What to Do With Money: A Mom’s Guide to Smart Money Management

The post What to Do With Money: A Mom’s Guide to Smart Money Management appeared first on Penny Pinchin' Mom.

Mom! You need to know what to do with money! And I’m not talking about how to spend it (we all know how to do that and then some!). I’m talking about how to earn, save, invest, and ultimately make your money work for you.

Statistically, you are probably going to outlive your spouse. I know I know…there’s a better way to put that across. The point is that women tend to outlive men across the globe.

What are you going to do when it’s all up to you, and all those expenses fall on your shoulders alone? This is something every parent needs to think about.

Do you have a retirement plan or a healthy savings account? How about an education policy for the kids? What about day-to-day expenses?

I know you are probably overwhelmed by all the things you need to do around the house. What with all the chores, homework, and other wifely duties.

As moms, we tend to take care of everyone else first, and if there’s some time left over, we will maybe see about taking care of ourselves last.

P.S. There’s rarely any time left.

Believe me when I tell you that your financial literacy is just as important as taking care of your family. It’s yet another way of making sure that they (and you) are going to be financially okay in the future.

With that in mind, here’s what to do with money to make sure the cash flow lasts and sets you up for a wealthier future.

Get Insurance

Did you know that the average life insurance cost per household is roughly $993 a year? Yes, $993 a year for something that ensures your financial stability should something happen to the breadwinner(s). When you look at it that way, it’s more like a drop in the bucket in some ways.

That’s a small amount to pay for that level of peace of mind as a parent. In my book, insurance is an absolute necessity. And I’m talking about all forms of insurance, from health to life and even home insurance.

These are the financial moves that might seem painful at first but will come in handy should the worst happen. Instead of buying that new bag with the extra cash you have, how about getting a new insurance policy and paying your first premium?

Pay Down Debt

Yes, this is a good way to set yourself up financially. Getting out of debt should make the top three of your financial priorities. Here’s why:

It leaves you with more disposable income It gives you greater peace of mind It makes it easier for you to invest the extra cash

When you don’t have crushing credit card debt to worry about, you can plan your finances better, invest more, and spend the excess cash on better insurance policies for yourself and your family.

Besides, paying off your debt and keeping it at a healthy minimum will help your credit score rating. With a better credit score rating, you have access to better financing options, which, in turn, can help you take advantage of future investment opportunities.

Shop Wisely

Just because you are financially smart and frugal doesn’t mean that you have to cut out shopping entirely. It just means that you do it in such a way that you get what you need while still saving some money. There are several ways that I know to do this:

Make a Priority List

This is something many moms do but then forget to implement. My list often looks something like this: Important and immediate items; important but not immediate necessities; and finally, wants (non-important, non-immediate purchases).

The important and immediate purchases simply have to be made. These are your basic needs like groceries, toilet paper, and such. It’s not necessarily fun, but definitely necessary.

Once you are done with that, you go on to the rest. The wants come last, and these can be bought as a reward for something.

Coupon

To be a frugal mom, you need to learn how to coupon. You will save a great deal on important and immediate items as well as important but not immediate items. Plus, it really can be a rush seeing all those savings opportunities you may have been passing up before.

Buy in Bulk

Bulk purchases often tend to be cheaper than buying single items. So, while it may feel like you are spending a good chunk of money initially (which you are), it will pay off in the long run when you choose to purchase essentials in bulk at a discount instead of buying them each week from a regular store at a higher price for less.

Set a Savings Goal

“Do not save what is left after spending, but spend what is left after saving.” – Warren Buffett

In all my years of saving money and financial planning, I’ve found this one piece of advice to be quite sound.

When you have a target in mind, you tend to go harder at the saving game than when you are just putting money aside for a rainy day. This is particularly true if you are a results-oriented mom.

Set personal and financial goals for your savings. They can be anything. You could be saving for a vacation, a new car, or your kid’s Harvard education (yes, be specific with the school; find out how much tuition is and save towards that specific figure).

Even if your kids don’t end up going to Harvard, you’ll have that money saved in your bank account, and you can use it to pay for whichever college they decide to join. And if they don’t, you can use it as part of your retirement fund!

Build a Positive Credit Rating

Hear me out: you need to pay off high interest debt as discussed above but also build a good credit score and rating. By paying off the heavy, high interest debt, you will be on a much easier financial path.

To create a good credit rating, I take out small personal loans from time to time. You can do this with anything.

Most people choose to use a credit card that they only use to pay for gas or the occasional night out. These are small loans you can easily pay off in no time, keeping your credit score and rating positive while also keeping you out of debt and your bank account in check.

Additionally, I have a checking account and a savings account with the same bank. Couple this with a good credit rating, and you have a potential lender who will give you a good interest rate down the line.

Now, the thing about educating yourself about what to do with money and personal finance issues is that your mind will start being open to investment ideas.

These are ideas that could bring you money in the form of passive income. You will need those lenders. See how it all ties together?

Learn what to do with money, learn how to manage your expenses, and finally, get excellent insurance. These are all pillars of good financial etiquette that every mom should have at her fingertips.

The post What to Do With Money: A Mom’s Guide to Smart Money Management appeared first on Penny Pinchin' Mom.