5 Ways Mommypreneurs Can Prepare Their Family Financially For The Unexpected

5 Ways Mommypreneurs Can Prepare Their Family Financially For The Unexpected

March 30, 2023

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Mommypreneurs don’t let unexpected financial obligations catch you off guard—prepare for emergencies before they happen.

As a mommypreneur, you are in a unique position. Not only do you have to keep your business running strong, but you also have to take care of your family. Both are a lot of work! Now, throw in some unexpected home repairs or medical bills, and you might feel overwhelmed juggling both the financial obligations of your business and your family.

Because there’s nothing you can do to stop emergencies from happening—they are called emergencies for a reason after all—the best thing you can do is to make sure your family is financially prepared to handle any unexpected expenses so you can spend less time worrying about your finances and more time running your business and raising your family. Let’s take a look at some of the ways you can get started. 

1. Start Your Emergency Fund

Set aside money that is only used when absolutely necessary to cover emergency expenses

5 Ways Mommypreneurs Can Prepare Their Family Financially For The Unexpected

One of the most common and effective ways to financially prepare for the unexpected is by starting an emergency fund. Of course, large, unexpected costs are bound to pop up from time to time, but that doesn’t mean you should have to take money out of your own checking account to foot the bill. Emergency funds are separate from your regular savings and spending accounts so you can pay for the unexpected without risking your ability to pay for your regular expenses. 

When starting an emergency fund, you should plan to save anywhere from 3-6 months’ worth of living expenses. You may want to have multiple emergency savings set aside for different types of emergencies, like healthcare costs, home repairs, or car repairs. But, before you get ahead of yourself, start with just one emergency fund and then build onto that as needed. 

Here are some tips on how to get started setting aside money for emergencies:

  1. Determine how much you would like to save – As we mentioned above, you should save between 3-6 months’ worth of living expenses in your emergency fund. To understand how much that is in actuality, sit down and review how much you typically spend on things like groceries and utilities and add up your regular monthly payments for things like your rent or mortgage. 
  2. Consider what counts as an emergency to you – Emergency funds are meant to be used for emergencies only, so you must decide what you think an emergency is to determine when it’s appropriate to dip into your emergency fund. 
  3. Set your fund up in a separate bank account – If you lump your emergency fund in with your regular checking and savings accounts, it’s tempting to use your money for things that don’t actually count as an emergency. Instead, set up a separate account—ideally, a savings account with a high-interest rate—to hold your emergency savings. 
  4. Come up with a plan on how you will contribute to your emergency savings – Depending on your financial situation, it may make more sense to set up automatic transfers to your savings account or to manually transfer money over regularly. Typically, an automatic transfer makes it much easier to be sure you are regularly setting aside money in your account.
  5. Monitor your emergency fund -From time to time, you will want to monitor your emergency fund to make sure you are on track to reach your savings goals. 
  6. Be patient – How quickly you reach your savings goal will ultimately depend on your own financial situation and how much money you can set aside each month. Oftentimes, though, it can feel like it takes ages to reach your goals. Remember, it takes time to reach these goals, but in the long run, you will feel so much better knowing that you and your family have a financial safety net to fall back on in case it is ever needed. 

2. Consider Life Insurance

Make sure your family is financially supported even if you aren’t here

5 Ways Mommypreneurs Can Prepare Their Family Financially For The Unexpected

It’s devastating to think about what would happen to your family if you were to pass away unexpectedly, but as a mommypreneur, it’s something you must do. Life insurance can help protect your family and your business if that were to happen, no matter if it’s you getting a policy or your partner. The death benefit from a life insurance policy can be used to cover expenses like: 

  • Mortgage payments
  • Childcare costs
  • Business expenses
  • And even funeral arrangements

Life insurance doesn’t have to be expensive to get the coverage you need either. One of the most common (and affordable!) types of insurance is a term life insurance policy. These policies guarantee a certain coverage amount for a predetermined amount of time, which is typically anywhere from 10 to 30 years. Should the policyholder pass away during that term, the beneficiaries listed would be paid out the coverage amount. 

Traditional approaches to term life insurance typically require applicants to undergo a medical exam so that the insurance provider can get a better idea of their current health condition and determine any risk factors they carry. For busy mommypreneurs, it can be tough to take time out of your busy schedule to do this. 

In recent years, something called accelerated-term life insurance has popped up. While not every company offers this, it is essentially an expedited process of applying for and getting term life insurance. The main differences that make the process quicker are that you don’t need a medical exam and the underwriting process is much more automatic. 

When you apply for this type of no medical exam life insurance, you will fill out an application that will detail your medical history, your lifestyle, and your financial history. Then, the company uses predictive models to review your application to determine how much coverage it can give you and the monthly cost. 

You can typically get a fair amount of coverage all without ever needing to have a physical exam. Because of how quickly you can get coverage and how affordable it is to get a policy, life insurance can give you some peace of mind when you are planning for the unexpected. 

3. Understand How to Responsibly Use Credit Cards

Make sure you don’t put yourself in financial trouble when using credit cards

5 Ways Mommypreneurs Can Prepare Their Family Financially For The Unexpected

It can take quite a while to save up your emergency fund. And, life insurance can only be used if the policyholder is no longer alive. So, in the event that an emergency comes up and you don’t have enough set aside yet to afford the emergency, what can be done? Well, if you can’t or don’t want to dip into your personal savings or checking account balance, it helps to have a line of credit to use in case of an emergency.

For a lot of people, credit cards are daunting. After all, when credit cards aren’t used responsibly, they can ultimately cause more harm than good. But, when you use credit cards wisely, they can act as a great backup for unexpected costs. 

Here are some tips to responsibly use your credit card

  • Understand your terms – After you’ve selected your credit card, take a look at the terms and be sure you understand what your interest rates are, any fees associated with the credit card, and when your monthly payment is due. 
  • Don’t miss payments – Make your payments on time every month—even if you just pay the minimum amount—so you don’t damage your credit score. With that being said, you should try to pay off your balance entirely every month so that you don’t fall behind on payments or end up paying more in interest. If that’s not possible, pay more than your minimum monthly payment. 
  • Use under 30% of your credit limit – One of the best ways to make sure you use your credit cards wisely is to only use as much credit as you need. It’s generally recommended that you use under 30% of your total credit limit. Your credit utilization ratio is a factor considered when calculating your credit score, so staying within your limit can help improve and maintain your credit score. 

4. Make A Plan To Pay Off Debts

Minimizing debt helps free up your finances for other financial obligations

5 Ways Mommypreneurs Can Prepare Their Family Financially For The Unexpected

Large, outstanding debts are a burden at any time, much less when an emergency occurs. Keeping up with both of your current debt and your new unexpected financial obligations can be a bit overwhelming. Because of this, it’s best to make sure you have a plan of action in place to start paying down your debts to give you and your family a bit more financial security and flexibility. 

When it comes time to pay off debts, choosing a debt repayment strategy that works best for you is the best way to get started. Here are some common debt repayment strategies:

  • Avalanche – Prioritize paying off your debt with the highest interest rate while making at least the minimum payments on your other lower interest-rate debts. When you’ve paid your priority off, shift focus to the debt with the next highest interest rate. 
  • Snowball – Prioritize paying off your smallest debt first while making at least the minimum payments on your other debts. 
  • Consolidation – Instead of paying all of your debts separately, combine all debts into one through a consolidation loan or other methods. This strategy can often help you lock in a lower interest rate, which can save you money over time. 
  • Management plan – Sometimes, no matter how diligently you manage your debt repayment, it can still feel like you’re not making any progress. If this is the case, you may want to look into working with credit counselling agencies to help you develop a debt management plan that works for you. 

No matter how you choose to repay your debt, coming up with a plan of action to tackle your payments can help you pay them off faster and unlock more financial freedom. 

5. Cut Back On Spending

Find a little wiggle room in your monthly spending plan to comfortably set aside money for emergencies

5 Ways Mommypreneurs Can Prepare Their Family Financially For The Unexpected

Saving up money for your emergency funds and paying off large debts are big undertakings. When raising a family and running a business, there are likely times when your budget is a bit tighter, making it a bit more difficult to prioritize preparing for the unexpected. Reviewing your spending habits and recognizing where you can cut back on spending can help add a little bit of wiggle room. 

Cutting back on spending is often much easier said than done, but with a few adjustments, it’s a goal well within reach. Here are some tips to get you started:

  • Create or revisit your budget – You should have a budget to understand how you are spending your money and how you want and need to be spending your money to accomplish your financial goals. If you have a budget already, you should take the time to revisit it to understand where you could cut back on your spending. 
  • Manage your subscriptions – Subscriptions are easy to start and then ultimately forget about. And those subscriptions can add up, too. Take the time to review your monthly subscriptions—whether that be streaming services, magazine subscriptions, or whatever else—and see which ones you aren’t using or can definitely live without. Cancel those! Always remember, you can resubscribe later if you find that you need it. 
  • Try spending with cash – Now that we’ve become used to paying for everything with a card, it can be hard to imagine reverting back to cash. Switching to cash can help you realize what you’re spending because you are able to actually see the cash dwindle. Try automating your monthly bills and limiting what you spend to the cash you have left over. 

No matter how much you try to prevent emergencies from happening, they are unavoidable. As a mommypreneur, you already have enough to worry about without emergency financial obligations on your plate. By preparing for emergencies ahead of time, you will be much better equipped to afford your emergency and get back to raising a family while running a business. 

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