Being a mom can mean a lot of investing in others. Investing in your family will yield extremely high dividends. Although not monetary, this investment is absolutely worth the sacrifices: time, finances, sleep, hobbies, time alone, etc. Moms are super heroes in my book and absolutely lay it all on the line for the sake of their families. Cheers to moms!
But… that’s not why you’re here! Your long-term financial goals do not have to go by the way side as you raise your kids. Investing in your future IS investing in their future as well. Learn to steward your resources well, and soon enough you’ll be teaching your kids about giving, saving, and investing as well. This will not only give you freedom, but make an impact for the next generation.
Some of you reading this might think, it’s already too late! I’ve missed it! And let me ask you a question I’m sure you’ve asked your kids before: “Are you just going to give up and bury your head in the sand or are you going to do the hard work of perseverance?” Rephrased for toddlers: “Don’t give up! Never give up!”Or rephrased for us millennials, “Just keep swimming! Just keep swimming!” Stop making excuses and procrastinating and proclaim that today you will do one thing that will bring you closer to your long-term goals.
So where do we begin? I’m glad you asked!
Take a Financial Inventory
Begin by taking a financial inventory. How much do you make and how often? What is your spending each month including all bills and debt payment? How much debt have you accumulated? What interest rate are you paying on your debt? Once you know where you’re at, you can begin to think beyond the monthly bills. Don’t just estimate for this step! Look at your banking accounts, credit card statements, bills, automated withdrawals, etc. and try to be as honest and accurate as possible.
The Results are In…
First, there’s bad news! If your inventory has revealed that you are in the red each month, meaning you spend more than you make, or you have debt accumulating 10% or more interest per month, you’re not quite ready to invest. My first recommendation would be to work on a budget you can live within. If you don’t already have a budget template with categories, sign up with your email at the bottom of the page and I’ll send you a budget template so you can plug and play your way into freedom! Once you have 3 months or more of successfully living within a budget AND have eliminated all high interest debt, bookmark this page to come back to!
If your inventory from step 1 reveals that you are not in the red, have money left over, or at least don’t have high-interest debt, you’re ready to start investing. Investing just means you’re acquiring an asset with the goal of generating income or appreciation over time. While investing doesn’t guarantee future income, as sometimes losses occur, the goal is to make sure you’re investing in things that have a history of performance. The stock market over the past 100+ years has a proven track record. As you’ll see, there are times of great economic downturn, but also times of tremendous growth and overall, a graph trending in the positive direction. While there are other things to invest in besides the stock market (i.e. real estate, cryptocurrency, etc.), for beginner mamas, this is where I recommend you start before building out a portfolio.
Start Investing
Investing for moms can look different depending on your family and employer situation. First, if you or a spouse is currently employed, take advantage of employer matches in retirement contributions and tax-advantaged accounts. If both you and your spouse are working, chances are you’ve got some great ways to invest and save yourself on taxes as well. Win win! Make sure you’re choosing funds that match your risk tolerance and the amount of time you have before you plan to cash in on the investment. The younger you are, the more risk you can afford to take. Make sure to check your allocations at least yearly and change as you approach retirement.
If you’re not employed but have a spouse who is, you can still contribute to an IRA based on your spouse’s income! This means both my husband and I can contribute to a Roth IRA each year even if I am home with my kids.
Once you’re at least getting an employer match on your retirement contributions and maxing out your traditional or Roth IRA, now comes the fun part! Investing beyond retirement accounts can seem daunting at first, but don’t let it get to your head. This is a marathon, not a sprint. If you need to double your money in the next 30 days, you’re better off going to Vegas! But if you have some time, meet my friend, compound interest. Compound interest can turn $100 per month over 40 years into $260,000*. And the great news is, you’ll only have contributed $48,000. This is why starting now is so important. Time is on your side.
Where to Invest
I would recommend you look into low-cost mutual funds as a beginner investor (but really for all levels of investing)! Personally, I really like Vanguard for their low expense ratios and customer service, but if there is another company you are loyal to, by all means go ahead! Some of my personal favorites for low expenses and a great track record of performance are VTSAX and VFIAX. Both of these are also available as an ETF if you don’t want to purchase the $3,000 fund minimum. Figure out how much you’re willing to sacrifice in your budget and give that money a job. If you use the mutual fund option, you can setup an auto withdrawal and each month it will automatically take the amount you select and invest it for you.
The main thing to remember when you begin to invest is you do not need to run to a financial advisor and pay an outrageous fee to have someone help you invest your money. The key to keeping good returns on your investments is to not have expenses and commissions sabotaging your returns. Trust me when I say, your investment, in one of the two funds I mentioned above, will more than likely beat out the advice of any investor anyway.
There are tons of other types of investment opportunities, but so as not to overwhelm and give you a clear place to begin, the stock market is my advice.
In Conclusion
You’ve got this! Investing for moms is not rocket science. First, start with the inventory. Next, if you’re ready to begin investing, take advantage of an employer match in something like a 401(k) first. This is free money on the table. No where else will you get a return like this! Next, max out a traditional or ROTH IRA. While I personally like the ROTH IRA, there are benefits to each, so do some research before making your decision. The current yearly maximum for an IRA is $6,500 or $7,500 if you’re over age 50. Finally, if you’ve already taken these two steps and you’re ready to up your investment game, open a brokerage account. Opening a brokerage account takes 5 minutes! Next, choose a fund, figure out how much you’re wanting to contribute, and allow compound interest to work it’s magic. If you’re a first-time investor, can I give you one last piece of advice? Don’t check the market every day! There will be days, even weeks, months, or years where the market is down. There will also be days, weeks, months, and years where performance is stellar. Ride the wave. Trust the process. And prepare to change your family tree.
*Using an average rate of return of 7% over 40 years at $100/month.
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