Mother's Day gift: 5 ways to beat the "mom penalty"

Being a mom has plenty of advantages, like your kids showering you with love on Mother's Day. But the disadvantages are practical. For one, you earn less.

Women tend to earn more than men when first out of college. But once they have kids, the typical mom earns less than similarly educated men and other women who don't have kids, according to the Economic Policy Institute. Moms are also relegated to handling a disproportionate share of the household chores, which eats into the time they can spend at work and puts them at a disadvantage in high-wage, high-pressure jobs that demand long work weeks, the EPI study says. 

Then too, work breaks caused by "temporary disability" -- a.k.a. pregnancy -- can disrupt your ability to save and hamper your job prospects when you return to the working world.

"Men typically get a bump in pay when they become a father," says Sallie Krawcheck, chief executive of Ellevest, an investing platform for women. "Women get a penalty -- and it doesn't matter whether you have your kids young or wait until you're established in your career."

That said, mothers don't have to spend their lives with such pay inequality, and stay stuck behind the financial curve. If you have kids, or plan to, there are five concrete steps you can take to get your financial life on track and keep it there, no matter what.

1. Invest young. The moment you have a job, be it at 16 or 23, you ought to be investing for long-term goals. Don't wait until you think you can afford to invest because every year of delay costs you compound investment returns, Krawcheck says. Compounding allows you to earn higher returns on investment gains, which is incredibly powerful over time. 

Consider a hypothetical young woman we'll call Sally, who starts saving $500 a month from the day she gets her first full-time job at age 22. Assuming she earns 9 percent yearly on her investments, she'll have $96,757 a decade later. 

Let's say Sally takes a work break at that point and stops saving. If she simply leaves her investments alone and they continue earning 9 percent per year on average, she'll have $1.4 million at age 62 -- even if she never saves another dime. It's worth mentioning that she only saved $60,000 of her own money. The rest is compound investment returns.

What would have happened if she started saving later, but didn't take that break? If Sally started saving at age 32, saved the same $500 per month and earned an average of 9%, she'd have just $915,371 at age 62. And she would have contributed three times as much -- $180,000 – of her own money.

2. Take the match. If Sally did her saving in a 401(k) plan that offered a company match, she'd be even better off. Most large companies will kick in between 25 cents and a dollar for each dollar their workers contribute to the 401(k). So assuming that Sally's employer matched half of her contributions, she'd have $750 going into savings each month for 10 years. At age 32, when she took off to have kids, she'd have $145,136 invested. Left alone to compound, that would turn into $2.14 million by the time she reached age 62, assuming the same 9 percent average return.

3. Invest aggressively. Is 9 percent too high a return to expect? Not if you invest aggressively -- that means in the stock market -- and for the long term. Although stock prices are volatile over the short run, over the 85-year stretch tracked by financial research firm Morningstar, a diversified portfolio of big company stocks returned 10 percent on average annually; a portfolio made up of 70% stocks and 30% bonds earned an average of 9.1 percent. U.S. Treasury bills, on the other hand, don't put your principal at risk, but they historically have returned just 3.4 percent, which is only slightly more than the rate of inflation.

What does that mean in dollars and cents? If you invested $10,000 in U.S. Treasury bills, you would have accumulated just $27,692 at the end of 30 years. If you invested the same $10,000 in a broad basket of U.S. stocks, you would have $198,374, which is seven times more. That makes stocks the investment of choice for long-term goals, such as your far-away retirement.

4. Negotiate. If you decide you're going to take a work break to raise kids, know that about 30 percent of those surveyed by the Ellevate Network ended up taking a substantial – 20 percent or more -- pay cut when they came back. Unfortunately, the impact of that reduction in pay compounds just like the interest on investments. But of course, this compounding works against you.  

"If you come back at a lower rate of pay, you get raises off that lower rate of pay too," Krawcheck says. "So you might think taking two years off costs you $170,000, but it really costs about $1.7 million."

Before going back to work, consult websites such as Comparably, Glassdoor and PayScale, which list average pay ranges in various fields and geographies. If you have friends and former colleagues who might be willing to share salary data, that can also help. In addition to negotiating a competitive salary, consider asking for other benefits that you might want, from additional time off to the ability to work from home a few days a week.

5. Ask. Want a raise? Ask for one, Krawcheck says. Sure, your boss might say no. But the odds are in your favor. When the Ellevate Financial Network surveyed professional women about what happened after they asked for a raise, 75 percent said they got it.