Working Moms and Personal Finance

The American workforce has seen a dramatic increase of women joining its ranks over the last forty years. Today women make up 47% of the workforce and by 2020 women’s participation is expected to exceed that of their male counterparts. This is of course due in part to large swing in attitude about traditional household roles. But the need for two incomes in order to support a family is also sending plenty of parents into the workforce who might otherwise prefer to stay at home and raise their kids.

Does that second paycheck make sense?

For many middle class women with dual incomes, returning to the workforce after maternity leave is a real question as to whether it is economically astute in light of the high cost of childcare. In a New York Times op-ed Lilian Faulhaber, associate professor of law at Boston University, writes that the IRS hurts mothers because “the tax code starts with a bias in favor of couples in which one partner works and one stays home.” Faulhaber admits that “this bias, however, does not directly discourage one partner from working. What does is the tax code’s treatment of childcare.”'

Mom's are taking charge of finances

Working moms are breadwinners in 40% of US households, and most of them are single.

According to a Pew Research Study, women performing as the primary breadwinner has climbed from just 11% in 1960 to nearly half of U.S. households with children in 2012. As the major breadwinners, working moms are making more of the financial decisions, managing investments, and dealing with tax issues. 

Although there are more breadwinning moms, the gender gap in pay is still a real issue in today's businesses. According to the Bureau of labor statistics women earn on average between 77% and 80% of what men earn for the same work. A new PAYSCALE analysis has released more optimistic findings, contending that men and women at the beginning of the careers see more equitable pay with women earning about 98% of what men earn. However, as they move into executive positions women’s earnings still fall to around 91%. 

But despite the gap, several studies show women are better at managing their family's finances. They save more money, manage their credit, and take on less debt. 

Tom Bulger, CPA has been helping working parents and families of all types make informed financial choices for over 25 years. Contact Tom to see how he can help you grow your family's wealth today and tomorrow.

Are you a working mom? Are you the major breadwinner in your household? Share your experiences with us in our comment section below.

Check back for our next post in our series on women in the workforce where we will look at women in leadership roles across industries.

Posted on June 24, 2013 and filed under Personal Finance.