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Stay-at-Home Parents: 5 Smart Money Moves

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Stay-at-home parents have one of the most rewarding jobs out there, but it’s also one of the toughest. Even tougher? No pay. For this reason, it’s important to look at the whole financial picture and ask, “What does one-income living mean for the family?” More than half of stay-at-home parents aren’t saving for retirement1, but that doesn’t have to be you. Follow these simple-but-essential steps to make sure your family is on the right financial track.

1. Open an IRA

You’re right in thinking that earned income is required to contribute to an individual retirement account (IRA); however, there’s a special kind of IRA just for stay-at-home parents: the spousal IRA. “It’s a great way to continue saving for retirement even when you are not working and don't have access to traditional retirement benefits like a 401(k),” says Kimberly Palmer, author of “Smart Mom, Rich Mom: How to Build Wealth While Raising a Family.”

A spousal IRA allows your partner to contribute to your retirement account on your behalf. Pretty sweet, right? To qualify, you’ll need to file taxes jointly with your spouse. “The point of setting aside money now for the future is to let the magic of compounded interest kick in to help your investments grow at least as fast as inflation,” says Manisha Thakor, a financial planner and director of Wealth Strategies at the BAM ALLIANCE.

2. Cover the “What Ifs”

Death and disability aren’t anyone’s favorite subjects to discuss. But if such an unplanned-for upheaval happens, the last thing you’ll want to do is figure out how to stay afloat without your spouse’s salary. When sizing up life insurance, don’t just account for your current expenses, says Palmer. “If your partner is the breadwinner, then you need a policy that would replace that income for 12 years or longer,” she says. That will help cover everything from mortgage payments to eventual college costs.

3. Double (and Triple) Check Beneficiaries

Even if you have a will in place, take some time to thoroughly review the beneficiary statements on your insurance policies, retirement accounts and bank accounts. Legally, beneficiary designations override any will provisions, meaning money can fall into unintended hands. People often don’t realize (or forget) they need to update their beneficiaries after getting remarried, Thakor says. Double-check the paperwork now to ensure it’s aligned with your overall estate plan.

4. Schedule Date Nights

In addition to dinner and a movie, schedule some time for you and your spouse to talk money. Romantic? Doubtful. Necessary? Absolutely. “The worst thing a stay-at-home partner or spouse can do is to completely disconnect from the household finances,” Thakor says. Review savings and investments as a team and talk through big financial decisions, like whether to save for a new car or what type of college savings strategy makes the most sense. Approaching your family finances as an active and equal partner means you’ll be less intimidated by money issues that crop up in the future.

5. Save, Save, Save

The brutal reality is that most families with one income have less of a safety net if the working partner loses his or her job. So, actively double down on savings (if you can), says Palmer. Try to trim the monthly budget a bit so you can better pad your emergency fund. And consider going above and beyond when it comes to retirement (remember, one income needs to cover two retirements). If your spouse has maxed out his or her employer-sponsored retirement account and you’ve both socked away the limits on your IRAs, look to after-tax investment accounts as another way to save, Palmer says.

Stay-at-home parents

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1 “Homemakers Are Not Off the Hook: The Aegon Retirement Readiness Survey 2015,” 2015, Transamerica Center for Retirement Studies


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