Mothers give their daughters countless gifts every day, including love, shelter, and all manner of excellent life advice — but when is the last time you passed along the gift of financial guidance? Unfortunately, it’s a gift we give all too rarely. For many years, money was a taboo topic, and moms (and dads!) were often silent on the topic of finances when speaking to their children. In fact, people are actually more comfortable discussing marital issues, mental health, addiction, race, sex, and politics than they are chatting about money matters.
But today we’re armed with the knowledge that the more we talk to our children — especially our daughters — about money, the more comfortable and confident we all become at managing our finances.
Teaching Girls About Money
There’s undoubtedly a gap between confidence levels among girls and boys in talking about and handling finances. We’ve all seen the statistics surrounding wages, rates of investment, and the gender wealth gap. Not only are women earning less and making fewer investments, but they are also living longer and dealing with higher healthcare costs — which is why it’s so important for them to get a good handle on their finances early.
Parents are a child’s first teachers. With that in mind, it’s time to start your daughter’s financial education off right and continue to add to it as she gets older. Here’s a breakdown by age to help get you started.
For your baby/toddler (0-5)
I recently purchased pretend cash for my three-year-old to start teaching him about money. Although my husband also got him the more popular gift of Stomp Rockets, my son has come to love playing with the pretend money. We play “store owner“ — where either he or I will be the owner or shopper — which has helped introduce him to how money works.
Starting an allowance for a child at this age is great, too, even if it’s just a small amount. Create “spend,” “save,” and “give” jars with your child, then print pictures of things she’s saving for to keep her focused on her goals. Even simple activities such as these can go a long way toward making them more comfortable with handling their finances in the future.
For your young child (5-10)
The allowance tip still applies here, but start letting your daughter pay for the things she’s been saving for. Be sure to educate her about taxes as well; teach her that even if she has enough money for the amount on the price tag, it will actually cost more with taxes figured in.
Another good exercise is to take her to the bank, open a bank account in her name, and ask your banker to explain the basics of savings versus checking accounts. To get her thinking about long-term savings, encourage her to put some money (maybe from birthdays and money collected on other holidays) into her bank account each year and periodically review the balance with her. (And maybe even contribute small amounts for her, for things like good grades, if you’re feeling generous!)
For the adolescent (10-15)
When it comes to financial advice for your daughter, this is a good age to start talking about debit and credit cards at a very high level — how they work, how they can impact you later in life, and so on. At this point, have your daughter start paying for some of the things she wants so she can begin to put a value on things. For example, if she’s asking for money to eat out instead of eating at home, you could have her pay for a few of those meals (or other “luxuries”).
Investing is a mystery to a lot of us, so this could also be the time to buy your child a share of stock in a company they love. This isn’t a long-term investment strategy by any means, but simply a way to let them dip their toes into the water.
For your teenager/young adult (15-25)
First and foremost, encourage your daughter to get a part-time job at this age — this is one of the best ways to teach teen girls about money and give your daughters financial advice. She’ll receive a paycheck, see what’s withheld for taxes, and get a chance to save. And if she works, she also can start contributing to a Roth individual retirement account. This could also be a great opportunity for you to “match” her contributions (as long as the total Roth contributions don’t exceed her total earned income for the year). Retirement is obviously a long way away for your child, but the earlier she starts saving, the better off she’ll be.
At this stage, I highly encourage you to help your daughter also understand how much it costs to live. This is especially helpful when she’s deciding on a career. Look up average salaries for the various career paths she’s considering and how far that income will go toward rent/mortgage, utilities, food, and other expenses. It’s also important to have conversations about the cost of college and whether your child will be responsible for any of it. If so, help her understand what repayment will look like (and that amount should be factored into that total cost to live after graduating).
Keep teaching your kids about money by continuing to have these conversations as your child grows, matures, and reaches young adulthood. She’ll quickly discover how difficult and expensive “adulting” is and will look to you for advice. If you’ve been open about handling finances from the start — or if you’ve just started to do so — your daughter’s confidence will grow.
The more your financial advice you give your daughter, and the more she knows about money, the more confident and successful she’ll be as she grows — and really, is there any gift you can give her that’s better than that?
MORE FROM HERMONEY:
- 5 Smart Money Tips For New Parents
- How To Teach Girls About Investing
- How To Parent Equally When You Both Work Full Time
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