Financial prejudices start early: How to talk to your daughter about finance - News-Credit-Mortgage-Coin


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Wednesday, May 27, 2020

Financial prejudices start early: How to talk to your daughter about finance

If you teach your daughter about finance early on, it can make her successful

To Her Credit offers targeted advice on personal finance based on unique challenges that women face. It was written by women with different financial backgrounds to promote empowerment through financial literacy.

Fundamental financial concepts are important for every child in order to grow up as a fiscal responsible adult. For girls in particular, however, gender bias can adversely affect their perspective.
A study conducted by the Girl Scout Research Institute found that only 51% of girls between the ages of eight and 17 are confident of making financial decisions, and only 12% said they were "very confident".

By starting the money conversation with your daughter early - for example, by providing educational information and practical learning opportunities with money - you can help promote a healthy relationship between your daughter and her finances that reaches into adulthood.

"It is a fantastic way to ensure that your daughters understand important financial concepts to prepare them for the future at a young age, and I would argue that this is one of the most important lessons that parents can teach," said Anna Barker, personal Financial expert and founder of LogicalDollar.

Financial inclusion is a global problem

A 2017 global study by UN Women and the World Bank found that women are more likely to be impoverished than men aged 20 to 34. A 2019 report also found that women have a worldwide employment rate of 48% (i.e. employment) compared to 75% of men.

The economic gender gap doesn't stop there. Although access to services such as bank accounts and credit cards is important to everyone, regardless of gender, the problem has become more pressing for women around the world.

The latest report from the Global Findex Database found that 72% of men have an account with a financial institution (e.g. a bank) compared to 65% of women. The same report found that men in developing countries are more likely to save money at a financial institution than women.

While these results may be worrying, opening the door to financial policies at a young age (such as providing information on how financial products and services work and how to get them) can help improve the economic situation of women in the world all over the world - which means higher rates of employment and less poverty.

For the common good: involve your daughter in financial discussions
T. Rowe Price's 11th annual parent, child, and money survey found that 30% of parents think they spend more time talking about money with their male children, compared with 16% who say they treat the topic most often with their girls.

To create a level playing field, try using finance as a table topic to promote transparency and teach your children basic finance concepts.

"At dinner, when we explain how things like credit cards work or how debt can get out of control, they're way ahead of their peers when it comes to not signing up for financial products," says Barker.

You don't have to go into detail, but if you share your own family budget plans and ask your daughter about her spending and savings goals, you can normalize the money as a conversation.

Practical learning opportunities are key
Learning by doing is one of the best ways to fully understand a topic, tool, or process related to personal finance.

"My parents, both with a wealth management career, introduced me to the financial industry when I was about 10 years old," said Sarah Schweppe, financial advisor at Wells Fargo Advisors in Charlotte, North Carolina. "My mother encouraged me to split my money into three" buckets ", including spending, savings, and charity."

Splitting the money into categories can help your daughter better understand the different ways that a lump sum can be used. The way you "collect" the money can vary. If your daughter is younger, you should put up three clearly marked glasses so she can deposit cash or coins and watch the glasses fill up.

Setting goals for each bucket is key. If your daughter has an allowance, you can help her determine how much of it is used for expenses, savings, and charity. If she receives money on other occasions - for example, on vacation or to do household chores - she can decide where her resources are best suited.

In order to promote the learning potential of money glasses, Barker suggests that the parents pay interest on your daughter's savings glass.

"By promoting the benefits of savings at a young age, you are laying the foundation for a positive outlook on money as you get older," says Barker.

If your daughter is a little older, a checking and savings account can better suit her needs, as the potential for part-time jobs, check deposits and ATM withdrawals is approaching.

If they are older: consider introducing financial products
According to the Girl Scout Research Institute report, girls between the ages of 11 and 17 know best how to save and how to buy the best values, especially when there is a lack of knowledge on topics such as setting good credit and credit card interest rates.

If you want to, adding your daughter as an authorized user to your credit card can help build and build credit as she learns to spend responsibly. As a primary cardholder, you can set spending limits and monitor your purchases in your online account.

Although an authorized user is not responsible for paying the card bill, you can set a specific day each month on which your daughter owes the amount she spends on the card - either in cash or digitally. If she doesn't make the payment, you can request a late fee or interest on what she owes you. Whatever rules you set up, they should be written out and explained thoroughly before handing over the card.

A new generation of debit cards and money management apps for children that are monitored by parents is another option. Fintech startups such as Greenlight and GoHenry offer parent-controlled debit cards and a mobile platform for children to safely establish a relationship with money.

Greenlight in particular offers two app experiences. In the parent version, legal guardians can track their child's purchases, set expenses and set ATM withdrawal limits, and assign tasks in return for allowance payments. Children can manage their cash flow in separate Spend, Give, and Save accounts, view their spend, and set savings goals.

The final result
While you can't completely prevent gender bias from penetrating your daughter's financial mindset, you can at least try to prevent it by offering her a seat at the table when it comes to discussing financial issues and practical learning opportunities for young people provide age.

“This will help [girls] avoid many of the financial mistakes that so many of us make at a young age (and that we make with age) and ideally help them close the wage gap and solidly close it formulate on the way to financial security, ”says Barker.

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