Confession time: it used to drive me nuts when I would mention my extended maternity leave and people would respond with “You’re so lucky!” Um actually, luck had absolutely nothing to do with it. Financial preparation did. I am SO pumped about today’s episode topic. We’re going to dive into one of the questions that I get asked the most from my coaching clients: how do I financially prepare to make a life change? If you are thinking of making a scary move this episode is for you.
A lot of people are surprised to hear that I actually haven’t always been a personal finance nerd. If you listened to episode 13, I got positively giddy when we were talking about all things budget. But that is my destination, not where I started. When my husband and I first moved in together, we lived and breathed by the “swipe and pray” method. I remember walking through the grocery store and not even considering how much money we were spending. I look back and literally cringe, wondering who the heck those people were.
We realized the swipe and pray method wasn’t going to get us to our goals was when we were planning a maternity leave for my oldest daughter. We had agreed that we wanted me to be able to take the longest leave possible. That meant that I wouldn’t be bringing home a paycheck after 6 weeks. So our first step to financially prepare to make a life change was to create a budget. This was not easy, especially because we were used to living life without a budget. It took a few months of practice, trial and error to get consistent with our budget. We needed to understand how much money we actually needed to sustain our lifestyle.
Once we had firmly established our budget and gotten consistent with it, it was time to make some cuts. Again, we were planning for a maternity leave that was going to be an undetermined amount of time, since I wasn’t yet pregnant. If I had the baby in September, we would need a way bigger nest egg than if she was born in December. Our theory was to prepare for the longest case scenario and see where we ended up.
Things that we cut included the extras. For example, going out to dinner and entertainment, such as going to the movies. At first, this was a big adjustment. After awhile though, we found fun and cheap ways to do date nights and connect with our friends and family.
Once we had made cuts and decided the minimum amount of money we needed to live each month, it was time to do some math. We multiplied the total amount we needed per month by the 12 months in a year that I would potentially take off. Then, we subtracted what my husband was going to contribute with his paychecks. Next, we took that number and divided it by the 9 months of pregnancy, since I was pregnant at that point and due in January. Now we had an exact number of how much money we needed. We wanted to have that money in our savings account by the time the baby was born. This would allow me to take an extended maternity leave.
To save that money, we had a direct deposit go from our checking account to our savings account each paycheck. It was easier to not even see the money, especially when we were tempted to buy all the cute baby things. My husband and I both picked up a few side jobs (chaperoning concerts, being a club advisor). We also cut coupons to make sure that we were hitting the number we needed to save every month.
I talk to moms all the time that are ready to make a big life change. Probably the biggest mistake that I see is the lack of timeline. I get it, you don’t always know when a baby will be born, or when a new job will be available or when you’ll hit your breaking point with your boss. That’s when I recommend that you take a guess-timate that feels reasonable and start from there.
The next mistake that I see a lot of moms make when preparing to make a big life change is they don’t have a sense of how much money they need to make that life change. Now, this can go either way. Either, they believe they need an astronomical amount of money and don’t even try. Or they think that it will “just work itself out” and take a leap. When it comes to financially preparing for a life change, it’s actually a benefit that you’re dealing with black and white numbers. I know facing your finances head-on can be intimidating, but you have to get real with yourself about your numbers in order to successfully navigate this life change.
Finally, the last mistake that I see moms make is not discussing their plans with their partners. If you want to make a life change, your partner is absolutely the first person you should talk to about this and gain support from. With some partners, there may need to be more discussion than others. When I was debating applying for a part-time job, after being a full-time teacher for years, my husband panicked. Thankfully, another teacher encouraged me to look at the numbers with him, to show him how thought out it was. I did, he saw the feasibility of the plan and I was able to accept the part-time job when it was offered. You never know how it will go until you start the conversation!
Do you have a life change in your future, maybe in the next 5 years or so? Even if it’s something that feels far off, it’s never too soon to start planning!
Take some time to write down a financial goal, then work backwards to see what would have to happen monthly for you to make your dream a reality.
If you enjoyed this episode, be sure to subscribe on Spotify or YouTube so you don’t miss next week’s episode, which is all about how to EMOTIONALLY prepare to make a big life change once you have the money situation figured out. It’s going to be a good one!
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Thank you so much for being here, mama! Get back to doing your thing, rocking your world and remember – keep growing! Little eyes are watching.
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And finally, you can also check out these related episodes that I think you’ll be obsessed with: