As new mothers navigate the challenges and joys of parenthood, one crucial aspect often overlooked is the importance of life insurance. With the unpredictable nature of health and life expectancy, it’s vital for new mothers to consider expanding their life insurance coverage. Surprisingly, about one-third of parents do not possess life insurance, despite a strong consensus among most mothers on its necessity. “New mothers must prioritize life insurance due to the unpredictable nature of health and life expectancy,” explains Finance Coach Jeannie Dougherty. This coverage is essential as a safety net, safeguarding against potential financial hardships and ensuring the continuity of housing, groceries, and children’s education.
“Surprisingly, a significant portion of parents, about one-third, do not possess life insurance, despite the consensus among most mothers that it’s a necessary investment. Considering the average age of widowhood is 59.5, life insurance is a vital safety net. It safeguards against potential financial hardships, ensuring the continuity of essential aspects such as housing, groceries, and the continuity of children’s education and extracurricular activities.”
With the addition of a new member to the family, budgeting becomes even more critical. To incorporate childcare expenses effectively, financial advisors recommend adhering to the 50-30-20 budgeting rule. This rule allocates 50% of income to necessities, 30% to discretionary spending, and 20% to savings. Since childcare costs are considered essential, it may require new moms to reprioritize their budget.
“To incorporate childcare expenses into your budget effectively, adhering to the 50-30-20 rule is recommended. This rule allocates 50% of your income to cover necessities, 30% for discretionary spending, and 20% for savings. Given that childcare costs fall under essential needs rather than discretionary wants, it’s crucial to reprioritize your budget accordingly. This may involve reallocating funds from non-essential expenses like subscriptions or dining out to cover childcare expenses. By prioritizing needs over wants, new moms can effectively manage their budget and maintain financial stability while expanding their families,” shares Dougherty.
Another essential aspect for new mothers is considering long-term disability insurance (LTD), which complements other forms of family protection. LTD provides income replacement at 66 2/3% of pre-disability earnings, crucial for those who need more than a few weeks off due to health issues.
“LTD is available if you need to take more than a few weeks off. Long-term disability insurance provides income replacement at 66 2/3% of your pre-disability earnings, reduced by deductible income. Mom may only know if she will need LTD or if she plans for it. Car accidents, falls, brain injuries, back pain, arthritis, and other joint disorders are the most common reasons for folks to file. If you know you have a history of being a klutz or have arthritis, it would be wiser to have that insurance. Otherwise, you have no additional financial support,” shares Jeannie.
Regarding parental leave, working moms should take proactive steps to understand their options.
“Working mothers should be aware of their parental leave options and take proactive steps to prepare for their time off. Typically, parental leave spans up to 12 weeks, and expectant mothers should inform their employers about their pregnancy. Human resources departments can guide them on the duration of leave available,” Jeannie says. “While many new mothers feel compelled to return to work swiftly due to financial responsibilities, it’s essential to consider the physical and emotional aspects of the transition. Some workplaces offer the flexibility of part-time returns to aid in the adjustment process.”
It’s crucial for new mothers returning to full-time work to acknowledge the toll it may take on their energy levels. Planning for adequate rest and support during this period is vital for their well-being.
new moms should be aware of various family tax breaks that can help alleviate financial burdens. Common family tax breaks include child care credits, dependent care credits, and education credits like 529 plans. “Understanding these benefits can lead to significant savings and should be maximized by consulting with a tax professional,” suggests Dougherty.
