Women are better investors than men, but if you tell them that, they won’t believe you.
Only 9 percent of women think they can outperform their male counterparts, according to a study by Fidelity Investments. This lack of confidence holds them back from investing and taking charge of their financial well-being.
When asked how to fix it, 88 percent of women said more financial education would give them the confidence to invest for their future. Unfortunately, only 17 states include personal finance as a high school graduation requirement.
“Until financial literacy is added to the standard curriculum, (financial education) has to start at home,” says personal finance expert Beth Kobliner, bestselling author of “Make Your Kid a Money Genius (Even If You’re Not).”
[See: 10 Investing Tips for Busy People.]
“Parents are the No. 1 influences on their child’s financial behavior,” Kobliner says.
Even among young adults who took financial literacy courses, the majority report their parents had a stronger influence on their financial behaviors, a survey of 18 to 24-year-olds by T. Rowe Price finds.
Women are more likely than men to say their parents are the most trusted source of financial information and according to parents, girls ask more questions about money, but that’s where the math stops lining up.
Parents talk to boys about number-related concepts twice as often as they do girls, says Jennifer Jipson, member of The Goddard School Educational Advisory Board and associate professor in the Department of Psychology and Child Development at California Polytechnic State University, whose research looks at how parent-child conversations help guide and support child development.
When parents do talk to their daughters about money, they often focus on topics like budgeting and smart spending while sons learn how to build credit and invest. As a result, these girls learn how to spend but not accumulate wealth.
“A really progressive-thinking friend of mine who runs a large nonprofit admitted to me that he talks to his son about stocks while only ever teasing his daughter about her shopping habits,” Kobliner says. “It’s this kind of insidious, subconscious bias that we need to be aware of and address.”
Making small changes at home in early childhood can pave the way for your daughter to grow into a financially confident woman.
How to teach your daughter about money:
— Model money equality at home.
— Teach money-management behaviors early.
— Narrate your actions and thought processes involving money.
— Be honest about your own money insecurities.
— Assign chores and allowances equally to sons and daughters.
Model Money Equality
For your daughter to graduate from childhood financially confident, she first needs a stage to walk out on. Girls need to know they live in a world where being a financially independent woman is not only possible, but also acceptable. It falls to parents, as the first and most formative role models, to embody this.
“Children are social learners,” Jipson says. “They learn by observing, and right now in our society, they’re observing a gender gap where parents in a heterosexual family may be modeling the idea that women are less involved in financial decisions.”
Start Earlier Than You Think
Researchers at the University of Cambridge found that many core behaviors which inform our financial decisions as adults are established by age 7, but Goddard Systems found that less than three-quarters of children ages 6 to 9 have mastered such formative financial concepts. This is partly due to the fact that over one-third of parents believe 5 is too young to begin learning about money.
It’s like learning a language, says Craig Bach, member of The Goddard School Educational Advisory Board and vice president of education at Goddard Systems. Your daughter doesn’t wait until she says her first word to begin learning a language, nor does she wait until she can add and subtract to begin learning about money.
[See: 7 Investing Lessons Dad Forgot to Teach You.]
People think financial literacy means talking explicitly about money topics, but for younger children it’s more about learning money-management behaviors, Jipson says. Children need to learn concepts like the difference between now and later, and more and less. They need to learn strategies to make waiting easier, such as deciding between having a small reward now or a larger one later, so that as adults they don’t fall prey to impulse spending.
Narrate Your Money Mentality
When preparing for the birth of her first daughter, Alexandria Stried, chief product officer at Ellevest in New York, read that babies are supposed to hear 30,000 words a day. She couldn’t imagine how she was going to talk that much to a baby who couldn’t talk back.
“The advice I got was to explain out loud what I’m doing,” Stried says. She’s taken that advice and used it to teach how money plays a role in everyone’s lives by narrating her financial transactions. “When I’m at the store with Juliette, I’ll say, ‘OK, Juliette, we picked out these outfits for you and now we’re going to go pay for them.”
Even when your daughter is older, revealing your thought process around money can be beneficial. When Jipson found herself coveting a new pair of sunglasses while shopping with her daughters, ages 10 and 12, she confessed her longing outright.
“I told them I really wanted these sunglasses but I wasn’t going to get them because mine were fine and we could use the money for other things,” she says.
The Cambridge researchers found that the enjoyment of doing something with a parent or participating in activities like going to the bank or shopping for a new car can be meaningful and motivating for children.
“It’s all about these teachable moments,” Kobliner says.
Be Honest About Your Own Money Insecurity
Even moments of uncertainty or doubt can be learning experiences for your daughter.
When working with kids and teens on improving their math skills, one recurring theme Bach encountered was the dampening effect of growing up with a family member or teacher who was not confident in math or financial literacy.
A key part of learning is knowing that it’s OK if you don’t get it right the first time; the point is to try, he says. Had those parents or teachers simply been honest about their insecurity and openly said, “I don’t know this but I’m going to try to understand it,” it could have imbued those children with self-confidence rather than insecurity.
Assign Chores Equally
As she begins earning her own money through allowances or chores, your daughter’s financial education can get a little more in-depth. Anytime his daughter earns money, Jeffrey Swett, managing director at The Swett Group of UBS Financial Services in Boston, sits down with her to discuss how she’ll allocate it to the four money buckets: spending, saving, investing and giving.
“It’s her decision,” he says, “I just listen.”
[See: 7 Lessons to Master for Financial Literacy Month.]
If you use chores to teach your kids about money, make sure you assign them equally.
“Research from the University of Michigan has found that girls do 30 percent more chores than boys, and are less likely to be paid for them,” Kobliner says.
When they are compensated, girls are paid half what boys receive, according to an analysis of 10,000 families by the allowance and chore-tracking app BusyKid.
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How to Raise Financially Independent Daughters originally appeared on usnews.com
