How Stay-at-Home Moms Can Protect Themselves Financially

Who’s going to take care of the kids? If you and your spouse are about to start a family, or your family is growing, I’m sure you’ve been asked that question. Bosses, colleagues, friends and family, all want to know if you’ll be taking significant time away from your career.

There are plenty of angles to consider, and countless words have been written about opting out, leaning in and everything in between. On top of all that, critics seem eager to weigh in on every available choice. The decision isn’t easy, and I’m not here to debate the merits of one parenting style over another. What I can offer is a sound financial perspective, based on my expertise as a Divorce Financial Strategist™ and the wisdom of my clients, who’ve been very candid about what they wish they’d done differently.

Of course, divorce can be tremendously difficult for even the most affluent, well-educated, strong and competent women. But of all those who’ve consulted with me over the years, I’d have to say that the women most uncertain about their financial futures are those who gave up paid work to be stay-at-home Moms (SAHMs). 

Some tell me that if they’d realized what they were risking, they would never have cut their ties to the professional world so completely. Others say that, while they would still happily have left their careers, they wish that they had protected their financial standing more carefully.

If you’re thinking about becoming a SAHM, please do yourself a favor and take a few minutes to face some unpleasant contingencies. For example, half of marriages end in divorce. What will you do if you find yourself there?

First, you should know that family courts won’t necessarily sympathize with an educated, competent woman who gave up her career and then expects to receive alimony from her ex-husband rather than return to paid work. "What we often find is that many stay-at-home parents, either moms or dads, as is becoming increasingly common, go into the divorce process assuming that lifetime alimony covering full support is a given. In this day and age, however, this kind of expectation is simply not realistic," says New Jersey family law attorney Bari Weinberger

What’s behind the change? Alimony reform. In states such as Massachusetts, that have seen alimony reform laws passed in recent years, so-called permanent lifetime alimony awards are “all but abolished, except under certain circumstances,” says Weinberger. In other states, including New Jersey, permanent alimony is still available, but is far less likely to be awarded just because a parent decided to leave their career to stay home with the kids. “What is becoming more the norm for stay-at-home moms and dads is 'rehabilitative' or 'temporary' alimony that's put in place to help the spouse get on their feet long enough to re-enter the workforce." Divorcing SAHMs confronting this reality may have to pursue full-time paid work immediately — and prove their efforts to the court. Many end up taking jobs ill-suited to their education and skill sets.

Fortunately, there is a way to supersede your state’s divorce laws, at least to some extent. If you are thinking about becoming a SAHM, you and your husband could prepare and sign a formal postnuptial agreement. 

You’ve probably heard of prenuptial agreements (or “prenups,” for short). They’re legal documents signed before a couple marries, and they establish and document what each spouse’s property rights and expectations would be in the event of a divorce. A postnup can accomplish the same sort of things; it’s just negotiated and executed after you’re married. 

I know, I know . . . nobody wants to approach the question of child care with “But, honey, what will happen if we split up?” However, if you are planning to leave paid work, then you and your husband do need to weigh the benefits and risks together, candidly, before you quit, and without devaluing your losses

What do I mean by that? Well, as the years go by, it seems as though many women start thinking that maybe their career was never as important as their husband’s, and that their sacrifices don’t matter so much, after all. Don’t believe it! Instead, while you are still working, be absolutely clear about what you’re about to give up: salary, benefits, earning potential, professional contacts, career momentum and other benefits, tangible and otherwise. 

Why? Because a postnup needs to specify how you’ll be supported if your marriage ends, and laying out these financial sacrifices provides a solid rationale for doing just that. 

“If a couple never executed a prenuptial agreement, or does have one, but it doesn't address spousal support, it can feel like you've missed the boat,” Weinberger explains. “Thanks to postnuptial agreements, you still have time to establish provisions to protect yourself financially should you make that leap to stay home and raise your kids." 

Your postnup might also stipulate the length of time you expect to be out of work. Then, you can amend it in the future, if need be. That would provide an excellent opportunity for you and your husband to confirm that the choices you’ve made together are still working . . . or to make adjustments, if they aren’t. 

As I’ve said again and again, candid, mutually respectful agreements like these strengthen marriages. Based on what my clients tell me, it’s lack of communication that causes more trouble.

Whatever path you decide is best for you and your family, understand that becoming a SAHM, however rewarding it can be otherwise, represents significant financial sacrifice and risk. When you take financial risks, you should have insurance. A postnuptial agreement is, to my mind, an absolute legal and financial necessity for any woman choosing to give up paid work. It’s not about planning to break up — it’s about planning for a secure future. 

Jeffrey Landers is a member of the DailyWorth Connect program. Read more about the program here.

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