Blog — Sisters for Financial Independence

“When moms first come back to work they need someone to tell them, ‘You are going to feel crazy. It’s ok to feel crazy. You won’t always feel crazy.’” - workingmother.com

With Mother’s Day coming up this week, I wanted to write a post specifically about how motherhood affects the financials of women. This article comes from my perspective as a new mom, but I know there are other people out there (dads, aunties, grandparents, etc.) playing the role of mom so this article goes out to you as well. Before I was able to sit down to type up this post, I had to specifically strap my 10-month old baby to her carrier so that we could nap on me, her favorite place to nap which buys me around 1.5 hours. This is motherhood for me! Juggling caretaking and working.

Note: This post was updated with new links and videos on June 24, 2022, but I have not changed the text to keep the sentiment of the post intact. We will celebrate my daughter’s 3rd birthday in a few days and time just flew by.

The Motherhood Penalty

The Motherhood Penalty is defined by AAUW as the “phenomenon by which women’s pay decreases once they become mothers”. This is a contributing factor to the current gender pay gap. Find the AAUW’s full report here. Research shows that women are more likely to take time off from work to care for children which leads to a loss of income. Women with children are also more likely to pass on promotions because it may tip their work/life balance requiring more hours or time commitment that is not available at the expense of the children’s well being. Lastly, research also shows that there is some bias towards women with children as they are seen as less committed to their work and maybe a liability than those women without children. All of this to say that a woman with a child will have less income due to less working time, less overall lifetime income due to a lack of salary growth from promotions which leads to lesser savings and lesser opportunities to invest and grow that money.

The Cost of Childcare

Part of the reason many women leave the workforce or pursue part-time employment is the high cost of childcare. According to care.com, More than half of moms scaled back their hours to save on child care and 25% of moms left the workforce altogether. NJ appears to have the most affordable childcare across the country, but I challenge that. It sometimes depends on what county you are in. I grew up in Middlesex County and the average cost of infant care for a month was around $1,125 while in our current county it is $1,050. Source here as part of a Rutgers University research study. With these costs, working families must at least make more than the childcare tuition in order to get ahead. If you are single mom, this is a tough situation.

My Own Story

In our household growing up, it was my father that stayed home to care for my youngest sister. At that point in time, we were 3 years into living in the United States. My sisters and I were 12 and 11 when our third sister arrived. I witnessed my parents do the dance, coordinating their schedules so that at least one of them could be home most of the time. The good news was that my sister and I were old enough to help take care of the baby, but the bad news was that this wasn’t enough. With no immediate family around (the rest of our family was in the Philippines), it became tough for my parents to juggle the schedules. Childcare was a consideration but it was expensive and my parents believed in raising their own children so it was decided that my father would stay home. My mother was a nurse and her career and income prospects were much brighter. My father had already worked 20 years in a separate career in the Philippines and was basically starting over in the US. So my father became a stay-at-home dad and in looking back, I think it was the best decision my parents made. I am sure it wasn’t an easy decision, but one that was made with the family in mind. So for my father, he opted out of the workforce completely because it made financial sense. He didn’t receive enough Social Security credits so had to wait until my mom retired to claim spousal benefits.

For me, I wasn't sure I wanted children but I knew that I did not NOT want them. In your 20’s in the New York City region, talking about children can sometimes mean you are not committed to your career or talking about children can jinx it’s future possibility so I had my own fears of what a child would do to my life. I feared not having enough time and money to fully be there for our child. Fast forward to 2019 when my husband and I welcomed our baby girl and I still have the same fears. Time continues to be elusive. Money isn’t such a big issue as I thought, but that’s partly because we chose to focus on the baby rather than on stuff for the baby. I am home full-time, working part-time so our expenses are 0 in the child care department, but it hurts a bit not to be making the same income as before.

A part of me wanted to stay home with the baby because I saw that one of my parents did and it didn’t break them. Sure it wasn’t easy, but it was what the family needed.

I am also grateful for my mom’s advice to save early because to be frank, my income isn’t what it used to be, but my spending isn’t also what it used to be so there’s a bit of an upside there. It’s funny the kind of stuff you spend on as a city girl either to impress people or to self-soothe after working long hours and making that daily commute.

The interesting thing about my parents setup was that they both knew their jobs were equally important so they took the means to protect each other by saving for retirement and ensuring they both had life insurance. But I know this isn’t the case for most families which is why I continue to harp on the need to save early, plan ahead and create financial protection for the family.

The Current Pandemic

New studies show that women are again more likely to be doing double to triple the work at home. On top of their 9-to-5, moms are doing double duty taking care of children especially as childcare facilities are closed and doing triple duty homeschooling their children, cooking majority of the meals and just being the facilitator, judge, peacemaker and overall household manager.

Sheryl Sandberg of Facebook and the LeanIn.org recently urged employers to do more to help support their women employees to “ensure women emerge from this period with their jobs and health intact.” It’s so easy to laugh at memes with moms holding a glass of wine after a long day, but the reality is that many women are being pulled in all kinds of directions. Many don’t have the luxury of working from home. Many must work outside the home risking their health and the health of their families so that they can make rent or have enough to live on. I know children are a choice for the majority, but this pandemic was not a choice and it’s showing some of the cracks of our current work environment especially for caretakers.

Women’s Financials

This is why I like to keep re-iterating that young women really need to start thinking about the concept of financial independence early and to start planning for it. Money saved today can buy time tomorrow. There’s no class in high school or college that tells you the double work you’ll have to do once you become a working mom. This topic doesn’t come up in any HR meetings or in any meetings with your OB/GYN, but it’s an important part of life. No one tells you that being a working mom will lead to a decline in income. A decline in income will mean less savings and less investment. A decline in income will lead to longer debt payoff. A lack of family wealth will keep a family in a financial cycle of stress. It’s time we change that. It’s time we give the warning and it’s time we all fight to change that.

Caroline over at CostaRicaFire.com (she’s been guest on this blog ) just wrote a post on “The Million-Dollar Price Tag Of Being A Stay-At-Home Parent” and she cites that a parent out of the workforce can mean $1,101,323 in total income lost due to lost wages, lost wage growth, and lost retirement assets and benefits.

There’s this great article by Dana of momlando.com “What I didn’t understand about being a working mom before I was one.” In it she cites all of the things that she was unaware of as a young professional that all of the moms around here were going through.

I watched working moms countdown until 5pm and race out the door like their pants were on fire. I had no idea they were just getting started on the second part of their day. No idea that they were analyzing if they were going to make it to daycare or after care on time before late pickup fees started. I didn’t realize they’d get in traffic and start calculating how long until they got there, how many minutes until they got home to make dinner, to do homework, to do bath, and bedtime. I didn’t realize that drive might be the only alone time they’d have for the day and they’d have to be actively shutting off from work mode and into mommy mode.I didn’t know that she’d feel guilty for wanting to have a career, or for not caring about her career anymore, or for being fine where she was because a promotion could tip her rocking boat right over.
- Dana of momlando.com

What I didn’t understand about being a working mom before I was one - momlando.com

I’ve bookmarked this page and have read and shared it numerous times because it says so much. How unaware we are sometimes of the struggles of working women around us. I was just like her: unaware and disconnected until I had my own daughter and started living through the experience.

In her book, The Two Income Trap, Elizabeth Warren (yes, that Elizabeth Warren) concluded after much research that motherhood was the single strongest predictor of bankruptcy and poverty in the U.S. and even more so if you are single or a woman of color. This is scary because I know women with children will sacrifice themselves first to make sure their children have what they need and want. And how can wanting and having children lead to such negative consequences. Married motherhood comes with great benefits, both financial and non-financial.

This is why it’s doubly important for women to really save for themselves, protect themselves first. It’s second nature to put our needs last when we become mothers, but this is where we all need to shift our mindset. Putting our needs last is actually detrimental to our overall well-being, but also for the well being of the family. A mother who is constantly worrying about finances is a mother that can’t give her full attention to her children. A mother who doesn’t have financial security will feel her confidence and sense of self deteriorate. A mother who can’t make ends meet cannot feel free to pursue creative pursuits that could boost the family’s income and livelihood. A woman is also more than a mother.

We don’t know what we don’t know until we get there, but there are people who’ve already walked that path that can tell us what to expect. So let this be fair warning to all future mothers. This is not to sway you from becoming mothers, but to fully understand that even in 2020, being a mother isn’t as glamorous as social media will have you believe. There continues to be economic and social benefits to having children, but women should stop being penalized for having children.

The Future

Here’s the thing, women can’t change the future of motherhood alone. We all need to pitch in.

We need to provide good, affordable child care.
We need employers to be flexible.
We need to raise boys that understand the importance of housework.
We need partners to help us in the day-to-day management of the household.
We need elected officials to step in and fight for working moms everywhere
We need to finally give caretaking the credit it deserves.
We need to change the nature of work so that it can be in true balance.

Do we need to embrace lower pay for motherhood?

I don’t think this should be the case anymore. I think this pandemic will require a new type of economy where the number of hours at work no longer matters, but the outcome.

To learn more, I would encourage you to read Pay Up: The Future of Women and Work (and Why It's Different Than You Think) by Reshma Saujani.

Blessings of Motherhood

I’ll wrap up to say that motherhood has it’s many blessings. Society benefits from having strong maternal bonds. Parents have a remarkable responsibility. “Motherhood is not easy, but it is a blessing. If you are a mother, God has given you a powerful source of joy, responsibility, spiritual growth, and a lifelong journey as one who guides another life.”

Happy Mother’s Day!