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A Gift For Moms: Planning for the Financial Impact of Children

(Part 2 of 2)

Mom and Baby Working

Let's pick up where we left off, with a very important question for new moms to answer. Will you go back to work? The decision to go back to work after having a baby is a personal one, and often depends on many factors. Maybe you want to work because you enjoy your job, or maybe you have no choice but to work because it's the only way you can survive financially. Or perhaps you want to stay home and you've spent the past few years shoring up your finances. Whatever you decide, know that your decision isn't etched in stone. Women, much more so than men, tend to move in and out of the workforce to accommodate children. So whatever you do this year might not be what you're doing two, five, or ten years from now. If you don't plan to return to work: Find out if your employer will pay you for any unused vacation/sick time. Be up-front about your plans and remain on good terms with your employer and colleagues in the event you change your mind about working or need a reference in the future.

Pay off debt where possible. Try to live on one paycheck 3-6 months before you leave work, which can help you cut non-essential spending and increase your savings.

Continue to save for retirement, you can establish and contribute to your own IRA (traditional or Roth) based on your spouse's earnings under the spousal IRA rules. If you have federal student loans, a deferment or forbearance request can give you a six-month reprieve from paying them. Keep your professional skills up-to-date by taking occasional courses, networking, reading trade publications, and so on, and be on the lookout for new opportunities.

If you do plan to go back to work:

Start researching child care options now. Compare facilities, quality, cost, and availability. At work, contribute to a dependent care flexible spending account (if available) to reduce your taxable income by the amount you contribute for child care costs.

Confirm your maternity leave with your employer. Does the company offer paid leave? Can you extend your paid time off with unpaid leave? Can your spouse take paternity leave? Make sure you know your rights under the law--the Family and Medical Leave Act requires 12 weeks of unpaid leave for certain employees. Talk with your employer about your current job responsibilities and plan for your leave as much as possible. Who will handle your work when you're out? What can you expect when you come back? If you'd like to modify your current schedule, think about your ideal work arrangement, then request a meeting with others in your department to discuss your well-thought out proposal. Would you like to work full-time, but with two days telecommuting from home for example?

Sometimes, a flexible work arrangement can mean the difference between being able to stay in the workforce or having to leave it, so it doesn't hurt to ask.

Working outside the home with young children can cause a significant amount of mental and physical stress. For some women, it's the hardest, busiest time of their lives. At work, new moms may face skepticism of their dedication to the job or doubt about their desire to take on challenging assignments, which can limit opportunities for raises and promotions. At home, women in dual-earner households often face primary responsibility for a seemingly endless to-do list of household and child-related chores. Even with a helpful support system, be prepared for times when it's hard to balance everything. In those moments, take comfort in the fact that you are doing the best you can. Finally, remember that no arrangement is permanent. You might stay home for awhile and then decide you want to go back to work, or vice versa. Try to keep an open mind and be flexible when facing the realities, financial and otherwise, that come your way. Build a financial foundation Here are some other things you need to do to care for your child: Draw up or revise your will so you can name a guardian for your child.

Also, consider completing a health-care proxy and durable power of attorney, which let you designate someone to make medical and financial decisions on your behalf if you are unable to. If you don't have life insurance, get it. If you already have life insurance, reevaluate your coverage. Even if you are a stay-at-home mom, you still need life insurance.

Want to save for college? Start by saving for yourself. Roth IRA's are great to use for retirement and college saving. Also, encourage grandparents to buy savings bonds and 529 college savings accounts instead of toys.

Research and compare when it's time for large purchases. Consult with financial advisers when you need help developing your plan and pass on your financial knowledge as your child grows.

Now sit back, relax, and enjoy all those moments that you can't put a price on!

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