Photo: Flickr / sean dreilinger
More women enter and exit the workforce than men primarily for caregiving reasons, says Suzanna de Baca, vice president of wealth strategies with Ameriprise Financial.
Planned carefully, the move can be rewarding. If done recklessly, it can lead to a host of financial problems.
With de Baca’s help, we’ve outlined what to consider.
What women leave behind
“Women often fail to ask ‘can I live without the income, and what is that going to do to my budget or savings?” de Baca says. “It’s not even just the paycheck, but the benefits like the employer-sponsored savings plan.”
And since women draw lower wages than men, taking time out of the workforce not only means leaving a paycheck behind, but facing an even smaller one when (and if) they return to the office. The impact may be even harder considering the loss of savings and compound interest she would have accrued.
Planning to quit
The most important thing a woman facing caregiving burdens can do is to start planning immediately and be realistic about her options, says de Baca. She recommends doing the following:
Taking the long view
Assess what impact caregiving could have on your career and realise that “going back” may not be as easy as it sounds.
“You need to take into account that careers tend to be on track, so sometimes it’s difficult to re-enter at the same level you left,” says de Baca. “If you’re not staying up-to-date, you may re-enter at a lower level and have to play catch up.”
Before you give notice, sit down with your employer to go over your options. If losing a paycheck isn’t feasible, you may be able to work part-time or adopt a flex-time schedule, which could help you keep a foot in the workforce and preserve your value, de Baca says.
“A lot of women don’t see this as a possibility, but asking for what you need rather than making assumptions is smarter,” she adds.
Drafting a plan—and sticking to it
Not having a plan will only make you more anxious, so run the numbers and plot out your short- and long-term goals. This way you’ll know what to expect and your personal needs won’t be sidetracked.
“The bigest mistake I see most women make is putting their own financial security out of the picture, and that’s where they get sabotaged,” de Baca says, adding that emergency savings are often the first thing to go. “(Women) want to do the right thing, but there’s a difference between helping others and putting yourself in jeopardy.”
Also review different types of care and analyse your budget to identify any trade-offs you may be able to make. For example, it may be too costly to hire a full-time caregiver, but perhaps a sibling can help.
Check your attitude
“Financially, women often assume it’s all or nothing and that hiring a caregiver will cost too much. But if you’re providing care and it’s not getting recognised, that’s going to hurt your attitude,” de Baca says.
If you’re feeling resentful, reflect on the situation by asking yourself, “If I paid someone to do this, would I have less stress in my life?” The answer should tell you what to do next.