Tag Archives: Economy

6 Biggest Money Mistakes Mothers Make

Tonight I’ll be leading the chapter meeting for our local Mothers & More chapter on “The 6 Biggest Money Mistakes Mothers Make.” Join us and bring a long a new or gently used purse for our donation to Elizabeth house! Here are the “mistakes” I’ll be discussing with moms tonight.

1. Making “To Work or Not To Work” Decisions Based Solely on Short-Term Family Budget

When mothers wrestle with questions about whether to stay employed or not, or whether to scale back employment to make room for family, the conversation usually centers on whether the current family budget can afford those changes. Can we still pay the mortgage or rent? Could we trim expenses to make up for lost income?

Too often, all the longer-term implications are left out. How will this decision impact my ability to save for retirement? My Social Security benefits? How will this decision impact my future earning potential?

Whenever faced with an employment or financial decision, ask yourself:

How will this decision affect the short- AND long-term finances of my family?

How will this decision affect my own short- AND long-term financial security?

2. Falling Into the “Can I make enough to pay for childcare?” Trap

When our daughter was born, my husband had just started his second year at a law firm and I had just been laid off from a part-time job. We sat down together to decide whether I should look for a new job or not. Estimating the income we thought I could make in a job with reasonable hours, we subtracted taxes, childcare, and work expenses. There wasn’t much left. Working for pay didn’t pay much. So we decided I wouldn’t, because we could afford for me not to.

Three different things lead many mothers into this trap. Continue reading

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Filed under Assumptions about Mothers, Career-Life Fit, Economy, Money, Motherhood, Remodeling Motherhood, Remodeling Motherhood Tips, stereotypes

Tax Day Question: Can I Make Enough to Pay for Childcare?

When our daughter was born, my husband had just started his second year at a law firm and I had just been laid off from a part-time job. We sat down together to decide whether I should look for a new job or not. The question we asked ourselves was, “Could I make enough to pay for childcare?” If not, we reasoned, it would make sense for me to take care of our baby myself.

Little did we know that the question had nothing to do with the cost of childcare and everything to do with tax policy.

You see, before World War II, the United States used an income tax system of separate filing for married couples in which tax rates applied to each spouse’s income separately.* As Ed McCaffery, author of Taxing Women, explains in his book, when the war ended and the costs of war went away, Congress saw an opportunity to reduce taxes. They did it by eliminating separate filing and replacing it with mandatory joint filing for couples. At the time, Congress also had an interest in wanting families to return to normal. In other words, they wanted mothers who had entered the workforce during the war to go back home. Joint filing would encourage them to do just that. As the legislative counsel of the treasury at the time remarked, “Wives need not continue to master the details of . . . business, but may turn . . . to the pursuit of homemaking.”

Joint filing introduced what McCaffery calls the “secondary earner bias.” The one who earns less, even today usually the woman, will be taxed more, which acts as a powerful but unseen disincentive for her to be employed.

Sue Hill Zamparelli for "This is Not How I Thought It Would Be"

How does it work? Married couples filing jointly are required to combine their incomes, no matter who earns what. However, the money doesn’t go into a common pool that is all taxed at the same rate.  As my friend Kimberly Tso explains in her blog post at The Two Penny Project, “Our federal income tax system uses graduated marginal rates. This is how to think about it: Imagine each dollar that you earn is stacked one on top of the other. Next, picture a large wedding cake next to the stack of dollar bills. Each tier of the cake (called the tax bracket) has a corresponding tax rate that increases as you go up each tier. …You only incur the higher tax rate if your stack of bills reaches that layer.” (See picture for example using hypothetical tax rates.) The policy goal of taxing the top layers more is for individuals who earn more to pay a higher percentage of their income in taxes compared to those who earn less.

For a couple, combining the incomes into one stack and then applying increasing rates to each layer has another effect—the secondary earner bias. When my husband and I faced the question of whether I should find a job or not, we thought of his job and his income as primary because he already had a job and he earned more. So we also thought of his income as first in the stack—where it would get taxed at lower rates. Continue reading

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Filed under Economy, Marriage, Money, Motherhood, Remodeling Motherhood

On Carpool and “A Market Punishing to Mothers”

I was about to go to sleep tonight when I thought I’d just quick check my New York Times app on my iPhone. There in the Latest News list was a piece by David Leonhardt – A Market Punishing to Mothers. My exhaustion from a day of trying to juggle caring for our 9 year old, helping out my in-laws, oh and yes, doing my job disappeared for a moment – replaced by giddiness that someone was calling attention to the economic challenges uniquely faced by mothers.

It’s a great piece. As Leonhardt says,

…our economy exacts a terribly steep price for any time away from work — in both pay and promotions. People often cannot just pick up where they have left off. Entire career paths are closed off. The hit to earnings is permanent.

The fact that the job market has evolved in this way is no accident. It’s a result of policy choices. As Jane Waldfogel, a Columbia University professor who studies families and work, says, “American feminists made a conscious choice to emphasize equal rights and equal opportunities, but not to talk about policies that would address family responsibilities.”

“Family responsibilities.”  Hmmm, I believe that term covers things like driving carpool to summer camp, taking three cell phone calls from the 9 year old at camp, calling to arrange overnight care to help my mother in law care for my recovering father in law, scheduling someone to come repair our washer that keeps staining our clothes, and then picking up carpool crew from camp. All while fitting in my job early in the morning, in between carpools, and late at night.

“Women do almost as well as men today,” Ms. Waldfogel said, “as long as they don’t have children.”

Yes, I’m with Mr. Leonhardt. It’s time to take the next step and stop just talking about policies that would address the family responsibilities both men and women have for both children and their aging parents. It’s time to DO something.

(Also see my April post on The Wage Gap Between Mothers and Everyone Else)

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Filed under Career-Life Fit, Economy, Gender Issues, Money, Motherhood

Social Security Debate Will Return: Educate Yourself Now

The Los Angeles Times ran a great opinion piece by economist James K Galbraith yesterday, Deficits, Social Security and Medicare and National Security.   Apparently the new thing for those who want to slash Social Security and Medicare is to claim that deficit spending = national security risk therefore we must slash safety nets in the midst of the toughest times people have faced in a long time. Galbraith does a great job of concisely explaining a) why deficit spending does not = weakness b) why cuts to these programs would be ill-advised in a number of ways and c) how this is a smoke and mirrors move around the real problem.

“…the only way to reduce public deficits eventually is to revive private credit, and the only way to do that is build a new financial system to replace the one that has failed. The “national security” case for cutting Social Security and Medicare is bogus. In economic terms, it’s just a smokescreen for those who would like to transfer the cost of all those bank failures onto the elderly and the sick.”

There’s no question in my mind that a debate about Social Security looms in our future. Mothers in particular need to educate themselves on how Social Security works – and doesn’t work – for them in order to raise their voices in the coming conversation. Hopefully the debate will open an opportunity to both protect a critical safety net for families AND to rid a system designed in the 1940’s of outdated assumptions about mothers, fathers, marriage and work that penalize mothers in particular.

So educate yourself now – read my series of articles on Social Security and mothers BEFORE the yelling starts.

Time to Demand Mother Friendly Social Security – Womens eNews

Social Security and Today’s Mother – Mothers & More Forum

The_Real_Social_Security_Crisis

Chapter 10 of my book – This is Not How I Thought It Would Be: Remodeling Motherhood to Get the Lives We Want Today

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Filed under Economy, Money, News & Commentary

Why I Hate the Mom Salary Survey

This past week leading up to Mother’s Day, Salary.com published its 10th Annual Mom Salary Survey which calculates that Stay-at-Home Moms Would Earn US$117,856 if paid for her family work. Employed mothers, the survey says, would earn US$71,860 above their regular salary for their mom duties – less because they pay for some childcare.

I hope the 10th Annual Survey is the last. Continue reading

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Filed under Assumptions about Mothers, Economy, Family Work, Fatherhood, Gender Issues, Motherhood, News & Commentary, Remodeling Motherhood

New York Times: Financial Advice By Women for Women

Great article in the New York Times today, Financial Advice By Women for Women.

“Women live longer, earn less and take more breaks from the workplace to care for children and elderly parents. And though studies show that women tend to save a slightly higher percentage of their paychecks then men, they ultimately end up with smaller balances because of their lower earnings.”

Does that mean women need specially tailored financial advice?”

My answer would be yes – especially for mothers – because as the article points out, there tends to be a “gap in financial literacy between women and men” at all ages, and motherhood in particular often leads to employment decisions that compromise earnings.

The article includes links to multiple online resources and recommended books to help women close that gap.  You can find even more at my Remodeling Tools webpage.

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Filed under Economy, Money, News & Commentary, Uncategorized

Power of a Purse Campaign: From Tara Brettholtz, Mothers & More

Earlier this month I posted all the reasons it makes sense to talk about mothers and money this month, including  the Mothers & More 2010 Mother’s Day Campaign: Power of  Purse. I’m so glad to be able to share this guest post from Tara Brettholtz, who started the whole thing last year. Tara tells us the story of how the campaign came to be plus an update on the impact it is having this year in 44 local chapters in 23 cities across the country! It’s not too late to donate a purse – read on to find out how.

~ Kristin

Sharing the Power of a Purse: How a Small Group of Moms Sparked a National Mother’s Day Campaign

This Mother’s Day, moms in 43 cities across the nation are making sure that more mothers to get the thanks and recognition they deserve.  It’s part of a campaign called Power of a Purse, and the idea is to collect new and gently used purses to give to mothers living in poverty, transitional housing and domestic violence situations to send a message of hope and support.

The idea was started by a Mothers & More chapter in Saratoga County, NY last spring when the group stumbled upon literature about a local YWCA that provides housing and support services to women and their children with no other place to go.  The group placed a call and met with a staff member to inquire about making some kind of donation.  They discovered that the women and kids there needed everything.

Suggestions of donating canned food or toiletries were met with sincere gratitude, but what Mothers & More members really wanted was to feed the spirits of these women who were struggling.

That’s when they thought of a purse.

“A purse has many layers of meaning to a woman, no matter how much money she has in it.  It’s a shot of confidence, a sense of security and a home away from home,” says Tara Brettholtz, project manager for the campaign and a director of Mothers & More. Continue reading

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Filed under Assumptions about Mothers, Economy, Guest Posts, Money, Motherhood, Remodeling Motherhood

Busting Stereotypes about Families and Money

On the surface it seems puzzling. Over the past 30 years we’ve gone from a majority of single income families with children to a majority of families with two incomes. Yet, as you’re probably aware, families are saving less and have more debt than ever. As a result they’ve been hit hard by the current recession.

But why? If two-parent families now have two incomes, and more money, why aren’t they wealthier than ever?

Elizabeth Warren, Professor of Law at Harvard and the Chair of the Congressional Oversight Panel for the U.S. banking bailout, wondered too, and then went to find the data. Continue reading

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Filed under Assumptions about Mothers, Economy, Fatherhood, Money