Tuesday, Oct 5, 2021 • 23min
Young Mom/Old Mom
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Raising a child is expensive. And of course the challenges (and spending) that come with parenthood will look different when the parents are considerably younger or older than average. Today’s guests are both mothers, but they had children at very different stages in their lives. (One was 21 when she welcomed her first; the other, 42.) Now they're both wondering how to prepare for their financial futures—and their children's.
Expert: Tiffany “The Budgetnista” Aliche.
For more on the topics covered in today's episode, visit glamour.com/money.
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Speakers
(2)
Samantha Barry
Tiffany Aliche
Transcript
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Break
00:17
I know that a lot of women kind of have done the calculations and realized it was actually cheaper for them to quit their jobs and stay home with their children. So, you know, everyone has to make their own choices.
Share
Samantha Barry
00:29
Hi, I'm
Samantha Barry
, the editor in chief of Glamour
and host of She Makes Money Moves.Share
00:35
Raising a child is expensive. According to
the U. S. Department Of Agriculture
, middle-income parents with two children will pay almost $13,000 a year per child from birth through to the age of 17. When you factor in inflation, that's almost $600,000, or almost $300,000 per child. And that doesn't include the cost of education.Share
01:01
Forbes
reported last year that the average age of first-time mothers in America
is now 26. It's 31 for first-time fathers. Of course parenthood and the challenges and spending that come with it will look different when parents are considerably younger are older than those averages.Share
01:18
Women who have children in their teens or early 20s, might also be juggling school or just starting their careers. And those who have children in their late 30s, their 40s or beyond, may have to balance paying for their child's races, summer camp and education while also saving for their own retirement.
Share
01:37
For today's episode, we spoke to two women who had children at very different stages in their lives.
Share
01:43
My name is April Franklin, I'm 36 years old. Am I 36? Yeas, I'm 36. The pandemic makes you forget how old you really are. I live in
Rochester,
New York
and I'm a reporter.Share
01:56
I got pregnant with my son at 21, I was scared, I just didn't manage my money well and I just didn't really know where I could go for resources to help me pay my rent. So I was evicted, I was maybe like two months pregnant, and I moved back in with my mother to kind of start all over.
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Samantha Barry
02:13
At the time, April did not have a great relationship with her child's father. She was also working part-time when she learned she was pregnant. Our other guest, Benét Wilson, was 42 when she gave birth to her only child.
Share
02:26
I am 58 years old, I'm an editor at
The Points Guy
and I live in Baltimore
, Maryland
. I had a surprise baby. So, and she is an absolute blessing, but it wasn't in my plans to have a child, so I was doing other things. So when I found out that I was having her, her father and I both had to do a big pivot, because we knew you know babies cost money. Childcare is very expensive.Share
02:54
I started working on that when I was three months pregnant because, you know, it's really hard to find good quality child care that's also affordable, because you don't want to skimp on that. And then of course we had to open up the 529s, the college funds.
Share
Samantha Barry
03:09
When her daughter was young, Benét worked full-time as a journalist, when she and her partner spent hundreds of dollars a week on their daughter's daycare.
Share
03:17
It was actually my dream job. And I realized early on that the demands of the job weren't jiving. I was living in
Baltimore
and I was commuting to Washington D. C.
every day. So when I woke up in the morning the baby was asleep, and when I got home at night the baby was asleep.Share
03:37
My mother died later that year in 2006, and it just got me rethinking everything. So I had to go into my job and have that tough conversation. And say, you know, I have to pull back. You know, some people call it the mommy track, but I need to see my child more. And there was a lot of travel, and I couldn't do that anymore.
Share
Samantha Barry
03:59
Benét assumed that her dream job was on the line.
Share
04:02
I thought that they were going to either fire me or make me go part-time or something.
Share
Samantha Barry
04:09
But she was surprised by the company's reaction.
Share
04:11
I still worked full time but I didn't go in every day. So that was a huge blessing, because that was an hour commute each day, each way. I got that time back. My child still went to daycare, but I was able to go and have lunch with her.
Share
Samantha Barry
04:27
April also struggled to find work-life balance. When their son was three and enrolled in an early pre-K program, April and her son's father were co-parenting and living together, and April decided to go back to school.
Share
04:40
I think as a a mother, a lot of times, as women, we're always the default as far as taking care of a child. Whether you are married, whether you co-parent. So living in a house with someone else, I was still like, I would work overnights. Maybe I'd get off of work at 6:30 in the morning.
Share
04:60
And come home Monday morning at 6:30, I still, I can't go right to sleep, because he in the bed, he's not gonna get the child up on time to catch the bus, so I gotta get my son up and still take him to school, and then go to sleep, and then maybe do the same thing over the next day.
Share
05:14
But I got through it. When I walked across the stage, I was eight months pregnant with my daughter.
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Samantha Barry
05:19
April graduated with her associate's degree about a month before her daughter was born. Benét's story also took an unexpected turn. When their daughter was 12, she and her partner of 18 years decided to split.
Share
05:32
It was tough, because not only was I doing that, I left our home. And just pretty much left everything in there because I just wanted a different path. And it was tough in those first few months, especially because I also chose that time to launch my freelance writing business, so there was a lot going on.
Share
05:53
And then dealing with our daughter who was understandably upset. But sometimes you're going to have to kind of walk away and wipe the slate killing, and start-up from scratch again.
Share
Samantha Barry
06:05
She was starting from the bottom financially too.
Share
06:08
I actually had to reach out and ask my father to sign my lease, because I hadn't had rental history for almost 20 years, you know? I lived in the house with my husband and we split the bills and everything, but there was nothing that said, you know, Benét Wilson has this lease. And so you know, thank God I didn't have to ask for money, but yeah, it was kind of a little disheartening having my dad have to sign for me, but you know, it all worked out.
Share
06:40
But the budgeting was different because you know, we had split bills. And you know, were things that I took care of and things that he took care of. But having to pay rent again and having to do like utilities, internet, you know, I just had written a check and I didn't think about, you know all the money that was actually being spent.
Share
07:01
So having to adjust to that, and then on top of that being a freelancer and having to bring in clients and, you know, making sure that there was income coming in regularly, and saving for that, my child was in private school and had braces, just a big, big balancing act.
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Samantha Barry
07:21
More on She Makes Money Moves right after this quick break.
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Break
Samantha Barry
07:48
Welcome back to She Makes Money Moves. I'm
Samantha Barry
.Share
07:51
When her son was nine and her daughter was just three, April decided to go back to school once more.
Share
07:56
I want my kids to pursue whatever it is that they want to do. I think people say that all the time, but I don't think they really mean it. People in my life, my mother, you know, anybody has told me you can be anything you want to be, but I don't see y'all being what you want to be. And so I wanted to really put that action behind It.
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Samantha Barry
08:14
At that point, April had been working as a patient care tech at a hospital for 11 years, and she was excited about the prospect of a career pivot.
Share
08:22
I think that's where I really just got the confidence to really pursue what I want to pursue, because nobody in my family, I feel like, it's pursuing their passion. I feel like there's plenty of talented people in my family, but you know, even my mother herself is just like, they always be like, why are you leaving a hospital? That's a good job, you know?
Share
08:44
But I would see people that I worked with at that hospital, wonderful people, right? But been working there as long as I've been alive. And I don't want that. Like, if you're happy to do it, that's great. But for me, I just couldn't see myself working at a place for 20 years, 30 years, some of them 40 years. You know, we're a different generation. That to me wasn't the life for me.
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Samantha Barry
09:12
April graduated in 2017 with a bachelor's degree in journalism. She was copyrighting for nonprofit and working weekends at a radio station while applying for full-time jobs in radio. She was offered one in October 2020.
Share
09:28
I definitely felt like, man, like, I don't even feel worthy of this opportunity right now. Like, this is crazy that I even have this. I was able to negotiate and the radio station gave me the better deal, But that was like the first time I ever had to like do something like that. And it was just like... "Me? Y'all want me?"
Share
Samantha Barry
09:49
April is making $48,000 a year while trying to pay off $36,000 in debt.
Share
09:55
I mean, I know a lot of people work really hard to become debt-free and, you know, I'm not there yet. And so right now my mindset is like, there's always gonna be some kind of form of debt, I'm always gonna owe somebody, but I'm not gonna be miserable, you know?
Share
10:10
And so I, I do what I can do. Obviously I won't spend my rent money to go get my hair done. But you know, I think that you figure out a way to work the struggle, you know?
Share
Samantha Barry
10:24
And part of that struggle is thinking about her kids and their futures.
Share
10:28
I wasn't really taught anything about money, the things that I learned was from watching my mother, how she handled money. And what I took from that growing up is when you get it, you spend it. And that was basically what I learned until I had to grow up and be responsible for myself and my own children and realize that that is not the way to live.
Share
10:48
I think about like when my son, It's like in his early 20s, you know? He's 15 now, so he'll be 18 in a couple of years, but like, I would love to buy a duplex and maybe let him live there while he go to school or start his business and maybe gift it to him at some point where he, that can be like him building that wealth or that kind of generational wealth, where that's something of his, where he can make an income, but also do the things that he likes to do.
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Samantha Barry
11:20
Benét, who currently makes between $100 and $150,000 a year also wants to set her child up for financial success. But at 58 she knows she needs to prioritize her own retirement.
Share
11:31
As I'm winding down, you know, have I done all the right things to make sure that I can have a comfortable retirement? I don't need anything grandiose, I would just like to have a roof over my head and the chance to still do some travelingm because I absolutely love to do that. There are still a lot of places in the world that I want to see. So just making sure that I'm ready to do that.
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Samantha Barry
12:00
Benét and April might have taken different paths to motherhood, but they both want to make sure they're ready for the future. April also isn't sure what to do with her money. Should she be paying down her student loan debt? And how should she be investing?
Share
12:14
You know, I don't even really think about retirement too much, and I probably should, right? Because I'm closer to 40 than... and I know the earlier you invest, the better it is for you. So I don't, I haven't really thought about, I guess, how I want like my elderly years to be. I just want to be able to have the freedom to spend money and not be like, oh my God, did I spend too much?
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Samantha Barry
12:60
For today's episode we're welcoming expert Tiffany Aliche.
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Tiffany Aliche
13:03
Hey, hey, hey, it's me, Tiffany Alicia, better known as the budgetnista. I like to call myself America's favorite financial educator, New York Times bestseller, and your financial fairy godmother.
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Samantha Barry
13:18
Okay, Tiffany, let's start with April. She grew up in a family where they didn't talk about finances. Do you think that's an important part of her story?
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Tiffany Aliche
13:25
Absolutely. And unfortunately it's quite common, it's actually less common that you grew up in a family that actually talked about finances like my own. So it's an important part of the story, but it's one that's an important part of so many of our stories.
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Samantha Barry
13:39
So, April is thinking about retirement and she's worried she's got a late start. What do you say to that?
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Tiffany Aliche
13:44
You're not April, honestly. Even if you told me that you were 50, I would still say you're not too late to the financial game because you're still here, and no one gets it perfect. You know, no one, even if they started young, everyone makes mistakes. But the fact that you are thinking about it, it's a really great place to start.
Share
14:02
I know that April was also thinking about like setting aside money for her children, that she was thinking about generational wealth. But I really want to caution moms especially to remember to put your financial mask on first. You know, when you're in the plane and they tell you to put your mask on first. And it's because if mama's not okay, no one's okay.
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Samantha Barry
14:23
So what does that look like, putting her financial mask on first?
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Tiffany Aliche
14:26
So, you want to determine one, how much do you want to set aside for retirement? You know, April, what does that look like to you? Simultaneously, I want you to fund your emergency account.
Share
14:36
Because it does seem sometimes difficult to pay off debt, fund your emergency account and also do retirement, but you're wanting to put at least some money towards all three of those things. I don't want you to be so focused on paying off debt that you're not setting aside for your financial future because debt freedom doesn't equal wealth.
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Samantha Barry
14:55
So we've got three buckets, right? Paying off debt, building an emergency fund, and saving for retirement. What percentage of your income do you recommend putting into each of those buckets?
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Tiffany Aliche
15:06
So, ideally, ideally, you want to put 20% toward retirement, investing for retirement. You know, now, for some people, they're like "there's just no way". That is what you're shooting for. You know, even if you could put half a percentage in, I want you to do something, but know that the ideal is, I'm setting aside 20% of my income to set aside for when I'm no longer working.
Share
15:29
And so when it comes to your emergency fund, it's not necessarily a percentage and more so the amount you want to get to. You want to have your first goal for emergency funding to be three months. So, I mean,
Covid
if it taught us nothing, the value of an emergency fund, but also three months is not quite enough, it's a good place to start.Share
Samantha Barry
15:47
And what about student loan debt?
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Tiffany Aliche
15:49
So, here's the thing, April. I want you to actually be less aggressive with debt. So, now, if it's credit card debt, if she said she had credit card debt, honestly Sam, I would tell her go hard on your credit card debt. It's actually costing you more than what you would likely make it investing.
Share
16:03
But because the student loan debt, my assumption is it's probably not double-digit interest, and then the interest rate is fairly moderate to low. So you can kind of like pay it, you can pay the minimum plus a little bit, but I would not be aggressive. I want you to instead focus on putting your money towards your emergency fund, putting your money towards growing wealth and retirement.
Share
Samantha Barry
16:24
Okay, now how could she fill those buckets and build generational wealth for her children?
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Tiffany Aliche
16:29
So, one of the best ways actually that you can set your child up for generational wealth is not what she's thinking. It's not likely going to be on her $48,000 a year salary, it's going to be through the education you give your child.
Share
16:40
That literally, like, my parents, I grew up fairly humbly. You know, my parents are both immigrants to this country, so we didn't grow up with a ton of money. But my dad, who's got two degrees, one in finance and one in economics, poured into my four sisters and I the financial education that now I'm sitting before you as what I call a baby millionaire.
Share
17:00
That was a better use of his resources. So it wasn't that he was going to leave us, not five kids, he was going to leave us a ton of money, but he said, "If I can infuse education into you, then you can use that education to grow whatever kind of financial life that you want". So that's how she's really going to pass along generational wealth.
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Samantha Barry
17:19
That's great advice. And that brings us to Benét, who's 58 and she has a 15-year-old. What should she be doing? If she made less money, I'd suggest putting money in a
Roth IRA
, but there's a cap for those.Share
Tiffany Aliche
17:30
She doesn't qualify for a
Roth IRA
because she makes more than the $139,000. That's the cap.Share
Samantha Barry
17:36
But she can put more money into her
401K
if her job has one, right?Share
Tiffany Aliche
17:40
She can put more money because anything over 50, you can put more money aside, because they allow you to catch up, you know? So one, is she leaning into like, you know, what? I am going to put more money into my retirement accounts because I'm over 50 years old.
Share
Samantha Barry
17:54
And at 58, how should she be investing?
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Tiffany Aliche
17:56
What you want to be more mindful of as someone who is a little older, is you want to follow something that's called the rule of 110. So, this is going to tell you how much money you should have in stocks, more aggressive investment, versus how much money in bonds, which are less aggressive investments, right?
Share
18:11
And so, the rule 110 is just you take your age, you subtract one. So like right now, so let's just say, so let's go for the easy math. I'm 40 right? And so 110 minus 40 is...
Share
Samantha Barry
18:26
Oh my God, 70, right? Quick maths in the studio, quick maths.
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Tiffany Aliche
18:31
So, you want to put the bigger number towards stocks and the smaller number toward bonds. Because what happens is that the older you get, the more conservative risk-averse, you know? And so that kind of let you know like, okay, as I get older that bonds number is going to get bigger and bigger and bigger.
Share
18:47
And so that's what she should be looking at, is to rebalance. Everybody should be rebalancing, but especially as you get older, you don't want to be one year away from retirement and then you're heavily invested in stocks, and then the market crashes. You don't have time to recover.
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Samantha Barry
19:01
What else she?
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Tiffany Aliche
19:01
Should also consider, is she fully insured? I didn't realize until I sat down with my personal financial advisor that was I underinsured. Because I've got my insurance and like, I'm 41 now. I got my insurance maybe like my late 20s, early 30s, but my life is totally different now. So I'm curious to know if her insurance is keeping pace with where she is.
Share
19:21
Because insurance Is there want to protect your wealth, but also to, you know, you have a child. The rule of thumb for insurance is you want 10-15 times what your annual income is. So that way, you're not no longer here. For the next 10 years, your dependent will still have you here financially. So making sure that she's ready for that.
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Samantha Barry
19:40
When Benét and her longtime partner split up, she was left feeling financially vulnerable. Is there a way to safeguard against that?
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Tiffany Aliche
19:48
Like, I'm the financially savvy one in the relationship between me and my husband. We got a certified financial planner, and we meet with her together. So he can fully understand like where we are, and then I'm learning new things about where we are.
Share
20:01
But also too I believe in having ours and each other separately, right? So I have my own checking account, my own savings account investing. He has his own checking account, savings account investing. But we have joint checking savings and investing. So we have collective money, but we also have autonomous money.
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Samantha Barry
20:19
I always tell people who are in relationships, no matter how madly enough they are, to have their own money and establish their own credit. You just never know.
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Tiffany Aliche
20:27
So there should be, there should be no one person that has the keys to the full kingdom. You know, even if you have the most amazing partnership. Because you just don't know, and each adult is responsible for knowing what to do no, matter what.
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Samantha Barry
20:40
Right, I get you. This has been an absolute pleasure.
Share
20:44
Like I said at the top of the show, raising a child is expensive. And regardless of your age or income bracket, one thing every parent can expect is unexpected expenses along the way. But there are steps you can take to help your family, whether the unexpected. Remember Tiffany's advice: put your financial mask on first.
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21:13
Part of preparing your kids for the future is modeling good spending, saving and investing. The more you know, the better prepared you'll be for whatever the future has in store.
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