Life changes rapidly when you have a baby. One minute you're crying with tears of joy and the next you're crying because work, parenthood and life have suddenly become very complicated.
- How do we keep living our current lifestyle now that we're parents?
- And how are we going to manage the costs of daycare, diapers and formula?
- What if I want to stay at home instead of going back to work?
I've invited someone on the show today who faced a lot of these challenging questions as a young mother and now she's helping other parents figure them out as well.
Chelsea Brennan is an ex-hedge fund investor, turned full-time blogger at Smart Money Mamas. After years of working on Wall Street. She made a major life change to choose family, passion, and a positive impact on the world over money.
Her story has been featured in major media outlets like Business Insider, Penny Hoarder and Forbes. Chelsea lives in Connecticut with her husband, two boys, a puppy named Stitches and 14 crazy chickens.
Andy Hill: Why did you decide to leave your job on Wall Street?
Chelsea Brennan: The kids were a big impetus for that, but I think it was a long coming before then. The job on Wall Street, I loved, I was good at it but it caused a lot of stress in my life in a way that was bad for my mental health and also just bad for physical manifestations of it.
I had an issue my second year on the job where I lost feeling in the left side of my body and they thought I was having a stroke. It turned out after many doctor's appointments that it's a stress response for some people and the name for it is actually “Wall Street Syndrome”.
That was terrifying. Then with my pregnancy, I had postpartum depression after my first, and then my second was tough and my water broke early. It was at that moment that I was like, “I can't do a few more years.” We were on track to do the financial independence thing and knew that I wanted to have kind of a second act entrepreneur career after that. But it got moved forward when my family needed me to be healthy more than me to do that job.
Was this a big financial decision for you?
Absolutely. It was huge and my husband is a stay at home dad, so we were entirely dependent on my income. As the hedge fund world is, you're making a lot of money. We were at that point at over $400,000 a year to then go to $0. We had the blog but it wasn't allowed to be monetized for compliance reasons at that point. It was a big change and something that we thought through carefully and actually sat with the spreadsheet open. “Okay. How long of a runway do we have without digging into what was our financial independence savings?” We had about two years and we were like, “That's enough time to kind of regroup and figure out what's next.” So we made the jump.
Where was your savings held?
It was in a high yield savings account.
What was weird about the hedge fund and finance world is that two thirds of your income was paid on one day of the year. It was your annual bonus. So you had your base pay and we always lived off our base pay.
Then those two thirds that came in at the end of the year was what we would sink away completely for financial independence. When we were trying to make this decision, it was actually mid-December. I talked to my firm since I'd already worked the full year. They were willing to pay my normal bonus. They weren't going to cut it if I wasn't going to come back after maternity leave.
We said, “Okay, we'll just take that bonus and use it as our cushion this year.” Instead of kind of sinking it away into what would've been our financial independence fund, we would use it as a runway.
What is a financial independence fund?
It was all our different retirement accounts and investment accounts that we were tracking. That net worth is what we would pull on if we decided to do the early retirement thing.
How did prepare financially and emotionally before you told your employer you were leaving?
We met with HR before the birth of my first, and they said to us, “Listen, sometimes you don't want to come back after maternity leave. Just tell us. We're not going to cut off your benefits. We just want to know that it's going on.”
And so I reached out and just said, “Listen, this is going on. This pregnancy has been tough. I don't think I'm going to want to come back. I think I need to kind of take some family time and do something else.” And they were very understanding.
They were like, “Just tell us what the plan is, what you want us to tell your team.” Because at that point I wasn't even in the office. The expectation was that I was going to go, I wasn't even going to come back before maternity leave. Someone had talked to my team anyway.
We thought about it and we prepared financially to make this decision. The focus was on the baby and making sure that we were okay and he was okay.
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How have you financially made that transition?
We're now nearing the end of that runway. We're coming up on our two year anniversary. The first year actually went pretty well. We did a lot of freelance writing and extended that runway a little bit. And then this year we have actually been pulling on the runway.
The business is doing fairly well but we've been developing a big project that meant we reinvested a lot into the business this year. So we have been pulling on what was savings and it's been a big change. I think the lack of identity from losing that paycheck, losing that title has been a big transition.
We did budget before because I liked to do it and we always had so much wiggle room. We saved 70% of our income. If something went wrong there was always money there and we had to switch to “Now we have to pay attention”.
It's something that I think was good for us in a lot of ways. My husband got more involved in the finances than he'd ever been before because he didn't use to have to pay a ton of attention to it.
We're set up in a way with the business that we'll be able to live off the business come January.
And now you feel you're going to be able to live a good lifestyle with both your husband and your kids?
We don't have expensive hobbies or whatever. We like to be at home. We moved to a lower cost house in a lower cost town. We used to be outside of Boston. We moved down to Connecticut. We bought a house that was significantly cheaper than our house in Boston. So we cut expenses in some ways and we're ready to live a little bit differently!
What can expecting parents do to prepare financially?
1. Have an Emergency Fund
We run into a lot of parents who think their finances have to be perfect before they can have a kid. Of all the things you have to do, you're never going to be 100% ready. I think the one thing to definitely do is make sure you've built some kind of emergency fund. Expenses for kids often get overblown: they don't need their own nursery, they don't need tons and tons of clothes. But things pop up, right?
For us, we were planning on breastfeeding, which neither of my boys had any interest in. That meant hundreds of dollars of lactation consultant visits and then formula. That was an expense that we didn't budget for it because we didn't think it was going to happen.
2. Get Term Life Insurance
I think having life insurance, making sure you have a plan to protect them is a really big one. I know it's the last thing you want to think about when you're bringing somebody into the world is estate planning, but I think it's really, really important, particularly if you rely on both parents' incomes.
You don't know what can happen and this is a good time to do it. The younger you do it as a woman the cheaper, with all the pregnancy risks that go into it, it can be cheaper to do it before you're actually pregnant. Those are just some basic things. Then just having your budge and I think looking at what expenses you can cut.
3. Plan for Childcare
Childcare is expensive. Start saying, “Okay, this is the part of the budget we're already setting aside for that.” Or, “These are the expenses that we're going to cut when we have kids.” So that it's not as big of a shock when the kid arrives and you have to suddenly find room in that budget.
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What can new mothers expect if they are considering going back to work?
1. Prepare Emotionally
Everyone's experience is going to be a little bit different and it's going to depend on your kid and your attitude toward work. If you're a working mom and you go back to the office, you're going to find that every woman in the office says, “Oh my God, are you crying on the way to work?”
Because it's so hard. Usually, I think for most people it is. I think for most people, it's really emotionally impactful. But we've also heard from friends and people in our community that some are excited to go back to work, and that can make us feel guilty.
Prepare yourself for whatever you're feeling, and know that it's normal. Try not to let other people's opinions eat at you too much. At that point in your life, you're picking apart everything you're doing. But know that there's probably going to be some part of guilt no matter what you choose to do. Just getting comfortable telling yourself that it's okay and it's going to be okay.
2. Ask for Support from Your Spouse
A big thing here too is getting support from a spouse if you have one. I think husbands understanding that this is a hard time, that if you have room in the budget to get a little bit of help at home, whether that means having someone come and clean every other week or getting some prepared meals for a couple of weeks.
It can be helpful, especially those first few weeks back so that when you both get home you can just spend time as a family and get some rest. That can be a huge help. I think the sleep deprivation makes this even more difficult.
3. Schedule Time for Yourself
The last thing I would say is 25% of women in the US go back to work within two weeks of having their baby. If you have to go back quickly, know that you have to find some time to take care of yourself. Whether that means asking a friend to come on Saturday morning and watch the baby so you can get some sleep. Take care of yourself because the rates of postpartum depression and other issues are much, much higher when you're running yourself ragged. You can't do it all.
How can parents extend that time off of work?
You can save up vacation time at a lot of companies and the only thing that is protected with the Family Medical Leave Act is 12 weeks that you can't be fired. However, if a company has less than 50 employees, they do not have to follow that. That covers a lot of businesses and a lot of people that are employed.
If you are in a position where you're worried about your job, I think starting to talk to people who are in your team or in similar roles who are willing to pick up the slack so the boss doesn't have to worry about replacing you. Finding that support at work can be a really big thing.
Just starting to save and thinking early about how much of that vacation time can you save helps. Are you allowed to roll over from year to year so that maybe the year before you can take a week or two less so you have a little bit more space?
I think the biggest thing for the people that have to go back really fast tends to be that concern about job loss. That requires good conversations at work and good backup plans to maybe this is a time to transition to something else. “I'm going to save up enough to take two months off and then look for another position.” Something like that.
What can people do to prepare for a transition to staying at home and maybe starting their own small business?
The first piece of advice that I got when I was pregnant with my first, is to not make any major financial decisions or any major life decisions in the first 6 months after you have a kid. If you were planning to go back and you went back for a week or two and now you're like, “I don't want to do this anymore.” Stick it out and give it a couple of months.
Let your body kind of reset and your life reset since now everything's going to look different. Then, make a decision. You may still want to leave at that point, but it's all chaos at that point. So stick it out for a little bit.
Related Interview: How I Took My Salary from 5-Figures to 6-Figures in 7 Steps
And then if you do still feel like, “Hey, I really don't want to be doing this,” or, “I want to be doing a different career or something else.” Start looking at the budget first and see if you can live on just your spouse's income? Have conversations with your spouse on how would you feel if you weren't working. How would we make sure that we still stayed equal in work and in financial empowerment with one of us working? What does that look like?
Start to practice it. Start living on just one income. Start cutting back expenses, seeing how that feels and then kind of slowly make that transition out. I don't recommend just going in and quitting because you feel like you don't want to do it anymore. Start testing it out because you will find at times that cutting that budget back and living more lean might be more stressful for you or you might miss work.
So start doing the transition. Ask work if you can cut back to part time. There's a lot of flexible work arrangements, more and more being available. Just start slowly stepping into it.
Test runs are a really good thing and I also think you should check in with people who know you well, close friends, parents. I reached a point after my first where I was like, “I just want to be a stay home parent. I'm mad that Jeremiah's home,” all this kind of stuff. It was my Mom who was like, “You would hate that. It feels like you would like that right now, but you would really hate that.”
And she was right. I was in a different headspace. I was not happy with the situation the way it was. But that didn't mean that I wanted the complete role reversal, right? I just wanted a different job. Anyway, check-in with people who know you because your brain might not be working quite the way you want it to be working at that moment.
What is the Mamas Talk Money Summit?
The Mamas Talk Money Summit is a project we've been working on all year. I'm so excited about it. It's a FREE online summit.
We have over 40 speakers with amazing women covering everything from family finance to investing in retirement to career development. And then lastly, teaching your kids about money.
Registration opens actually on October 7th and the event will actually run October 21st to the 25th. It's going to be a lot of fun. We're doing live Q&A with all the speakers during their sessions. There'll be worksheets to help you kind of take action on each of the talks. We're super excited about it!
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