By Liz Folger, Work-at-Home Mom Expert
You've just signed up with the company of your dreams. You can make as much money as you like, come to work at any time, leave at any time. But there is just one problem with this company. No benefits. No health insurance, no 401K plans, no dental insurance -- nothing.
Well, that's sorta how it is when you decide to start your own business. The fear of NO BENEFITS keeps many a mom from working at home. So what do you do? Do you give up your dreams of doing what you really want in life because you feel you cannot pay for your own health or disability insurance. Only to regret later in life that you should have followed your dreams?
That's pretty much how Mechelle Gooch, owner of Cooper Business Services felt. Mechelle, who is completely covered under her spouse's plan, gives this perspective. "As a mother of 4, and as a previously divorced mom of 3, if I were single again, I would not be able to be a Work-at-Home Mom (WAHM) due to the insurance issue. It is just too costly and I could receive great benefits at no cost to me from most employers."
One mother, who would like to remain anonymous, explains, "I am single right now, with 3 children (who are insured through their dad). I do not have health insurance, it is outrageous!!! I save through my savings account...too afraid to invest, but getting the courage to try. I am going to start an IRA for myself next year."
Most of the mothers I interviewed for this article relied on their spouse for their health insurance. Tina Kampman recently found out how hard it really is to become insured. Tina says, "We get health insurance from my husband's company, but recently had to go through the exercise of trying to purchase our own health insurance. This was not a pleasant experience. There are a lot of plans, but if you have one thing wrong with you, they will turn you down. Many of the plans have preexisting condition clauses which are onerous."
However, Margaret Lyon of Lyon Graphics has found buying health insurance not too bad. "I buy my own health insurance. I could have gone Cobra when I left my office job, but it was very expensive. So I just purchased my own individual policy through a different company. Considering that I don't see the doctor often, it seems expensive to pay close to $100 a month for health insurance, but if I am in an accident or get very ill, I have the security of knowing that I am covered," says Margaret.
Emma S. McDonald, owner of Beginning Teachers' Tool Box, does not use her husband's insurance due to the high premiums. Instead, she has found a small insurance agent who specializes in self-employed group plans. She says, "My son and I are the only two on the policy and it costs me about $200.00 a month, which isn't bad. We are located in Texas, but I'm sure that each city probably has someone who can do the same thing. The major providers (who are any good) here are Harris Methodist (no maternity though), Blue Cross/Blue Shield, and Freedom Life is pretty good." She believes the average work-at-home moms can find good insurance that isn't $400-$600 a month!
Disability insurance probably isn't the first insurance that pops into your mind when you are thinking about the benefits you are going to be missing out on when you decide to go solo. However, when you hurt yourself and are unable to work, you'll wonder, "Why didn't I sign up for disability insurance?
"Disability insurance is often overlooked by people, but it's very important for financial security." explains Tina Kampman. "A typical WAHM would be much more likely to be disabled than to die. Disability insurance protects your income. (See Jane Bryant Quinn's "Make the Most of Your Money" for a good explanation of all of these insurance issues).
Saving For Your Retirement
Saving is hard enough, but being self-employed and saving for retirement is even trickier. Janice M. Boyles, Publisher, Choosing Home, http://www.angelfire.com/biz/ChoosingHome, is saving for the future. "I think this is tough for everyone - saving for the future. It's hard to determine if that need for future savings will suddenly appear next week, next month, at college time or retirement time, but again, luckily, my husband has a plan for saving at his work (not a great one, but one at that)." However, Janice has always felt she needed her own method of savings for emergency situations. So she has joined American Express's savings/retirement program where they charge you monthly on your credit card and you can contribute the amount you want to save. Janice explains, "That money is set aside for you at a certain percentage. You can't withdraw any for at least eight years without a penalty. The interest rate is fairly good and you can increase your contribution at any time
Another work-at-home mom says, "I am concerned about retirement, but do not yet have a retirement plan. Once again, this is something that is just beyond my reach right now. The worst thing is, that these answers were true even when I WAS working outside the home as well."
Believe it or not, there are IRA's out there the self-employed can invest in. That's what Tina Kampman is able to do. "I fund retirement through my IRA-SEP, which sole proprietors are entitled to establish. It is a great way to save pre-tax dollars and is based on the amount of business you do, not your income like a regular IRA. So, we can put away quite a bit every year if we want to."
If There's A Will There Is A Way
Following your dreams is never the easy choice. Don't discount the self-employed life simply because you feel you can't afford it. Research and talk with other self-employed individuals. Whether the above moms can pay for benefits or not, the fact is that they are all working for themselves. Don't pay the biggest price of all -- not following your dreams.
Liz Folger is Work-at-Home Mom Expert and author of, "The Stay-at-Home Mom's Guide To making Money". Her book is available at your favorite bookstore or by calling, 800-632-8676. Liz has also created a resource site for work-at-home moms at: http://www.bizymoms.com. When you visit don't forget to sign-up for the free e-newsletter just for moms who work from home. If you have a question that you'd like covered in a column, e-mail her at: [email protected].