Let’s begin with these questions: Do you rely on your partner for financial support? Could you pay all of your bills and maintain your current standard of living without help from anyone else?
I recently wrote a post called Quitting My Six-Figure Job. If you haven’t read it yet go take a gander and then pop back over here. It serves as the backdrop for the words that follow.
I think it’s valuable to read the whole article for context, but if you are short on time here’s a brief synopsis. In 2011 I left my high-paying job to become a stay-at-home mom. In the past seven years I’ve missed out on $1 million worth of potential income. If wisely invested that money could have grown to more than $3 million throughout my lifetime.
A reader sent me a long email in response to that post. More specifically she had a couple of questions she wanted to ask:
- How do you feel about relying on your husband’s paycheck?
- Is it hard to be financially dependent?
I stared at the words on my computer screen and read the email in its entirety fifteen or twenty times in a row. Returning to the first line each time I reached the end of it.
These are difficult questions to answer. How do I feel about being financially dependent? How do I feel about relying on my husband for financial support?
Oh where should I begin?
Saving at the Start of My Career
First you should know that I struggled with the decision to leave the workforce. In fact, I contemplated my options for months. I thought I knew for sure what I wanted to do and then, at the last minute, I changed my mind.
Our finances were front and center in my decision making process. I spent the first twelve years of my career earning and saving money. In fact, by the time I walked away from work I had saved $155,758 in my 401k.
My company matched my contributions up to 6% and the market gave me an additional lift after that. The total value was over $300,000 on the day I rolled it into my IRA. Almost half of that was converted to a Roth. At the time my husband’s retirement accounts were equally valued.
I was guaranteed a small pension worth roughly $1,200 per month. Although I couldn’t gain access to it until I reached retirement age.
My final paycheck from work included a severance check worth more than $62,000. The previous check was sizable too as it included the payout of unused vacation leave and other miscellaneous items.
Our investments at the time totaled over $1 million. My husband saved more than half of that amount.
Knowing the Value of My Marketable Skills
When I left the workforce I was completely aware of my marketable skills. “How?,” you might ask. Well my employer just happened to announce company wide layoffs when I was four months pregnant.
I set up an interview for a new job weeks after I received the news. I was offered the position along with a slightly higher salary than my previous one. My skills at that time were up-to-date and in demand. I knew I could return to work if the need arose.
Preparing to Stay-At-Home
It’s clear that my situation is rather unique. Most women who quit their jobs probably haven’t spent twelve years saving as much as I did. Few would have the opportunity to do so. Even fewer are married to a man who did the same.
I didn’t leave my job with mere pennies in my bank account. In fact, if my husband and I divorced I would’ve walked away with half a million dollars. That doesn’t include proceeds from the properties we could have sold.
These financial details provide key details to my decision making process. I did not walk blindly into my new role as a stay-at-home mom.
I stepped into that position after saving for over a decade. In fact, those large sums of money were amassed long before I conceived my first child.
I would urge all new parents to run the numbers before making the leap to stay home. You don’t want to pause your career until you feel confident about your finances.
Working Women Can Also Become Dependent
My skills are certainly rustier than they once were and my experience more outdated. There is no doubt that my earnings capacity has temporarily diminished as my years outside of the workforce grow.
Most stay-at-home parents are aware of this conundrum. Some do a better job than others of keeping their skills up-to-date and their network intact. I, personally, have not done an excellent job at either of those chores.
Does this lackadaisical approach keep most stay-at-home parents financially dependent on their spouses? Yes, of course it does.
But I would argue that stay-at-home moms are not the only ones who are financially dependent.
Do You Rely On Your Spouse for Financial Support?
Many married working women are also financially dependent. While there are certainly breadwinning women in the world and kudos to them, there are plenty of other women who could not support their current lifestyle entirely on their own. (For the record there are also a lot of men in that same bucket.)
If your partner disappeared from the face of this Earth and took that bi-weekly paycheck along for the ride, could you still pay for your housing, utilities, food, vacations and credit card bills or would your lifestyle have to change?
If you cannot maintain your current lifestyle than you are also financially dependent upon your partner.
I have plenty of friends who are teachers and social workers. Not a single one of them could remain in their current homes, paying their current mortgages without the addition of their husband’s salary.
You could argue that those women are less dependent on their spouses, but no doubt about it they still need their husband’s paychecks to maintain their lifestyle.
The Definition of Financial Dependence
Is a stay-at-home mom in a worse financial place than a working one? Probably. The working woman already has a job, a career, a trajectory and a means to make more money. A stay-at-home mom will need to find employment before she can begin earning. There is no denying that fact.
There are plenty of horror stories about parents who leave the workforce, face divorce and have trouble finding work, but there are also a plethora of stories about working women who are unable to fully support themselves. If that weren’t the case alimony would never be granted to working women.
Financial independence is the ability to support yourself fully and completely without assistance. In the world of personal finance and FIRE, you are not financially independent until have enough income to pay for your living expenses without employment.
How many women can support their lifestyles on their own? Let alone reach FI alone?
Both stay-at-home moms and working moms face financial dependence. It is more common for a woman to rely on her spouses’ paychecks than to live comfortably without them.
There are many systemic reasons for this problem. For starters young women are still encouraged to work in lower paying fields. It’s obvious that nurses and teachers don’t get paid as well as doctors and engineers.
Did you know that less than 18% of all computer science degrees are earned by women? We should all feel disheartened by this fact.
Empower Women To Earn More Money
Do men naturally gravitate to these occupations or are they programmed from a young age to earn more money? And if men are groomed to provide for themselves then why aren’t women?
We should teach young women about personal finance. We should also ensure every girl is as comfortable and competent with a calculator as her male counterparts.
In order to level the playing ground we need to introduce young women to STEM and show them how to solve complex problems. We also need to stress the importance of subjects like math and science and provide female role models for them to meet and aspire to become.
With these skills, they can study, graduate and move on to high-paying careers. They can also learn that saving money is just as important as earning it. After all you can’t reach financial independence without saving and investing it.
Passion or Profit
As a teenager I was told to pursue my passions while my male classmates were told to increase their profits. Why do different genders receive such different messages?
What if a young girl has big dreams that cost money? How much harder will it be for her to achieve them? How much more will she need to rely on someone else to bridge the gap between the money she earns and the lifestyle she craves?
It’s not fair for women to start behind the eight ball. If we wish to remove the need for dependence we must also fight for equal pay and work to shrink the wage gap.
Mutual Financial Dependence
I’m not sure if I answered the question I was asked. So I’ll try again. “Does it bother you to rely on your husband’s paycheck?” Actually, it turns out that I was dependent on my husband’s money long before I ever quit my job. Despite earning six-figures I couldn’t pay for our bills by myself. I certainly wouldn’t have qualified for mortgages on multiple homes.
“Is it hard to be financially dependent?” The same answer applies. I was dependent long before I became a stay-at-home mom. I just didn’t realize it at the time.
Sure I could have altered my lifestyle and supported myself quite happily, but I couldn’t afford to live the life I planned. That’s not necessarily a bad thing, but it is the truth.
It’s also true that before I left my job my husband was also dependent on my income.
I should point out that there is nothing wrong with mutual financial dependence. It’s certainly cheaper for two people to maintain a household than it is for two people to maintain separate residences. There are also a huge number of perks.
My Decision and My Finances
I’ll be honest. If I didn’t have $1 million in the bank before my son was born I’m not sure I would have left my profession. When I gave up my paycheck I had a hard time separating my net worth from self-worth.
I never felt bad for being dependent on my husband, but I did feel guilty for giving up my income. I spent many years focused on increasing my salary and saving. It felt strange to suddenly give up on that.
My husband’s company and his salary eventually made up for my missing income, so I never felt the need to worry about becoming destitute or broke. He provided the paychecks so I could stay at home with our amazing children. A fact that I am still grateful about.
We also saved a ton of money despite my decision to stay home. My husband’s income was more than enough to cover all our bills and still invest a lot.
What helped my peace of mind was consistently checking our finances. I never worried about our financial future, because I routinely reviewed and managed our day to day transactions, credit cards, bank accounts and excel spreadsheets.
You may not earn as much as your spouse but you should still be 100% vested in the outcome of your partner’s paychecks. Actually, this is true whether you stay-home or continue to work.
My confidence grows each time I log in to my bank accounts. It comes when I know we can pay our bills and credit cards.
How does it feel to be financially dependent on my husband? It feels okay because we have a ridiculously large safety net. Thanks in part to the markets and my husband’s continued drive to work. I’m certain I’d feel different if we didn’t.