Tuesday, Nov 12, 2019 • 27min
The Pivot to Parenthood
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If we’re just talking dollars and cents, kids are a terrible investment. How are parents supposed to cover the day-to-day necessities—plus dance lessons, coding classes, and tutors—while saving for the future? In today's episode, we help one young mother answer those questions.
Expert: Shannon Mclay
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Samantha Barry
Shannon Mclay
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Speaker 1
00:00
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Samantha Barry
00:31
She Makes Money Moves is the production of
Glamour
and IHeart Radio
.Share
00:35
I think that's a decision that a lot of women and families have to make, of how they're going to care for their child during the day while they work.
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Samantha Barry
00:48
I'm
Samantha Barry
, the editor in chief of Glamour
and this is She Makes Money Moves.Share
00:56
If we're just talking dollars and cents, kids are a terrible investment. According to the Department of Agriculture, a middle-income family in America will spend more than $230,000 to raise a child from birth to age 18, and that doesn't include the cost of college.
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01:19
The financial outlook for parents is especially bleak in the U. S., the only developed country in the world where mothers aren't guaranteed a single day of paid maternity leave. Concerns about money explain in part why Americans are having fewer kids on average than they did 50 years ago. But still, the vast majority of women here, 86%, will become mothers by age 44 according to the
Pew Research Center
.Share
01:48
Those women have asked us over and over again how they can provide the best possible lives for their children without going broke. How can they cover the day to day necessities plus stands, lessons, coding classes and tutors while saving for sleepaway camp and family vacations? And how, on top of all of that, will they send their kids to college when the average cost of a four-year degree, at minimum, is more than $100,000?
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02:16
Today's guest is the mother of a one-year-old son. She and her husband would love to have more kids in theory, but they'd also like to buy a house and save for retirement. This is her story.
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02:29
My name is Jenna Genitas and I'm 31 years old. I'm from
Grand Rapids
, Michigan, and I'm a full-time freelance writer. When my husband and I first got married three years ago, he was the breadwinner, he worked for the federal government in a very stable senior-level position.Share
02:45
I worked in human resources for seven years. I still had a strong career, but not as good as his. And then after we got married, we took some time to explore new career paths and he ended up doing some teaching and then decided to go to graduate school. I became a freelance writer and really fell in love with the freelance lifestyle and writing, and began to do that full-time.
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Samantha Barry
03:09
Jenna's husband was hired as a graduate assistant, which meant the school would cover his tuition and he'd get a small monthly allowance that went towards the rent. Jenna was the main provider.
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03:22
The statement with his graduate program covered our rent payment, pretty much. So I covered everything else in terms of grocery, healthcare, utilities, transportation, car insurance, you name it.
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03:35
And then savings for retirement or anything else that we wanted to do, that was all on me. There were times when I stayed up till three in the morning busting out more pieces, writing more because I had to support us.
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Samantha Barry
03:48
Before Jenna's husband started grad school, they talked about when they might have kids and decided they'd wait until he was almost done with the program.
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03:58
I thought, based on his graduate school and what it would require, that it might be best to wait until he was closer to graduating. And so that's what we ended up doing and we were fortunate enough to get pregnant relatively quickly.
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04:11
And so that put the due date within six weeks of his graduation datem and he was doing a research thesis, which was pretty in depth. And so it was a stressful time.
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Samantha Barry
04:25
Since Jenna was the breadwinner and her husband was almost done with school, they decided he'd wait to look for a job and tend to the baby so she could get back to work sooner.
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04:36
Their son was born in November. Her husband graduated in December. Because she worked as a freelancer, anytime Jenna took as maternity leave would be unpaid. She returned to work full time in January when their son was nine weeks old.
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04:53
It was stressful because he was having a lot to do on his end in terms of finishing his graduate program, and then I was supporting the family. I knew that I needed to save up income in order to take time off with the baby and I don't have paid coverage, so I knew that those weeks that I wanted to spend with them would be unpaid. And then with my husband in graduate school, he wasn't paying for as much at that time.
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05:16
So it was a joyous decision and we wouldn't trade it for anything. It was a beautiful experience that we had, and we're so happy that we did it, because once my husband graduated, he was able to spend time with the baby while I went back to work. Because my husband didn't have a position yet, so he was fortunate to have that special bonding time with him that maybe some dads don't get, so that was very fortunate.
Share
05:50
Leading up to having the baby, I worked extra. I tried to take on extra projects, worked late in order to save up money for that time because I knew how important it was for me to have that time with the baby, and then we tried to limit our expenses, certain things we just tried to cut back on during that time. And then I took nine weeks off, and I think that was the best choice for us at the time to make our budget work.
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Samantha Barry
06:15
Jenna would be the only one bringing in money for the next five months.
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06:19
That put the pressure on me to provide, which was our plan. So I knew that going in, we had talked about that, but I think that it did create a new set of roles for us. So I was the main income provider but I was at home and the mom, so that was tricky, I was breastfeeding.
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06:38
And then my husband was there, he was still trying to find a job, taking care of the baby and he's a very supportive husband. He's very progressive, so he understands that it's ok for women to make more money than the man.
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06:52
But I think that it was still difficult for him, maybe more difficult than he wanted to admit, because he wanted to support the family. I think that's what he grew up with, you know, the man takes care of the family and especially as a father I think he felt that responsibility to his son, to provide a good life for him.
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Samantha Barry
07:13
In May, her husband accepted a one year position with the 2020 Census.
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07:18
That's very exciting, but it would only last a year to maybe a year and three months. And even within a month of starting, he was already looking for next jobs. He was already worried about what's he gonna do when this ends, how am I going to support the family? I still sense that pressure from him on himself to provide for the family.
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Samantha Barry
07:40
Jenna is confident that when this contract ends, her husband will find another job.
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07:46
Hopefully sooner than five months this time.
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Samantha Barry
07:48
Also looking to the future, Jenna and her husband would love to have another baby.
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07:54
We've definitely talked about more children. Would love to have them, hopefully soon. We're hoping for at least another child, maybe two or three more.
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Samantha Barry
08:03
But Jenna knows their current lifestyle won't be sustainable with more than one child.
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08:09
Right now it works really well for me to pay a mother's helper slash babysitter to come in for four hours a day. So they, right now, bridge his naps. He takes a morning nap and an afternoon nap, and so they come in for four hours and that gives me six hours total where I can do billable work. And so right now that works really well.
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08:28
But then he's gonna change his nap schedule and I'm going to have less time where he's sleeping. And would it make sense to put him in daycare or when we have another child, you know, what makes sense financially at that point versus how much money I'm making? And I think that's a decision that a lot of women and families have to make, of how they're going to care for their child during the day while they work.
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Samantha Barry
08:54
More on She Makes Money Moves right after this quick break.
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Break
Samantha Barry
10:00
I'm
Samantha Barry
, welcome back to She Makes Money Moves.Share
10:04
Jenna also worries that her and her husband's finances aren't optimized for the future. They're debt-free, have money in the bank and have contributed to retirement off and on. But she knows the current budget won't work as her son gets older and their family grows.
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10:21
We're in a fortunate position with our savings right now. We have some money squared away for a down payment on a house. We don't have any debt currently, we keep a good chunk of our money in a checking account with a credit union and they give us 3% interest on that.
Share
10:34
And then we do have some money in index funds that we try to regularly invest in, and we have
Roth IRAs
in some retirement accounts with our previous employers. Right now, we have a budget that works well for our baby and our current living situation, but we know with a bigger family, as well as further expenses, you know, I was looking at expenses down the road for a summer camp, or for clothes for teenagers, you know, that is a lot more expensive than what we're currently paying for.Share
11:07
So I would love some advice of how to plan long term for a family, a growing family, and making sure that we're setting ourselves up and our kids for all that life has to offer. Their activities, their education, their health care, things with friends and I don't know all the answers to that.
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11:28
Long term, I would love to stay freelancing full time, but it can be very distracting to be at home and to think of all these other things that I'm doing during my day, that's something that I continue to struggle with.
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11:41
I think the biggest challenge for me, being a freelancer at home and a mom, is just the level of focus. Because my energy and my focus, my attention, is so scattered to different things in my life, whereas before, when I was a single person or just a married person, I had less responsibilities, less things going on in my mind.
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12:01
So I'd love, you know, just more strategies of how to work at home as a mom. Right now I'd love to keep working at this freelance lifestyle because I see so many benefits, and I think it's really great for our family, even though there are challenges.
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12:19
I guess the biggest piece of advice that I'm really looking for is budgeting and planning for our children's later years, growing a family, different expenses that we might not even predict right now. Whether that's healthcare, education, activities, sports. And then just trying to get a good read on how we should balance our time, how much money we should be earning versus spending time with our kids.
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12:45
I think that's something my husband and I would love to find, this great balance of having that time with our children, having really meaningful memories be made. But then also being smart about our money and making sure that we are in a financially good position for our family.
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Samantha Barry
13:13
Today's expert is a mom and she's worked with hundreds of parents since starting her financial planning business in 2015.
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Shannon Mclay
13:21
I'm Shannon Mclay, founder and CEO of The Financial Gym.
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Samantha Barry
13:25
Okay. So Shannon, my first concern for Jenna is that she's under a lot of pressure as a freelancer. Her maternity leave was unpaid, so she went back to work after nine weeks. Now her son is a little older, she has helped while she's working at home, but during that time she might also throw in a load of laundry or start dinner and she's working after he goes to bed. So how can we help her strike a balance?
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Shannon Mclay
13:52
I've been there, done that. I started a business and I found myself the first two years of it doing everything, working seven days a week non-stop, and then getting to the point where I wasn't feeling efficient. And I'm also a divorced single mom of a 13-year-old son now. And I felt like I wasn't doing anything well, but I was working a lot.
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14:07
And then what I realized, and this is what we advise our client since I advise, especially, you know, women, working moms to do is think about your day and your time and think about batching your time. So think about, you know, what your normal days look like and there's no real normal day or go across a week of it. And when are you most efficient, and when are you getting things done?
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14:27
And then also when is most efficient for you. So if you're writing, when can you feel like you write the most? Like, for me it was in the mornings, like I'm a very efficient morning worker. So morning time is like my writing quiet time, and then afternoons is more responding to emails.
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Samantha Barry
14:42
So she needs to pick the hours that she's most effective. designate those as work hours and just focus on work then, right? Then she can pick an hour for housework or errands and not work during that hour.
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Shannon Mclay
14:56
And then, you know, with batching your family time too. So, when my son comes home, I spend some time with him. Initially when he comes home, if I'm working from home, I'm not on my phone, like, I make specific time to be focused on just him. And then that way when I'm recording a podcast or I'm writing and he's doing something else, I don't feel bad because I gave him his batch.
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15:18
Don't forget your own personal batch time too. That's the other thing I want to say is like, I was working seven days a week and I realized I was getting burnt out myself. And I'm like, type A overachiever, getting burnt out is really tough for me and I realized I have to take two days a month, where... the weekends I don't have my son, I take one day of those weekends where I don't look at email, I'm not gonna respond to anything, where I'm just gonna mentally unplug from everything.
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Samantha Barry
15:41
Super important, kind of remember my previous job before this job a
Glamour
, was at CNN
and I run social media and my teams were 40 people, and they were in Hong Kong
and London
and New York
. And there was definitely a period where I was like, when am I sleeping?Share
15:57
It was like that surge of waking up and being on and going to bed and being on, and realizing I got shingles, which was terrible. But like realizing I had been burnt myself out because I hadn't had my batch of me time.
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Shannon Mclay
16:07
You need it, because you're actually gonna be more efficient in the times when you're back on. So for me, I was so scared because I thought I'm gonna miss every opportunity if I'm not on on.
Share
16:16
And then what you realize is like, the opportunity is still gonna be there. You only took a day or you only took a few, you know, it's still gonna be there. And you're gonna come back to it with so much more energy, you're gonna be able to do a better job at it too.
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Samantha Barry
16:29
More on She Makes Money Moves right after this quick break.
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16:35
I'm
Samantha Barry
, welcome back to She Makes Money Moves. Okay, so let's talk about Jenna's finances. If they want two or 3 kids, how much should they be earning and saving?Share
Shannon Mclay
16:46
More than you want to know. See, you would never have the kids if you knew it, right?
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Samantha Barry
16:50
But for somebody, you know, for the rest of the world, how do you start plotting that out without getting overwhelmed and being like, no, never, never having children.
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Shannon Mclay
16:57
Right. Yeah. You would be, you would never have children if you knew the numbers, I promise you. And my dad used to say children are the death of net worth and, I was like, that's so crude.
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Samantha Barry
17:06
So, at The Financial Gym, if your clients are considering a big financial leap, you have to try to manage the costs before they commit.
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Shannon Mclay
17:16
So if you're going to have a second child, she was talking about possibly needing childcare and things like that. So if childcare is gonna be $1,000 a month, let's just say, then set up in a savings account and call it whatever, childcare. And automatically save $1000 a month to that account.
Share
17:30
And then see how the rest of your budget works. Like, are you getting credit card trouble? Do you need to take that money from there, like, are you able to afford it? Are you able to put that $1000 in there every month? It's a rehearsal for the actual event.
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17:43
We have our clients doing rehearsal funds for buying a house, for buying a car. You know, if they're gonna buy a car, if that's gonna be $250/month car payment, save that $250 a month. And then what will happen is that car fund now becomes your down payment on the car and you know, you could afford a car for $250 a month.
Share
17:59
So you're testing it out before you're forced to actually do it. And I think that's practical advice for anything, from having a kid to buying a home, any life goal. Try to live it like you already have the situation. For children...
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Samantha Barry
18:10
What are the big costs? We've got childcare, education?
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Shannon Mclay
18:14
College, that's the big thing I want to tell listeners, is to not over focus on that.
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Samantha Barry
18:19
Are you seeing parents risk their own financial future-
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Shannon Mclay
18:23
Because they're paying off the college. So what I say is have your kid take out the loans, and then you work together and there's parent loans, and you can support and be co-signer in loans. But have them take them out and then you can have them work them down and pay them down as your financial situation continues to improve.
Share
18:40
But the worst that we'll see is a parent that just pays the tuition or just, you know, use all the money for that, and then there's nothing saved for the parent and the kid can't borrow against again, because they're not in school anymore, and now you're out the cash.
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Samantha Barry
18:54
They don't have cash to help the kid, they don't have money for themselves, that's not good. So do you think Jenna at this stage needs to worry about high school, Disneyland childcare, but she maybe doesn't need to map out future education at this stage, having a second child?
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Shannon Mclay
19:13
Yeah, she could have a fund you know, it's a different savings fund that could either be her retirement or it could be the college assistance. Like, I would have a flex fund that you would invest in. So it wouldn't necessarily be in your retirement, wouldn't necessarily be in a 529, which would be the child education, it's in another, in a taxable investment account.
Share
19:32
It's just a bucket that you know, that you earmark: this is our flex fund that is either it's going to have to support us in retirement or if over the next 18 years our financial situation which hopefully will keep getting better and better, then we can give money to our child to help them with their education. But I just see too much of parents trying to overhelp with the education part of it.
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Samantha Barry
19:54
Talking about savings, Jen and her husband have a what she describes as a good chunk of savings in a credit union checking account with a 3% interest. Is that the best place for it?
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Shannon Mclay
20:03
Yeah, it's great. Credit unions are a great place to get higher interest rates, and there's a number of them out there.
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Samantha Barry
20:09
If they're not buying a house in the immediate future, they should leave the money there?
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Shannon Mclay
20:13
It's there, it's got insurance, it's going to be there when you need it. You don't want to put your home money, that you really want to buy this home, you don't want to necessarily invest it, because that's going to be a more risky move for your money.
Share
20:24
But if you're not going to buy the home in two years or beyond, then you probably do want to take it out of that and you want to invest it more, in, you know, stocks and bonds in an investment portfolio. It's going to have a little more risk, but you can also be able to grow that a little bit more as well.
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Samantha Barry
20:39
Great. And other people thinking about the pivot to parenthood, what are the big things they should be looking out for?
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Shannon Mclay
20:44
So parenthood itself, you're never going to be prepared for it, you're never going to feel good at it, you're never going to really succeed at it on a given day. So it's the greatest gift ever, though. But the best thing you do is financially prepare for that roller coaster of a life journey of being a parent. It's the greatest gift ever.
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Samantha Barry
21:09
If you're considering kids or if you're already a parent and thinking about having more, the time to start thinking about money is now, It's impossible to anticipate all of the expenses that come with having kids.
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21:23
But if you understand the zoomed out view of your current finances and have a plan for the future, you'll be better prepared for the next 18 years and beyond. If you're stressed out about your budget, your kids will eventually sense that. Don't let money be a thing that causes tension in their lives or your own.
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