10 Ways Moms Can Make the Most of Their Money

Recently I was a guest on a radio show about kids and money, and a number of adults called in to talk about their own family experiences as children. One woman had grown up with a father who had a gambling addiction. She credited her mother with holding the family together both financially and psychologically. Another caller confessed that he still loves to indulge his children -- now in their early twenties-with things his family couldn't afford when he was growing up. He depends on his wife to rein in the family purse strings.

In fact, studies consistently show that by margins of 60% or more, women tend to be the ones who pay the family bills and balance the checkbook. So on Mother's Day it makes sense that Mom should give her own finances the same TLC she applies to the rest of the family.

That's particularly true because the time mothers spend performing the ten most popular "Mom jobs" would add up to annual cash compensation of $122,732 for a stay-at-home mom and $76,184 for a working mom, according to Salary.com. And every woman needs money of her own to manage and control-especially because nearly all women will be on their own financially at some point in their lives.

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That means, for example, putting your own retirement savings first, before braces for the kids' teeth or college tuition bills. In a survey by Country Insurance and Financial Services, 49% of the mothers interviewed picked college as their top savings priority, compared with 39% of fathers, who were more likely to choose retirement. Moms, the dads got it right on this one.

You say you're living paycheck to paycheck and can't find the money to save for a rainy day, much less for retirement or college? I'll let you in on a secret: Regardless of income, everyone is living paycheck to paycheck. The only way to sock money away is to have someone else save for you, taking it off the top of your paycheck before it can burn a hole in your pocket.

If you work outside the home, for example, sign up for your employer's retirement plan. Aim to contribute at least enough to qualify for an employer match. But if you can't come up with that much cash, any amount is a start (see our How much will my 401(k) grow? calculator). In 2009, you can contribute up to $16,500 to a 401(k) or similar account.

And saving doesn't have to be eat-your-spinach. While you're at it, have your bank take a little from each paycheck so you can treat yourself to a romantic weekend with your spouse, a Disney cruise with the kids or a spa weekend with the girls.

Here are seven other ways mothers can make the most of their $100,000-plus annual investment of time and money and build a lifetime of financial security -- on their own.

Set up a spousal IRA. Even if you're a stay-at-home mom, you should always have, and control, your own retirement savings. As long as your husband has a paying job, in 2009 he can contribute up to $5,000 to an IRA or Roth IRA for you, in addition to squirreling away $5,000 in his own account (see Why you need a Roth IRA). That also doubles the tax breaks and savings power available to you as a couple. And if you have outside income from a sideline job, such as making crafts or working as a personal trainer, you can sock away some of that money as well in a self-employed retirement plan.

Make extra retirement contributions if you're 50 or older. You can kick in an additional $5,500 to your 401(k) and an extra $1,000 to an IRA. These catch-up provisions are especially helpful for moms who entered the work force late, after their kids were grown, or delayed their own saving to pay for those braces or that college tuition.

Buy life insurance. Statistically, women tend to be the survivors. And loving as your relationship may be, you can't count on your spouse to provide for you and the kids if he's not there. As a rough rule of thumb, figure that insurance coverage should equal eight to ten times your total household income.

When figuring your insurance needs, consider the income you earn outside the home or the amount you contribute to the family with the services you perform. According to Salary.com, the job titles that best match a mother's work -- in descending order of pay -- are chief executive officer, psychologist, facilities manager, day-care-center teacher, cook, computer operator, housekeeper, van driver, janitor and laundry-machine operator. To shop for a low-cost term insurance policy, go to Insure.com or AccuQuote.

Write a will. If you don't have one, your state's one-size-fits all estate plan kicks in, and it may not be tailored to your needs or your children's. For example, as the surviving spouse, you may get only a fraction of your husband's assets, with the rest going to your children. If you and your spouse both die, the state decides who will raise your kids. With a will, you call the shots. What's more, you'll avoid a messy situation like those that often make tabloid headlines. Remember the Anna Nicole Smith debacle with her infant daughter Dannielynn?

Name a guardian. Think of a will as a way to protect your most precious assets -- your children -- if something should happen to you and your spouse while the kids are still minors. Parents are often tempted to rely on informal guardianship arrangements. But those arrangements don't have legal standing. Without a will naming a guardian, the courts will decide who brings up your children, and you'll have no say in the selection.

Get what you deserve. Make sure you're the beneficiary on insurance policies, pension and profit-sharing plans, IRAs, 401(k)s and other retirement plans. You don't want to find yourself in the position of Caroline, who was unexpectedly widowed at the age of 32. Before her husband met Caroline, he had named his mother the beneficiary of his retirement accounts, and he never bothered to update the papers after the couple were married. When he passed away, there was nothing Caroline could do to get access to the money for herself and her young daughter. Instead, she was dependent on the good graces of her mother-in-law.

Think single, even if you're not. Don't rely on your husband or any other interested party to take care of you. But if you're in a relationship, work together; each of you contributes different strengths and a unique financial perspective. When it comes to investing, for example, men tend to be more willing to take risks, while women are more conservative. Together, you can compensate for each other's weaknesses, make a socko team-and improve the return on your investments.

Adapted from Kiplinger's Money Smart Women (Kaplan, $15.95), by Janet Bodnar, editor of Kiplinger's Personal Finance magazine.

"Other books, like Kiplinger's Money Smart Women by Janet Bodnar, avoid the patronizing finger wagging and stick to giving advice that women can really use -- like explaining when you can tap your Roth IRA to help with a down payment on your first house. You'll save so much money, you may decide to treat yourself to a latte. After all, you've earned it." -- Time magazine, April 16, 2007