Moms, your time is precious. You’re getting the kids up and ready for school, running them back and forth between piano lessons and soccer practice, and making sure dinner and homework are both done.
Oh, and you’re also fitting your paying job in there, too. Even when you’re not at the office, emails and calls take place in the few quiet minutes after bedtime.
You wouldn’t trade it for the world, but it’s hard to think about the future when the present is like a whirlwind. You can barely find time to check Facebook, nevermind plan out your long-term financial goals. That’s probably why not having enough money for retirement is the top money concern among Americans.
Luckily, it doesn’t have to take a lot of time. With this simple guide, you can set up your investing, life insurance, and emergency fund before that episode of Dinotrux is over.
Investing and saving
Women are focused on growing their wealth, and they consider paying off debts to be more important than men do. According to a 2016 study from BlackRock, women – whether they’re millennials or baby boomers – are less likely to understand the risks involved in investing, and are less likely to invest in the stock market. When it comes to millennial women in particular, only 38% have both savings and investments, compared to 60% of millennial men.
It’s easy to understand reluctance in investing. It can seem complicated and overwhelming, not to mention time consuming. But to start investing for your future, you don’t have to be a wolf of Wall Street. These days, you just have to have a smartphone.
There’s an investment app out there for everyone. Thinking about a long-term, one-stop-shop for your money? Betterment and Wealthfront are your best bets, using algorithms to make the most out of your money. Want an easy way to dip your toes into the stock market? Try Robinhood. Looking for a low-touch way to save? Acorns rounds up your purchases and invests the difference, so you don’t even have to think about it.
Each of these comes with its own strengths and drawbacks, so be sure to check out our guide for a full look at how to find the right investment app for you. Answer a few questions about how you want to invest and connect a bank account, and you can be up and running in minutes.
And don’t forget about your old-fashioned retirement accounts. A workplace 401(k) can be the difference between retiring and working for a few more years, and you can get the money automatically deducted from your paycheck so you don’t have to worry about it.
If you’re using an IRA, whether through a new platform like Betterment or Wealthfront or a classic like Vanguard, you’ll still want to automate your saving. Your schedule is already full; the last thing you need is to remember to transfer money to your IRA every month. Set it and forget it, as they say, to make sure your plan stays on track.
No matter what plans you have for yourself or your kids – retirement, college, a new house – it can all be derailed if you don’t have life insurance. As much as we hate to think about it, the unexpected happens, and losing a partner’s (or both partners’) income can throw off your entire financial plan and your family’s future. Life insurance isn’t just to cover big-ticket items; it can help pay for the everyday costs you might have trouble handling if the household income goes from two or one down to one or zero.
Unlike long-term financial goals, life insurance is immediately complete: while you’re saving up for college for 18 years, your life insurance policy will be ready as a financial safety net right away.
Here are a couple of things moms (and moms-to-be) should keep in mind when they’re shopping for life insurance:
- Life insurance is most often used as income replacement, but stay-at-home moms might need life insurance, too. Think of everything you do to keep your family running, and ask yourself how much it would cost to pay to replace those tasks. For example, how much would daycare or a nanny cost if you’re not around to be home with the kids? Talk to your spouse about making sure you both have life insurance coverage to meet all of your needs.
- Pregnant? Congrats! You might be tempted to rush out and by life insurance to protect your little one, but it might actually be better to hold off. Pregnant women can suffer from a bump in their insurance rates; because of things like increased weight and gestational diabetes, you might be classified in a worse health class – and have to pay more in premiums – if you wait until after the first trimester to apply for life insurance. You might be better off waiting until you have your baby, letting your body recover, and applying when you’re in better health.
Another big concerns with moms is affording life insurance premiums. But life insurance is more affordable than you think. Here are starting monthly rates for a woman in excellent health looking at a 20-year, $500,000 policy:
[table caption="Sample term life insurance rates, 20-year/$500,000 policy" width="500" colalign="left|right"]
Age,Starting monthly premium
30 years old, $17.94
35 years old,$19.21
40 years old,$26.25
45 years old,$40.18
As you can see, life insurance gets more expensive as you get older. That’s why it’s important to get your safety net in place early.
When you’re ready to apply for life insurance, use an insurance calculator to recognize your insurance gaps and figure out your needs. Then all you need to do is answer a few basic questions. You can calculate your needs, compare your quotes, and submit your application in ten minutes – fast enough to do it during the kids’ swim lesson.
An emergency fund is a crucial part of any budget. Lose your job? Car break down? Dip into your emergency fund to cover the costs, leaving your retirement funds to keep doing their job.
Most conventional advice recommends keeping anywhere from three to 12 months’ living expenses in an emergency fund. That’s a pretty wide range, so you’ll need to figure out how much you need.
First, do a quick assessment of what you already have saved up in terms of an emergency fund, and what you need. Make sure you have enough to cover rent or mortgage, regular bills, and so on, but it also needs to take into account your risk tolerance. How big an emergency fund would make you comfortable? Do you want a year’s worth of money saved just to be on the safe side, or are you confident that a three month cushion is enough to take care of any costs, get back on your feet, and rebuild your emergency fund?
Then, like your retirement savings and investments, automate transfers so you’re building your emergency fund without even thinking about it. It won’t take long for you to hit your fund goal, whether it’s three months or a year’s worth of savings. And the best part is, once you do reach it, that’s it! There’s no messing with it, no figuring out what to do with it; the whole point is for it to sit there, untouched, until an emergency arises and you need to tap into it.
Not only is an emergency fund an easy way to build a financial safety net, it’ll also put you ahead of the curve compared to your peers. A recent survey shows that 69% of Americans have less than $1,000 in savings, and 34% have no savings. Getting your emergency fund in place means that once you put the kids to bed, you’ll be able to sleep easy yourself.
Busy moms have enough to worry about. Finances doesn’t have to be one of them. Taking a few minutes to assess the current state of your finances, set up and automate payments to investments, a life insurance policy, and an emergency fund is an easy way to ensure that, whether you’re expecting your firstborn or sending a kid off to college, you and your family are protected no matter what.