Dads: Give Your Daughters the Gift of Financial Strength
June 19, 2019With Father’s Day campaigns like #DadsDoHairToo — which showcases talented fathers giving their daughters fabulous hairstyles — dads are getting the recognition they deserve as they help their daughters grow into confident, strong women.
When it comes to finance, dads can play a positive role by helping their daughters establish balanced financial skill sets.
A survey conducted by Giftcards.com found a notable difference between girls’ and boys’ financial educations. While girls were more likely to learn about tracking spending and budgeting, boys were more likely to be taught about bank accounts, credit cards, credit scores, and investing.
While these are all essential skills, it’s important for everyone to achieve balance in their financial knowledge.
Here are 3 ways dads — and all role models! — can help girls grow into financially savvy and empowered women.
1. Talk to her about the value of good credit
Begin by laying the groundwork for how you build credit and why this matters. A credit card can help us build good credit, which can then allow us to take out more significant loans later on, like a loan for a car.
If possible, use an example that clearly relates to your daughter’s daily life. Do you live in a house? Consider using your personal debt history, like a mortgage, as a lesson.
Start by offering a positive example, like, “Because we paid our credit card and car loan payments on time, we paid less for the loan on our house over time.” Offering a counter example — what would have happened if you hadn’t paid those bills on time? — may give her a sense of potential risks and why we need to be intentional about our debt.
As with everything, consider balance when discussing credit.
Too much emphasis on the potential pitfalls of debt and bad credit scores can lead to credit-aversion and reliance on cash or debit cards, which may prevent your daughter from establishing a solid credit history in the future. On the other hand, neglecting to discuss the potential problems (like high APRs) can create blindspots that lead to credit overuse and unmanageable debt.
2. Teach her about taxes
Taxes can be tough to digest, even for adults. Start by giving your daughter a broad overview by stating the purpose of taxes and giving local examples that she can see, like roads and schools.
As with any lesson, it’s best to put ideas into practice.
If your daughter receives an allowance, try demonstrating the role of taxes by setting a tax rate on her allowance and explaining how her money is used to serve the household. If she has a job, you can also guide her through the tax return process using her own tax form.
It’s possible that your wise words may not stick right away, and that is perfectly okay!
These skills can take time to build. Be kind and patient, both with her and yourself — it will be worth it. By introducing tax principles and mechanics to your daughter, you’ll establish a foundation that will serve her well as she tackles taxes in her future.
3. Discuss the differences between saving and investing
Saving and investing are both essential tools, but it’s critical to know how they differ in order to use them most effectively.
Teaching saving is a great place to start. Young girls can learn that adding a coin to a piggy bank here and there will add up over time. When she’s ready, that piggy bank can graduate to a bank account, where you can cover the topic of interest and inflation.
Eventually, this baseline can initiate a whole range of comparisons — what is the difference between a savings account at Bank A versus Bank B? Should I consider a savings bond or certificate of deposit (CD)?
This offers a great entry point to compare saving and investing, illuminating the potential pros and cons of each tool. Investing aims to generate more money than saving over time, but investing also carries risk. On the other hand, a savings account — which is federally insured, typically up to $250,000 per account — can offer relative safety and easy access to your money. At the same time, a savings account may not keep up with inflation and could require more time to achieve your financial goals.
Inspire a lifetime of learning
At this point, Dad may have questions, too, like, “How much should I be saving versus investing?” Treat this as an opportunity to become an even better teacher for your daughter.
A financial professional can be an invaluable resource as you and your daughter navigate her financial future.