My daughter has a savings account at a local credit union which sends a monthly children’s newsletter with a cartoon that we read together, and she recently received a Sesame Street packet to introduce very young children to the principles of saving. She might be on the cusp on toddlerhood, but the two ways in which she engages with money are both reminders that it’s not too early to instill financial habits in her.
These kid-friendly financial tools also serve as a nod to the special role I play in passing down financial wisdom as her mother. Here are five tips I’m teaching her about money.
1. Know your worth.
The words of empowerment that we shower upon our daughters, though important, can mask the dismal reality of working America. Women make less than men at a figure of 77.9 cents to every dollar, or 97.8 cents to every dollar for doing the same work. The numbers aren’t exactly the chorus of a cheerleading chant when we’re telling our daughters that they can take on the world, but they’re important to understand. They deserve to know how the system is stacked so they can negotiate accordingly and know it's always OK to ask for more.
2. Healthy money habits are about rewards, not punishments.
Too often, we can look at saving as a type of punishment because we focus too much on bypassing our momentary desires. Instead, saving is an investment in ourselves — a daily decision to refuse something that we want now for something we want more later. Our physical decisions work like this: when we crave a cookie but grab an apple, our bodies reward us. Healthy living, such as choosing a half hour of yoga instead of a TV episode or eating a nutrient-rich, balanced diet, results in bodies — and minds! — that feel and act well. It's the same with our financial decisions. Saving money isn’t always about saying no to Starbucks. It’s about drinking office coffee because we want to have spending money in Paris next spring. More importantly, our financial habits reflect our power over our money — how we save and spend our money shows that we're the master of our budget, not the other way around.
3. Decide what kind of life you want to live – and make enough money to sustain it.
Whether our daughters want to pursue a career in STEM or social work is only part of the equation of how they structure their lives. The neighborhood they want to live in, the hobbies they want to pursue, the stability they desire, and the impact they would like to make on the world all come with a price tag. For some of them, pursuing a career in the arts is well worth living far from extended family. For others, city living may warrant longer hours at work. Rather than pit passion against the practical in career conversations, we can help our daughters cultivate autonomy and see their individual decisions as part of a much larger, much more holistic picture.
4. The closer you are to the money, the more you’ll make of it.
This doesn't mean that the road to wealth passes through a career in finance. After all, being close to the money is less about our industry and more about understanding how money works. Financial literacy is perhaps one of the most crucial tools we can hand to our daughters. The more informed they are about money, the better decisions they can make. That gives them more opportunities to invest wisely and confidently, recognize the value of their long-term goals, help close the retirement gap between men and women in their later years, and pay it forward to women in their lives and daughters of their own.
5. Be generous.
Recent years have bombarded us with studies that have shown us the links between generosity and happiness. Women get it, which might explain why they’re more willing to take on arbitrary tasks at work than men. Those that know their worth, though, can still give freely of themselves without becoming doormats in their professional or personal lives. A spirit of generosity fueled by a confident sense of self worth allows women to give themselves, their time, and their resources to the causes and people that matter to them. And if a recent study that selfless people make more money than selfish ones, that generosity can literally pay off as well.
Carmen Dahlberg is the founder of Belle Detroit, L3C a creative agency that provides high-quality creative work to businesses by training and employing low-income Detroit moms.