Mothers may be priceless, but the National Retail Federation can put a dollar figure on Mother's Day: $21.4 billion. That's what Americans are expected to spend on flowers, brunches, jewelry and other gifts this year. However, Kimberly Palmer — author of Smart Mom, Rich Mom — has a different gift in mind: a frank talk about money.
"I love it when my daughter asks about my job and I can explain to her why I work and how it contributes to our family financially. Likewise, I love hearing from my mom and grandmother about the choices they’ve made — older women can teach us a lot about life’s twists and how to prepare for them financially," Palmer says. "Those kinds of conversations are true gifts."
Palmer has talked with dozens of what she calls "smart moms," those who make sound financial decisions with confidence, to learn their secrets for her book, out June 1. Here's a little wisdom from moms to moms:
Q: What are the biggest mistakes moms make with family finances?
A: Focusing on the small things instead of the big ones — if we spend just an hour on a weekend setting up a college savings account, balancing our retirement account investments or updating our life insurance policies, we do so much to boost our family’s financial security — much more than we would if we spent that time hunting down sales or coupon codes instead.
Q: Do moms get the credit they deserve?
A: We hardly ever get the credit we deserve! Even if you just look at the advertisements aimed at us, you would think that we’re just interested in saving a few dollars by hitting up weekend sales. Those kinds of savings are nothing compared to the much more important choices we make about investing, tax-advantaged accounts like 401(k)s and 529s and flex spending.
Q: You say that the costliest part of having babies is the impact on women's earnings. How do you limit that damage?
A: When you have a baby, you will either be shelling out a ton of money for child care or your (or your partner’s) earnings will take a big hit. You can limit the damage by preparing as much as possible — saving up money in advance to cover some of those big initial child care costs or covering the lost income during maternity leave. The good news is that child care costs go down over time while your income has a good chance of rising, as long as you keep working.
Q: You advise moms to always be working in some capacity to maintain their earning power. What about stay-at-home moms?
A: Stay-at-home moms can do so much to preserve their own earning power while they are out of the workforce. Even things like maintaining an updated LinkedIn profile, participating in Twitter conversations with leaders in your field and making new connections via social media or attending the occasional networking event can make it easier to return to work when you are ready.
Q: You say it's shocking how gendered investing culture still is. How?
A: It is pretty disturbing the degree to which financial advisers still cater their conversations toward the husband if both the wife and husband are present. It’s time for moms to take a more central role in managing those investments, because there is a very high chance that at some point we will be the ones solely in charge — we might as well embrace that role now so we’re ready.
