A stay-at-home mom is a working mom.

This post is part of the #MommyMoney Series. A series that explores money, motherhood and financial independence. Having children is a great gift, but it can also be the single most challenging event in a woman’s life.

I recently read that the annual salary of a stay-at-home mom for 2019 was $178,201 based on an analysis by salary.com. The figure was based on the multiple roles moms (and dads) take on. From being an Academic Advisor to a Babysitter to a Dietician to an Event Planner to a Judge to Staff Nurse to a whole other myriad of functions a mom performs, moms are an invaluable part of the household. I also want to note that many working moms do this same work while also holding down a separate, paid job. Either way you look at it, being a mom is not easy. Add to the fact that it is uncompensated work also makes it a bit daunting.

We know that running a household is core to all of our well-being. After all, where would we be if we didn’t have caretakers that sacrificed their time for us? To quote futurist, Alfred Toffler “How productive would your workforce be if it hadn’t been toilet trained?” Thus, it’s time that we start thinking about compensation and it’s up to women everywhere to start paying themselves.

We all need to know our worth. (No, this post is not sponsored by salary.com) We need to set an example for our future daughters that being a mom is hard work and it’s OK to start asking for compensation. Compensation in this case, unfortunately, will not be in the six-figures, but it’s a start to getting some financial footing.

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Opportunity Cost

Many parents, more specifically moms, will or have already made decisions on what to do with regards to going back to the workforce after the birth of a child. The decision almost always boils down to the financials. It is unfortunate that in the United States, we have a limited number of programs that protect, pay, and encourage longer maternity (and paternity) leave. The U.S. also lacks public programs that lower the cost of childcare so the onus is on many women to stay at home to care for children as the most economically viable option for the household. It also bears mentioning that all of the tasks and responsibilities of a woman get compounded after the birth of a child. This puts a lot of stress on her time and well-being, sometimes pushing her own needs to the back burner. It’s a shame that this is the case as, without this main Household Manager, life won’t be so easy.

Staying at home to care for children (and older parents in the future) has normally been part of the women’s Caretaker role. In our current economy, caretaking is low-income work or unpaid. This means that when a woman takes on the Caretaker role full-time, she misses out on potential earnings, skill development, and networking opportunities. A lack of earnings means lower Social Security benefit accumulation and a decrease in savings and investments. A double whammy!

The opportunity cost of being a stay-at-home mom can add up quickly. Many women will sacrifice six-figure careers to care for their children. By some definition, women with loads of career experience or advanced level degrees become unpaid six-figure babysitters. It’s a trade-off with the reward of raising kids that grow up to be caring and successful adults.

Pay Yourself Mommas

Unfortunately, the reality is that no matter how much these figures have risen over time, stay-at-home moms do not see a single cent of this salary. Household labor is invisible labor. Our GDP, which is the #1 economic indicator does NOT account for all of the work, time, resources, and money that goes into managing a household.

So my advice for all the women (and men) out there that have not completely ruled out having children is to start paying yourself early on. Let the power of compound interest create a salary for your future self. I know, as a young 22-year-old, children were the last thing on my mind, but thinking and planning about future events that have a high probability of happening (i.e. having children) can allow you some freedom later on.

Before you become someone else’s caretaker, set money aside for the sole reason to have it as a cushion for when and if you decide to leave the workforce to care for others. A great option is contributing to a ROTH IRA. It has some income limits that you can read about on the IRS website, but in general, it is a post-tax savings vehicle, which means you’ve already paid taxes on it and your earnings grow tax-free (there are age and withdrawal restrictions). If invested properly, it can grow significantly. While the name IRA, which stands for Individual Retirement Account, has the word “retirement” in it, it has a fairly flexible set of qualified withdrawal options. Currently, the max you can put in for 2024 is $7000. It doesn’t seem like much, but it adds up over time especially if you start early.. You can open and contribute to an IRA as a single individual or as part of a married couple filing jointly. The requirement is that you just need to have taxable compensation.

So, if and when you do decide to leave the workforce for some time, you can continue to contribute as a means of paying yourself or as a continuation of your retirement savings plan. One of the requirements for the IRA is earned income. Because you will be out of the workforce without pay, if you are married filing jointly, you can use your partner’s income to fund your IRA. This is called a Spousal IRA, but it’s not a separate IRA account.

$7000 a year doesn’t seem like much and if we break that down into days, that’s around $19 a day, but it’s something and a start to compensating yourself. No, it’s not going to be the six-figure salary quoted, but it’s an exercise in ensuring a secure financial future for yourself. This is especially important as women tend to live longer and having money in your name can provide security and confidence.

If you start maximizing the IRA at $7000 the year your child is born (or earlier before children are even in the picture) and continue to contribute $7000 and have a rate of return of 7%, when they turn 18 you’ll have a sizeable investment account which can provide you more opportunities in the future.

Of course, as the Financial Manager of the household, you may be saying to yourself, how do I afford to pay myself? Momma, you can find a way. One thing I’ve always been awed at is the ability of moms to stretch budgets. If there’s a will, there’s a way.

There are many other alternatives to save money and pay yourself so discuss those with your partner. Remember that as with anything in life, there’s a trade-off, but planning ahead can make the trade-off that much easier to deal with. Remember too that when you save into a retirement account like an IRA, both you and your spouse can do so. Doing this can allow you to supercharge your investments as a family which means more money overall.

Post Pandemic

As I am updating this post, it would be re-miss of me not to include how the pandemic affected mothers everywhere. According to new data from salary.com, the new median annual salary for stay-at-home moms this past year is $184,820 – an increase of $6,619 above the pre-pandemic median.

The most time-consuming and expanded roles were Chief Financial Officer (CFO) and Chief Operating Officer (the role that makes sure everyone else is following the plan), which more than doubled to account for 20+ hours per week.

Moms are doing more work across the board whether you are staying at home full-time or working AND taking care of the household. Remember, there’s no such thing as a mom who doesn’t work. With that said, please consider contributing to your IRA or another account for yourself. Whether you think of it as a paycheck for all of the work you’re doing or just a must-do item for your own financial security, don’t wait.

Do you pay yourself as a stay-at-home mom? How have you made this happen with a tight budget? Would you feel guilty taking away that money away from the family finances to pay yourself?

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