October 30, 2007

Offramping Moms

Looks at the growing trend of new mothers taking a step back from careers to care for their babies. Kathleen Miller discusses the financial considerations of the decision to stay home.

About the Money: Off-ramping and Can I Afford to Stay Home?
Kathleen Miller
October 29, 2007

FAQs:

• What do people interested in “off-ramping” need to consider from a financial perspective?
• What are some the financial risks associated with giving up a career or a job?
• How do you analyze the costs of working vs. staying at home?
• What are some strategies for those who are off-ramping and or leaving the workforce.
• Your husband left his job recently after a successful career. How did the two of you work out these financial issues in your family?

Q: What do people interested in “off-ramping” need to consider from a financial perspective?

• More men than ever are making this choice as well – it's no longer just a “women's issue.” Eleven percent of households today have an “alpha earning wife” or “breadwinning mom” who makes more than her spouse and is supporting the family financially. (I'm one of those by the way!!)
• The family needs to ask themselves: how will they afford their current lifestyle?
• Can they do it on just one income?
• If not, can they downsize and get rid of expenses to support the lifestyle they desire?

Move to a smaller house with a smaller mortgage
Take less expensive vacations
Get by with one car Create and stick to a budget (for perhaps the first time)
Have an emergency fund of at least 3 months of expenses

Q. What are some the financial risks associated with giving up a career or a job?

• The first risk is your immediate loss of income but there is also an “opportunity cost” of being out of the job market. You are giving up health care benefits, career advancement/future earnings and retirement plans. Don't just look at your income in the short-term and the day-to-day expenses. You have to look at what you are giving up now and later in life as well.

• A real consideration is the cost of waiting to fund your retirement. The earlier you save for retirement the better off you are later in life. If there are gaps in savings and contributions you simply will have less at your desired retirement age.

• The same thing goes for career advancement. As a career develops you gain more responsibility and along with that come pay increases and bonuses. That progression stops once you leave the workforce.

For example: Go online to one of the many financial calculators and run a financial model based on what you are making and saving now. Then run one based on having reduced earnings for a period of time and notice what the difference is 20 or 30 years from now. Most people will be surprised with how large the gap becomes.

Suggested example: MSN Money Retirement Planner, helps calculate how long you can live off of your next egg before it runs out.

http://moneycentral.msn.com/retire/planner.aspx

Q. How do you analyze the costs of working vs. staying at home?

• First map out all your expenses and which expenses are work-related:
  You might save the costs for day care, business lunches, travel to and from your job, your wardrobe or uniform expenses. You might save on health care costs if you are leaving a job that is literally making you sick.


• Be realistic about the trade offs:
  Will you use less gas or more gas if you traded your work commute for shuttling your children and the neighborhood kids around to all their activities?
  
  Will your spouse earn enough to fund both of your retirement accounts?
  
  Will you take on an expensive hobby now that you have free time? Golf, boating, traveling etc?
  
  Are you leaving your job to return to school? If so you may have more expenses for tuition and books.

Q. What are some strategies for those who are off-ramping and or leaving the workforce.

• Keep the job door open:

  Find ways to keep your skills current. If you are taking a sabbatical or transitioning into a role or a stay at home parent, you need to maintain your business network and skills.

  Attend professional association meetings and continuing education programs even if you are not working.

  Volunteer with organizations that will help you expand your network

  Work on a consulting or part-time arrangement with your former employer

  For example:

  The generation of women today is better at this than my generation. They are alpha mom's who use technology like blackberry's, cell phones and email to communicate versus the PTA mother of my generation who was isolated from the business world. Oftentimes see them with a blackberry or cell phone attached to them while they are out with the babyjogger.

  One of my employees left our firm and had a child. She is now back working on a part-time basis earning money for savings and keeping her business connections and skills current.

  Another client works on a project-by-project basis with her former company. They call with project work that she can do from home, which keeps her earning money but allows her the time to spend with her children that she desires. Don't assume your employer will not work with you. It doesn't hurt to ask.

• Consider how the financial impact with affect you emotionally in addition to financially.
  
  Many times the balance of power in a relationship shifts when one spouse is longer a financial contributor. This can have tremendous mental impacts on self-esteem and confidence. You need to discuss the budget and how the money will be spent with both partners managing the financial decision making in the family.

Q. Your husband left his job recently after a successful career. How did the two of you work out these financial issues in your family?

Discuss how you and Don worked through these issues once he left his job and you continued to run your business.

CEO Spotlight

Christine Wallace, CEO of Gracewinds Perinatal Services, discusses the needs of new parents and the market they represent.

ATM's Christine Chen sat down with Christine Wallace to find out more about her innovative business and the array of products, classes and services that Gracewinds brings to Seattle moms.

Chen: What services does Gracewinds provide?

Wallace: Everything from before the couple is pregnant; if they are trying to conceive we have fertility counselors here, we have acupuncturists who will do fertility acupuncture, support groups for couples who are trying to conceive. We have a class that is called “baby maybe” for people who are wondering whether or not they want to have a child. We have all of our prenatal services that range from childbirth classes prenatal yoga, massage, acupuncture, and pregnancy support groups. Our retail store is a year old, which offers supplies and gifts for pregnancy as well as new moms and new babies. Once the baby is born we have a new moms group, we have mom and baby yoga, infant signing classes, lactation consultants that will help moms through breastfeeding problems, and the doulas.

Chen: So will you explain what is a doula?

Wallace: A labor doula is typically a woman who goes in with the laboring mother and partner if there is one. And is there from the moment the birth begins through the labor process and continuing through the birth and remains for a little while after the baby’s latched on to the breast, if their breastfeeding. The doula is typically done with their job once the couple has moved into a family.

Chen: Christine was this a passion that turned into a business for you?

Wallace: It was, I’ve always loved working with pregnant women. I was a medical assistant for a family practice office. I’m a massage therapist that worked with pregnant women, a child birth educator, and a labor doula who is a professional labor support person. And I was noticing that all these women were having to look at so many different avenues to find my services that I thought 1-00:23 It was, I’ve always loved working with pregnant women, I was a medical assistant for a family practice office, I’m a massage therapist that worked with pregnant women, a child birth educator and a labor doula who is a professional labor support person. And I was noticing that all these women were having to look at so many different avenues to find my services that I thought but why not just combine them all. That’s how Gracewinds started so I definitely love working with pregnant women and with the fathers as well and the babies. I have five of my own, and a new grandson.

Chen: Christine, Do people underestimate the amount of time it takes to go through just the early stages of having a baby?

Wallace: We get the parents coming to the child birth classes quite often and I think that’s where the light at the other tunnel starts to hit. Especially the dads, where its like, “Oh wow this is coming,” and their so focused on the birth event it self, which may last only a few hours, may last a couple days, but then its over, and I think what’s really when it hits them, after they get home, it’s like “oh my gosh we have this baby here now and what do we do with it?” So we’re really trying to expand on our new born and post partum services as well, so that they have a little bit more help when they need it with the new baby at home.

Chen: Is Gracewinds leading the charge for a new kind of service provider?

Wallace: The services are out there. I think people have to look a little harder to find them right now. Gracewinds was just very lucky at the time we chose to start this business. We just hit that niche and have been able to draw very talented professionals to come here, almost effortlessly. People are very interested in what we’re offering and to add their services to it. So I’m hoping as Grace winds expands and gets more well known that people will take that model and go we can do that to cause moms everywhere who should be able to and dads who should be able to find these things easily, and hear about things that they never heard of. One of our more popular workshops is called, “Adapting your dog to a new baby,” it is taught by a dog trainer who is a mom and it’s the most popular class because everyone in Seattle had a dog before they had a baby. So it’s these little niche classes and things that are really popular. If we can do this more often and make it available to more people, I think it would be greatly beneficial.

Chen: So it sounds like because you have your roots in being a doula, the idea of seeing the whole progression from beginning to end sort of played into your concept of providing Gracewinds for people, right?

Wallace: I think birth is such, especially for these first time parents, it’s a scary anxious exciting time and there’s different milestone and obstacles all along the way. Having been a parent as many times as I have, I innately understand that and then again as a doula I understand that you can’t provide them with one thing and then send them out the door and I think that they have been taken care of. Our clients typically become very loyal very good friends so its one of those rare opportunities as a business person where you can help somebody and connect with them and can see the results. You see results all the time when they walk in with their babies.

Munny Jouney

Author Brad Dugdale explains “Munny Journey,” a plan to make your baby a millionaire.

Bulls and Bears

Bill Smead discusses investment strategies for growing families. Smead recommends that families:

• Create a six month financial reserve.
• Have life insurance equal to 15X your annual salary.
• Tear up credit card offers.
• Maximize your 401K participation.

Related Links

To read more about the growing trend of new mothers taking a step back from careers to care for their babies. See the following articles:

USA Today’s article and statistical data, "Attitude Gap Widens Between Working, Stay-At-Home Moms."

Townhome.com’s article, "Stay-At-Home Economics."

Jobsformoms.com's article, "The number of stay at home moms and moms with work at home jobs continues to grow."

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