You have probably seen the news recently about new financial regulations from the Fed due to start in October. http://www.federalreserve.gov/newsevents/press/bcreg/20110318b.htm The new provisions of the Credit Card Act of 2009 that will go into place in October prohibits banks from giving credit cards to people who do not have individual sources of income, such as non-employed parents. Non-working spouses will no longer be able to use their household income to qualify for credit.
Who cares? Non-employed spouses should. For this reason alone, a woman should consider starting up her own business, whether she already has a job and is hoping to take time out of the workforce to start a family or she stays at home. There are many reasons to own a business in this country, including tax advantages, continued professional development, flexibility, and income potential. This new regulation is one more reason for a mom to have a business, even a teeny-tiny one, that documents profitable income. What some may not realize is that small businesses can be more alike than they are different, from the occasional Pampered Chef consultant to the very part-time blogger mom to the retail store owner and more. Moms who are business owners have advantages over moms who are not.
I was married and divorced nearly twenty years ago, I went through a rocky time personally that nearly ruined my credit. I believe that this provision takes us back even further than twenty years. We forget that stay-at-home moms (and dads) have economic value in our society, even though they don’t receive a paycheck. A non-working spouse should have access to credit throughout their marriage partnership so they don’t incur terrible hardship as a financial unknown should death, illness, or divorce markedly change their status after years, sometimes decades. Family tragedies happen every day and are difficult enough without removing access to credit, an almost undeniable necessity of modern life in America. Although I advocate for debt-free living, having a credit history is as important as having a job. Credit doesn’t necessarily mean credit cards, but can impact basic life functions such as the ability to rent, buy a car, or even establish phone service.
Many women make major changes to their employment situation when they are pregnant or shortly after having a baby. Many professionally trained and talented women take a huge step off a professional cliff when they start a family, potentially creating unintended financial concerns for herself and her family. A business that a mom runs during naptime and on weekends can not only rewarding and economically beneficial in more ways that you can count on just a profit and loss statement, but it now becomes a woman’s ticket to financial independence, without depending on her spouse to approve her inclusion on a credit account.
Recent articles have advocated that non-employed spouses rush to apply for a credit card before the regulations go into effect, but the banks can already apply the new standards if they chose. Older women with established credit histories may be less impacted. I am more concerned for younger women. I think the best thing we can do is learn to be aware of our options, and owning your own business is certainly one of them.
Moms put others first in so many ways, but when staying at home to raise children means you give up your own financial identity, that’s just wrong. Way before this provision, I realized that I could never comfortably put my entire financial well being into another person’s hands again. Add this new law to the list of reasons for a woman to have and maintain a business before, during, and after her baby.