Parenting: Maintaining credit while staying at home

September 24, 2012 (WPVI) -- When Maria Addison had her son, Luke, she and her husband decided to rework their budget and make some sacrifices so she could become a stay at home mom.

"We watch carefully what we spend our money on. We obviously don't eat out as much anymore. A lot of the luxuries went. It was a big decision," she said.

Part of that big decision was cutting spending but, surprisingly, it was not cutting up credit cards - at least, not Maria's. According to financial expert Lee Molosky, vice president of SHM Financial Group, that was a smart idea.

That's because when the new CARD act or Consumer Act, meant to protect consumers against unfair credit card practices, inadvertently put stay at home parents in a bad spot.

"It's making it almost impossible for these stay at home people, with no income, to establish credit," Molotsky said.

Having no credit can be a dangerous situation in the case of divorce or even death of a spouse. Molosky says, as a stay at home parent, it's essential to be aware and involved in your family's finances.

That includes maintaining individual credit separate from your spouse. So, make sure that even if you combine your bank accounts after marriage, or decide to snip up some credit cards to avoid over spending, it is important you keep your own credit card and make payments on time.

Here's some more friendly financial advice:

-Make sure the stay at home parent puts his or her name on some of the house hold utilities bills to establish a history of payments.

-Make a family budget. Track your spending every month but allocate an additional 25 to 30 percent on to that estimate. This will help you out with unexpected emergencies and help you save.

-Put your own personal limits on credit card purchases. If you don't have the cash to pay it in full at that moment, don't buy it.

-If possible, make a self-imposed pay cut and put that 5 to 10 percent of your paycheck into a savings account.

"Make it your own family bill and put it somewhere you're not going to touch it unless, God forbid, there is a real emergency," said Molotsky.

Read more Parenting Perspective blogs by visiting the Parenting Channel on 6abc.com.

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