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7 Ways Stay-at-Home Moms Can Avoid Money Pitfalls

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Being a stay-at-home mom has intangible rewards that defy measurement. It has some real costs, too.

Moms who choose to stay home will take a hit for the time spent away from work. They won’t make contributions towards savings, will miss out on career growth for time spent away and may have trouble restarting careers. Being smart in how you approach life as a stay-at-home parent can mitigate some of these costs and help you avoid pitfalls.

Here's how to get started:

1. Tough Conversations

Before deciding to become a stay at home, discuss your financial outlook with your spouse or partner. Will you be able to cover expenses on one income? Can you eliminate or diminish some expenses? Do you have an emergency fund? If you can build up your savings prior to leaving work, you’re ahead of the curve. If you don’t have much in terms of savings, some of these other tips become more important.

RELATED: 8 Things Stay-at-Home Moms Want You to Know

2. Adjust Expectations

When you lose one income, everyone in the family will likely have to adjust their expectations. Take a look at the proportion of your combined money that goes to food, transportation, clothes, entertainment and dining out. Then adjust for life on one income. Simple things, like meal planning and paying in cash at the grocery store, can help save money. Stick to your budget. Remember, money is tool; budgets don’t have to be seen as restrictions — they are the boundaries you choose because they serve your well-being.

3. Have a Joint Bank Account

Without a joint account and no income of your own, you run the risk of your partner exercising sole control over your family’s money, which leaves you with nothing or an allowance. Not only can this be demoralizing for stay-at-home moms, but it’s unwise in case something should happen to your spouse or partner, and you’d be unable to access funds. Having a joint account for earnings is smart. If there’s money left over after your monthly expenses, decide on the best way to use it. If you can’t decide, save it.

4. Keep a Separate Bank Account

This bit of wisdom comes from my own mom. Even if you have a joint account, it can still be wise to have a separate bank account. For instance, if you split whatever extra money you have at the end of the month, put your portion into your own account. Not only can separate accounts endow everyone with a sense of personal accountability, but it’s also a way to make sure you don’t accidentally encroach on joint account funds, which are supposed to cover your essential expenses.

5. Both Parents Need Life Insurance

A working parent is not the only person who needs life insurance. Just because you don’t have an income doesn’t mean you wouldn’t be a major loss to your family if something happened to you. The rule of thumb is to get a policy for the total cost of childcare your kids would need, plus education costs. While no one wants to imagine a worst case scenario, planning for your family’s well-being will give you peace of mind. Even a small policy is better than none.

6. Build a Side Income

I know plenty of stay-at-home moms who make the transition to work-at-home mom as soon their kids are old enough. Moms start freelancing, blogging for money, turn a hobby into a small business or make a little extra cash through childcare — all from home.

RELATED: 10 Questions You're Dying to Ask a Stay-at-Home Mom

7. Plan Your Comeback

How long do you plan to be home: one year, five years, longer? Make the choice that’s right for you and your family. Having a big-picture plan can help you determine when to start looking for work and when to start looking for childcare. A plan will also be helpful in considering other options that open up for you and your family.

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