Making Money as a Stay-at-Home Mom: Part 3 - Playing Defense

Live frugally

Each dollar saved is another dollar invested, and that spare change over time compounds into wealth. Take a conservative approach to spending by reviewing your monthly bills for rent, utilities, groceries and entertainment. Knowing generally what percent of your income goes where on a monthly basis and changing your spending habits accordingly can help save on excessive discretionary spend.

Ways to live frugally

• Compare and shop at multiple groceries stores. Find the best value for quality amongst various brands and know when and where the grocery has the sale rack out. Our local grocery store has three steep discount locations spread out within the store that is not stocked until late morning / early afternoon.
• Go without a cleaner. Invest in some high quality, durable cleaning equipment; and make a habit of daily, weekly, and monthly chores for household cleaning.
• Cut out expensive discretionary spend such as eating out, DoorDash, Amazon purchases, and expensive gym memberships. Opt instead for low cost alternatives such as cooking at home, potlucks, pre-made meals from grocery stores, the Dollar Store or local Buy Nothing groups, and in-home gym.
• Shop used or second hand at thrift shops or the dollar store. Learn when to buy for quality vs. quantity. Know when to shop for what and know the general price points of regular household items like pasta, paper towels, and other groceries, clothes and shoes, and household gadgets.
• Skip designer clothes and expensive make-up regiments. Instead, eat healthy and drinks lots of water. Exercise, use sunscreen, and cover up when exposed to sunlight.

Invest for the long-term

Investing in individual stocks or exchange-traded funds (ETFs) can be a lucrative source of passive income. Research and diversify your portfolio to mitigate risk and aim for long-term growth. Even modest investments can potentially yield substantial returns over time. Set up regular contributions to your investment accounts to ensure consistent growth.

Examples for investing long-term

• Set-up automatic 401(k) and/or Roth IRA contributions before your paycheck is sent to you.
• Set-up automatic investing into a low-cost index fund like SPY or VOO (both tracking the S&P 500). Set aside a portion of your paycheck to direct deposit into a brokerage account.
• Use automatic dividend reinvestment so your investment returns continue to grow.
• Pick a weekly discretionary spend and instead replace that by putting the spend towards investing. Continue to cut out discretionary spend, expense by expense.
• Develop your financial literacy to understand equity investing and tax implications and avoid get rich schemes. Learn to detect when a “financial expert” is probably wrong or trying to scam you.
• Develop the risk tolerance and temperament to make calculated bets. Don’t buy on leverage or on margin. Don’t invest in something you don’t understand like options, crypto, or the like, unless you understand them.

Know Basic Financial Planning and Analysis

Being able to conduct a thorough cost-benefit analysis on major expenses can save you a lot of money. Whether it’s on car purchases or other major investments, the ability to assess the financial impact of your choices is a powerful skill that can put more money in your pocket.

Examples of family financial planning

• When taking on a new job, project what your family living expenses are, then calculate what your pre-tax salary has to be in order to make ends meet. If the job doesn’t pay enough, then either negotiate for a higher salary or reduce your living expenses.
• When deciding on selling your primary home, look into the IRS tax break for homeowners selling their primary homes. For homeowners who qualify, all of the capital gains from the home sale may be tax free at the federal level.
• When planning household maintenance and repair projects, shop for multiple quotes from contractors. Focus less on the aesthetics and more on the quality of materials and construction. Consider ROI -- skip work that might yield negative returns, eg new drapes or an in-ground pool.

Pick up basic maintenance & repair skills

Having the know-how to complete basic repairs and maintain your home can save you a significant amount of money in contractor fees. We went from a dual-income to single-income family, and we’re still learning to manage with less money. Frivolously calling for help isn’t a real option, so we’re teaching ourselves how to tackle these problems on our own.

Examples of being a handyman

• Learn how to prevent pipes from freezing when temperatures fluctuate. Learn how to unfreeze pipes without having to call a plumber
• Learn some gardening skills and DIY instead of hiring a gardener. Generally know how to mow the lawn, rake leaves, shovel snow, and plant grass.
• Recognize when maintenance and repairs are important to complete like rotting wood around the exterior, roof replacement, or masonry repointing.
• Know how to unclog the drain whether it’s the bathroom sink or toilet. Plumbing issues happen surprisingly often, especially clogged drains.

Blue collar trade skills are invaluable. If you’re going to be a stay at home parent with real estate assets, prepare to get your hands dirty in the day to day upkeep. Real estate is definitely sweat equity, and it pays off for the handyman homeowner.

Be your family’s COO/CFO

Being a stay at home mom can encompass a lot of work beyond childcare. From taking care of the yard and the house to managing the daily financial operations, a well run house can save the family a lot of money. Those savings can then be invested and utilized wisely to generate better returns.

If your partner’s job is to play offense by working and bringing home a paycheck, then your job is to ensure that money is responsibly deployed to run the household and to ideally generate more wealth. The scope of the SAHM role is what you make of it, and that can include being your family’s COO/CFO.

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Read the Series

This article is part of the series, Making Money as a Stay-at-Home-Mom. Check out the other articles in the series here:

Part 1: Ways for SAHMs to Start Making Money

Part 2: Rent Out Your Assets

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