Have you ever spoken directly to your daughter about money? Whether you have or haven’t, know that she’s already absorbed volumes of information from observing your actions and overhearing your opinions on the topic.
A study by the University of Wisconsin-Madison found kids can understand basic money concepts by age three, like value or exchange: You pay money to get things. And separate research from the University of Cambridge showed many kids’ money habits, from executive function skills like self-monitoring to delayed gratification, are set by age seven.
Your daughter will face gender equality issues like unequal pay, time out of the workforce, and uncertainty about investing. Help her become confident in her money-handling abilities by using these four steps.
Teaching Your Girl Money Habits
Know Thy Money Personality
Gather self-knowledge by taking a money personality test (there are many online). Ensure you and your partner understand your money blocks and areas for growth before talking to your daughter. You don’t want to pass on a negative money mindset.
Consider both your families. What messages get passed from one generation to the next about money? What messages should end with you? Which ones need reframing to be more beneficial?
Question your motives. You may think focusing on a “save, save, save!” narrative 100 percent sounds like a wise and positive message to pass on, but that’s not necessarily true. What if your attitude towards saving is fear-based? In that case, your daughter may learn to squirrel away every cent and never invest in herself or any meaningful opportunities because: “I can’t spend on that dream, I must save.”
Foster Healthy Family Money Values
Who handles the financial decisions in your household? What are your family money biases around gender, investments, buying power? Healthy family values mean being transparent and open about how you think, feel, and interact with money. The Smart Money Mamas podcast has a helpful episode on How to Determine Your Family Money Values.
Choose a theme (money means freedom/money loves fun/money is empowering) that resonates with you, and then have a light-hearted family evening unpacking how to bring this shared value to life.
Begin a gratitude practice. Each day list three reasons you’re grateful for what money enables (a home, food, clothing, etc.).
Involve Her in Your Buying Decisions and Process
Many kids don’t see money changing hands anymore. All they see are swipes or clicks. This disconnect can unintentionally breed an unhealthy view of credit cards and budgets.
Show your daughter how you plan and budget for grocery trips. Take her with you when buying a car and explain each step. Show her how you shop around online to find the best product and a price you’re comfortable paying.
Once she has the foundational knowledge needed to succeed, let her handle the family food budget for a week. This exercise should be a fun and empowering experience. Frame it like a game, privilege, or rite of passage, not a test for her to pass.
The Consumer Financial Protection Bureau has a collection of tips and activities online to help grow children’s money skills, habits, and attitudes towards finances.
Let Her Have Chances to Experiment With Her Money
When she’s old enough, let her open a bank account. Teach her to discern between buying something because she thinks she should own it (the latest fashion trend) and purchasing something truly for her individual preferences (an obscure book on Japanese folktales).
Let her know it’s okay to buy things that bring deep happiness and that money also offers freedom and opportunities (such as traveling). Micro-lending from parent to child is an excellent way to teach about and discuss loans, returns, and interest rates.
Fostering a healthy financial mindset will significantly benefit your girl’s relationship with money. By taking these four steps, you’re setting her on the right path towards a healthy financial future.
Written by Roxana Bouwer
Top image by Felix Koutchinski on Unsplash
This post is part of the Girls That Create series Talking With Girls About Finances.