like IRAs and 401(k)s.

What to do: "The goal should be to save at least 10 percent of income for you first. Savings over and above that can go toward the kids," says Erin Baehr, a certified financial planner and owner of Baehr Family Financial in Stroudsburg, Pennsylvania, and Randolph, New Jersey. Her advice: If you or your spouse is eligible for an employer-matched 401(k) retirement plan, invest enough to max out the match – it's like free money.

Next, open Roth IRAs for both parents, even if only one works for pay, Baehr suggests. This retirement savings account can double, if necessary, as a college savings tool. Contributions can be withdrawn tax- and penalty-free to pay for education expenses.

"If parents really want to start saving for their kids before funding their retirement accounts and emergency fund, I recommend investing a little bit, maybe $25 a month, to satisfy that need," says Baehr. "Then encourage grandparents to scale back on gifts like clothing and toys and contribute to a 529 instead." A state-sponsored 529 plan for college savings also offers tax advantages, she adds.

Don't ask, don't get

Working moms aren't getting the salaries they deserve – because they're not asking for them, says Linda Babcock, a professor of economics at Carnegie Mellon University and author of the book Women Don't Ask. She found that while men tend to negotiate for higher starting salaries and promotions, women are likely to just accept whatever they're offered. This leads to significant financial losses over the long term.

Mothers can be particularly susceptible to this tendency, says Babcock, especially if they're returning to the workforce after taking time off to raise their children. "Mothers returning to work often undervalue themselves and their skills," she says. So when they're offered a job, negotiating for more money doesn't occur to them.

"The same is true for mothers who work part time," says Babcock. These moms may be so relieved to find a job with more flexible hours that they don't want to risk anything by asking for more money.

What to do: Recognize that your skills are valuable. "What many mothers don't realize is that even if they've been away from work for a while, they've actually been developing very important skills through child-rearing, from time management to diplomacy. Mothers bring a lot more to the table than they think," says Babcock.

Explore comparable positions and salaries to get a realistic idea of what you should be making. Check out online "salary wizards" on Salary.com or Payscale.com, and search Google for sites tailored to your career – they may include information on salary ranges. If you go into your meeting with a clear idea of what you want in terms of salary and benefits, it will be much easier for you to negotiate effectively.

The starting salary you're offered will probably be on the low end, because your future boss is expecting you to negotiate. "Employers never offer the highest amount they can pay," Babcock explains. When negotiating, refer to your skills and experience, state your case with calm enthusiasm, and project a cooperative "let's work together" attitude.

Respected Readers: Need your help to keep the site up and running. please donate ! Any help is appreciated.

How to Find and Keep a Good Nanny

 

Many families who are in the market for a nanny choose to use the services of nanny agencies. 

These agencies weed through the less desirable candidates on their behalf -- something that can be a tremendous time saver.

You don't have to use the services of a nanny agency, of course--provided that you have the time and the expertise required to do the hiring yourself.

Here are a few tips to get you started:

• Ask applicants to submit their job applications in writing. Not only will this save you countless hours on the phone: most of the flakier and less committed candidates won't want to bother to apply in writing!
• Once the resumes start to show up in the mail, do some preliminary screening to eliminate those nannies whose resumes reveal unexplained gaps in unemployment, an unstable work record, a lack of related experience, or who are missing a key requirement for the position (e.g. a valid driver's license or training in infant-child resuscitation). Then do some preliminary screening by phone before deciding who you should -- and shouldn't interview.
• Try to schedule interview with at least three candidates so that you'll have a few to choose from. Make sure that your child is on hand to meet these candidates so that you can assess whether the two of them are going to hit it off or not. (Note: If you're child is currently struggling with separation anxiety, she may give any potential nanny the thumbs down!)
• Once you've wrapped up the interview, be sure to check each candidate's references thoroughly. Find out how long the person providing the reference has known the nanny, how satisfied she was with the nanny's overall job performance, what the nanny's strengths and weaknesses are, what ages of children the nanny is best suited to care for, and so on.
• Once you've found the perfect nanny and she's accepted your offer of employment, put the terms of your agreement in writing. (Note: You can find a sample nanny contract in my book The Unofficial Guide to Childcare.) Having a written agreement will help to eliminate any future misunderstandings.

Now that you've found a good nanny, you'll want to do everything you can to keep her. Here are a few tips:

• Take a day or two off work to give the nanny a chance to get used to your child's routines before you leave the two of them on their own.
• Make sure that you stick to the terms of your agreement. If you've promised to be home by 6:00 p.m. each night, honour your commitment. If your circumstances change and its no longer possible for you to hold up your end of the bargain, renegotiate the contract. (Be sure to sweeten the deal by offering your nanny a raise.)
• Keep the lines of communication open so that you can deal with any potential sources of conflict before they become a problem.
• Let your nanny know on a regular basis how much you value her contributions to your family.

Respected Readers: Need your help to keep the site up and running. please donate ! Any help is appreciated.

Working Mom Or STAHM?

Working Mom or SAHM: Does It Really Matter for Baby's Development?

For babies whose mothers work outside the home, the positives may outweigh the negatives.

The Scoop

The latest wrinkle in the Mommy Wars? Babies raised by working mothers may receive more positive benefits than negative ones, according to data from one of the most comprehensive childcare studies to date.

As highlighted in a July 31, 2010, Washington Post piece, researchers from Columbia University followed more than 1,000 children from 10 geographic areas through first grade, tracking their development and family characteristics. The study found that infants raised by mothers with full-time jobs scored, on average, somewhat lower on cognitive tests, deficits that persisted into first grade. But this negative was offset by three strong positives. As researchers note that working mothers had higher incomes, they were more likely to seek high-quality childcare, and they displayed greater "maternal sensitivity," or responsiveness toward their children, compared to stay-at-home mothers.

"We can say now, from this study, what we couldn't say before: There's a slight risk [for cognitive delays], and here's the three things that you, Mom, can do to make a difference," says Jeanne Brooks-Gunn, the study's lead author, in an interview with the Washington Post.

According to researchers, the study also reaffirmed that part-time employment had no negative effect, nor did it seem to matter for a child's cognitive development whether a mother worked full time after the first year.

For Baby

The link between cognitive development and working outside the home? Researchers believe that mothers with full-time jobs find it more challenging to provide an infant with "the kinds of intensive interaction that babies require," says Brooks-Gunn. High-quality childcare appears to offset this, but according to Brooks-Gun, high-quality childcare, too, is hard to find for an infant.

Respected Readers: Need your help to keep the site up and running. please donate ! Any help is appreciated.

Sunburn And Babies

Sun protection tips to keep Baby safe

Protecting your baby's sweet skin from the sun should start at birth. But what if, regardless of all the precautions taken, your baby or toddler ends up with a sunburn? Have no fear, mama. Here are some ways to help treat Baby's burn!

Easing Irritability and Sunburn Pain

In a nutshell, sunburns need to be treated like any other burn.

Dr. Barbara Huggins, professor of pediatrics at the University of Texas Health Center at Tyler, suggests these top tips:

• Limit physical touch to the sunburned areas.
• Keep Baby cool and out of any additional sun exposure.
• Give plenty of liquids. Make sure Baby is well hydrated, and learn the signs of dehydration.
• Give Baby a cool bath and apply cool compresses to the burned areas.
• If applying moisturizer, avoid Benadryl or benzocaine products as these can irritate the skin.
• If clothing is necessary, then choose very soft, 100-percent cotton garments that can breathe (otherwise, just keep Baby in a diaper).
• If Baby has blisters, don't pop them. As long as the blister is intact, the burn underneath is sterile. Once they're popped, the area is open to infection.
• With continued irritability, you might try a dose of pain reliever like acetaminophen or ibuprofen.

If your child has symptoms of heat stress such as fever, chills, nausea, or vomiting, see a doctor immediately. And "if the sunburn is severe, with many areas of blistering, the child needs to be evaluated by a physician because, as with any second-degree burn (and that's what a blistering sunburn is), the child can easily get dehydrated because of the oozing associated with burns," says Huggins.

Long-term Consequences of Sunburn

While most parents protect their children from overexposure to the sun, sometimes they can't avoid it. In the long term, the problems associated with sunburn are serious and include premature aging and skin cancer. "It is estimated that 60 to 80 percent of total lifetime sun exposure occurs in the first 18 years of life," Dr. Huggins says. "It's one of the reasons that sun protection should begin at birth and continue for life, especially in children with fair skin and freckles. Though the initial risk of developing melanoma is rare, it doubles with a history of having had a bad sunburn. The more sunburn, the higher the risk."

Preventative Care

Want to stop the burn before it even happens and keep your baby's disposition sunny and bright? Just follow these suggestions for keeping sunburns at bay:

• Apply sunscreen evenly on children under 6 months.
• Keep children (including infants) out of the direct sun, especially between the hours of 10 AM and 2 PM.
• Allow for 10 to 15 minutes to play in the pool or outside, and then cover up.
• Consider buying the new UVA protective shirts. Also, dress the child in a hat.
• If the infant or child falls asleep outside, be sure the sun is at his or her back and not reflecting off water or a pool deck.
• Be aware that sun, even through tree branches, can burn, as can the sun's rays on cloudy days.
• Comfort measures include cool compresses on the sunburned skin, vinegar compresses, aloe creams, and plenty of fluids.
• Driving in a convertible or a car with sun streaming in the window can also be a cause of sunburn.

Respected Readers: Need your help to keep the site up and running. please donate ! Any help is appreciated.

The Daycare Dilemma

It's always a dilemma for me to know just how to address the subject of substitute care, because there is such a gap in our culture between the ideal and the possible. Ideally there would be little need to use substitute care, nor would any mother feel a strong personal need or desire to do so. The reality, of course, is that parenting - the most important job a woman can have - is not valued sufficiently. No one should ever feel that she is "only a mother" - motherhood should be more highly valued than any other profession. No other job is as critically important; no other job has the potential for improving our world by nurturing the capacity to love and trust others. As Canadian psychiatrist Elliott Barker wrote:

"We have to change a lot of established patterns or ways we do things - our priorities - so that nothing gets in the way of attachment in the earliest years. The capacities for trust, empathy, and affection are in fact the central core of what it means to be human, and are indispensable for adults to be able to form lasting, mutually satisfying co-operative relationships with others."

Our culture not only minimizes the importance of motherhood, it maximizes the desire to consume commercial products, defining success always in economic, rarely in humane or social terms. There is no question that a mother with a professional career who uses daycare for her children receives far more recognition and respect than the mother who has left a professional job to stay at home with her children - despite the fact that the at-home mom is in a position to contribute far more to society in the long term. If motherhood were valued as highly as it should be, more mothers would choose to stay at home, and more pressure would be put on governments to help provide the means by which this could be done.

Creative solutions can only come about through a deeply-felt need. If everyone understood the critical importance of mothering, there would be fewer daycares and more and better alternative solutions that keep mother and child together. There would be more family centers where mothers with infants and young children could get together with other parents, watching the children as they play together. Families would be given sufficient financial support by the government, and this support would be seen not as a "handout" with all the stigma that welfare has now, but as a wise and critical investment in our future. Everyone would know that motherhood is the single most important profession there is, one that deserves the highest esteem and the highest pay. What kind of society do we have where athletes, movie stars, and CEOs get the highest pay? 

What kind of society do we have when the professional woman with her children away from her all day enjoys higher esteem than the stay-at-home mother who has the opportunity to nurture a human being, whose personal qualities, positive or negative, will affect all future relationships? Which is the more critical job?

Our vision is too narrow, too immediate, too limited. We see only the present contribution of the professional woman and are blind to the even greater potential contribution of the mother at home. We need to value these mothers now - or our future will look no different than it does at present, with our myriad social problems. If we really understood the importance of the mother-child bond, we would find those solutions that now seem so elusive and difficult. We would recognize that a young child who has bonded with a particular caregiver who then disappears from the child's world, can internalize feelings of rejection and disappointment. We would be committed to finding ways to keep mothers, babies, and young children together. We would provide whatever financial support is needed, and give extensive parenting education to all. We would give greater prestige and sufficient financial support to dedicated stay-at-home mothers. Most of all, we would recognize that repeated separations from the mother can damage the mother-child relationship and create a tragic reluctance in the child to love and trust others in the future. Close bonds of love and trust take time to develop; they take time to maintain.

We would recognize the critical importance of providing paid maternity leave. We would understand that parental care has the most stability. We would build a healthier population and fewer hospitals and prisons. We would strive to learn more about the father-child bond, and give fathers an opportunity to bond early with their child, and to support the mother in the earliest years. We would enjoy a very different and vastly improved society, where compassion and connection were valued and desired more than any other goal or commodity, where a small house filled with love, trust and joy would be valued far higher than the biggest mansion.

Respected Readers: Need your help to keep the site up and running. please donate ! Any help is appreciated.