As the father of five teenage daughters and a personal finance professional who primarily works with women, I have a unique perspective on what it takes to raise daughters who are good with money. This perspective is borne out of 20 years of immersing myself in the financial lives of the women I work with and how their money decisions have shaped their lives.
Not surprisingly, a woman’s money scripts – her thoughts and behaviors around money – are strongly shaped by her childhood experiences. This usually means learning by seeing and overhearing as conversations about money are few and far between
Mistake #1 – Parents aren’t teaching their daughters about money.
A few years ago, I conducted a study on “women and money.” I was surprised to learn how rare it was for women to be taught about money as children. Almost to a person, real discussions about money did not happen.
Whether it was deemed uncouth or rude or whatever, talking about money was verboten. Even in today’s society where the wage gap has dramatically decreased (still lots more work to be done) and the economic power of women has never been higher, there is still this undercurrent of women are not good with money and we shouldn’t be talking to our daughters about such things.
Solution: Don’t be afraid to teach your daughters about how money works. You don’t need to be an expert to know that running up credit card debt is bad and saving money regularly is good. Don’t assume your daughters knows this!!
Mistake #2 – Being afraid to say “we can’t afford it” (even if you can)
Despite mistake #1, our daughters are learning about money from us even if we aren’t talking directly to them about it. Kids are sponges, always soaking up information, always formulating what is appropriate based on the behaviors of those around them. #1 on the list? You got it – us, parents. We are their primary role models not only in terms of the things they say, the foods they eat, the manners they adopt, but also the way they view money.
If they never hear these words – “we can’t afford it” – they are predisposed to grow up thinking that everything is affordable. Do you think “entitled” children became entitled without being taught? Entitlement is learned behavior – no one is born with the “entitlement” gene.
Some parents are afraid to tell their daughters the truth. They fear that they will not be deemed “successful” if they don’t give their daughters the same things the other kids are getting. This is not only dangerous for children but for the parents. Spending money to keep up with the Jones’s is a cliché but
Being successful isn’t creating impression of your life. Be true to yourself and be honest with your children. Life is life. Sometimes we can’t afford the things we want the most. The sooner they learn this lesson, the better they will be for it.
Ah, but what if you can afford it? Be pragmatic. Don’t be afraid to say “no, we can’t afford it” even if you can. Teaching your children important life lessons is more important than being 100% truthful all of the time. Besides, “afford” is a completely subjective term so who is anyone to say whether or not you can afford something? Sidebar: any parent who says they are 100% honest with their children 100% of the time is 100% fooling themselves!
Why is this so important? Unless you plan on bank-rolling your girls for the rest of their lives, they need to learn how to discern what they can afford and what they can’t. Rampant credit card debt often arises early in a woman’s life as she continues living the lifestyle that was created under the shadow of mom and dad’s financial resources and was never taught the consequences of doing so.
Mistake #3 – Bailing Them Out When They Make Mistakes
One surefire way to mess someone up financially is to bail them out whenever they make a mistake. Look, I get it, you don’t want to see your daughters suffer. One of the most difficult, gut-wrenching moments of being a parent is watching your children fail. It’s natural to want to rush in and fix it, to make the pain go away.
Unfortunately, you just can’t kiss the money boo-boo and make the problem go away. All you’re doing is creating a monster. Cute, little monsters in pigtails who grow up into not so cute monsters with agendas of their own. I can give you oodles of real-world examples where adult children are still suckling at the parents’ financial teats because the parents have allowed it to happen, some even using the grandkids as leverage! Note: this is not a “daughter” issue.
Solution: Stop Creating Monsters and Cut. Them. Off.
I know, the kids of today don’t feel like they’re adults until age 30. Whatever. That doesn’t mean you need to support them financially until age 30. This also doesn’t mean you turn your back on them, either. This isn’t “all or nothing” parenting, teaching.
Did you pick up on the fact that these “money” mistakes have less to do with “money” and far more to do with human behaviors? Do you fault the tool (money) or the wielder of the tool (you)? If you want to create financially savvy women, you need to instill in them the proper money mindset. The issue isn’t all that credit card debt they have; it’s how it got there in the first place. Treat