Thinking of Becoming a Stay-at-Home Parent? Do These Crucial Financial Tasks First to Protect Your Future

Becoming a stay-at-home parent isn’t financially feasible or personally desirable for everyone. But for men or women who want to be home with their kids, it can provide some amazing benefits for a family and help children establish a firm foundation in life.

Unfortunately, it also makes the stay-at-home spouse financially vulnerable. Before you put your career on hold and jump into caregiving, there are a few things you should do to make certain you are protecting your personal finances as much as possible. Here’s what they are.

Get life insurance on the working spouse

Life insurance is crucial if one person is going to be the sole breadwinner for a family. When the stay-at-home spouse steps away from their career, they limit their future earning potential. In most cases, it would be difficult and disruptive to the family if they were suddenly forced back to work in the event of a tragedy.

Life insurance can provide funds necessary for the at-home spouse and their children to maintain as close as possible to their standard of living even upon the death of the primary earner. A policy must be put in place to make sure that can happen. In fact, since the services a stay-at-home mom or dad provides are also valuable and difficult to replace, it’s a good idea to get insurance for that parent as well.

Establish credit in your name

The sad reality is that somewhere around 50% of marriages end in divorce. If you don’t have credit in your own name and you want to leave your spouse (or your spouse divorces you), you are going to be in serious trouble.

You typically need a good credit score to get an apartment, set up utilities without a large deposit, or even get a cellphone. You’ll also need credit to borrow for things you might need in the future, like a vehicle.

You should be sure joint loans, like a shared mortgage, have your name on them so they show up on your credit report and help you build credit (and you should pay attention to your finances to ensure your spouse is paying all these bills so your credit isn’t damaged). You should also have a credit card in your name, in case you need it and to help you build your own personal credit score.

Make sure your name is on shared accounts

Just because your spouse is bringing home the paycheck doesn’t mean you aren’t entitled to a share of it. You should insist upon your name being on joint bank accounts and shared marital assets such as the deed to a family home and the title to your vehicle. If your spouse starts a business and you help provide support to them while doing it, you may even want to ensure you have an ownership stake in that company as well.

All of this can help ensure that if something goes wrong, you have money and financial security to start your new life. Since you’re giving up your earning potential and making it harder to support yourself in the future, you must take care of yourself in the present.

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