Life as a mom can be hectic and juggling home life with work can make it even more difficult. Given these stresses and the pressure to always do things right, it’s no surprise that many moms often make financial mistakes. The good news is that recognizing these mistakes is the most important thing and fixing them is the first step to financial wellbeing.
Not Having a Basic Budget
Many people struggle with budgeting in all walks of life, but for mothers that are busy raising a family, it may be easy to forget to budget and simply live day to day. This can be a risky way to live, especially in the event of an emergency. Creating a budget – even the most basic – will help. A great way to keep a budget is by assessing current expenses and removing any unnecessary spending. You can then use this money for essentials or put it into a savings account. In addition to this, look at your monthly expenses and assess if there are any opportunities to reduce what you’re paying, many people find they are paying too much for education expenses. Private loan companies can refinance student loans. You might need a steady income and a strong credit score to qualify but it’s always an option. Other options for reducing your monthly expenses include shopping for cheaper utility costs and cheaper insurance premiums.
Prioritizing College Savings Over Important Short-Term Needs
Many moms want to save for their children’s college, and while this is important, they may overlook more pressing short-term needs. It is always important to have an emergency fund to fall back on in those times where you need a cash injection. If you don’t have this, you’ll end up digging into your child’s college fund anyway and, because you’re not prepared, you’ll probably end up taking more money out of the fund than you need to. Having this stash will also prevent you from having to take out high interest loans.
Failing to Plan for Yearly Events
The need to obtain quick cash for an emergency is something you cannot predict but there are certainly other financial obligations that you can plan for. Many moms, even those with a budget, don’t think about long-term savings or recurring savings. Having savings set aside for expensive times of the year like Christmas is important; it can help with planning, and you never have to feel like you’re short on cash when the time comes around. Other events to plan for include birthdays, vacations, and that time of the year when all your insurance premiums need to be paid.
Not Having a Backup Plan
Having one source of income can be risky as job security becomes a very rare thing. Having a backup plan in place is essential and while you don’t need to rush out to take on a second job in another industry, it is a good idea to do a course and get another qualification.
Not Taking Out Life Insurance
Life insurance will be your family’s financial safety net in the event of your sudden passing and while you might not like to think of that happening, it’s important to be prepared for the unexpected. Your absence will leave a huge void in the family in terms of income and this void could lead to huge pressure. Life insurance can cover the cost of a funeral and give your family financial support when it comes to mortgage repayments, childcare services and living expenses. It’s important to determine what type of policy and amount of cover best suits your family’s circumstances.