Financial bias starts early: How to talk to your daughter about finances

Basic financial concepts are important for any child to grasp in order to grow into a fiscally responsible adult. Yet for girls, in particular, gender bias has the potential to negatively impact their perspective.

In line with this thinking, a study conducted by the Girl Scout Research Institute found that only 51% of girls ages eight to 17 feel confident making financial decisions, and as few as 12% stated they are “very confident.”

By starting the money conversation with your daughter early on – such as providing educational information and hands-on learning opportunities with money – you can help foster a healthy relationship between your daughter and her finances that can extend into adulthood.

“Making sure your daughters understand key financial concepts at a young age is a fantastic way to set them up for the future and is, I would argue, one of the most important lessons a parent can teach,” says Anna Barker, personal finance expert and founder of LogicalDollar.

See related: Parents pass on their financial attitudes and beliefs about debt to children

Financial inclusion is a worldwide problem

A 2017 global study by UN Women and the World Bank found women have a higher likelihood of being impoverished compared to men between the ages of 20 and 34. Further, a 2019 report found women have a 48% global labor force participation rate (meaning employment) compared to 75% of men.

The economic gender divide doesn’t stop there. Though access to services like bank accounts and credit cards is important for anyone no matter their gender, the issue has proved more pressing for women across the globe.

The most recent Global Findex Database report found that 72% of men have an account at a financial institution (such as a bank) compared to 65% of women. The same report found that in developing economies, men are more likely to save money at a financial institution than women.

Though these findings may be unsettling, opening the door to financial concepts at a young age (such as providing information on how financial products and services work and the methods to obtain them) can help improve the economic situations of women across the globe – meaning higher rates of employment and less poverty overall.

For the greater good: Include your daughter in financial conversations

T. Rowe Price’s 11th Annual Parents, Kids & Money Survey found that 30% of parents believe they spend more time talking about money with their male children, compared to 16% who say they cover the topic most often with their girls.

To level the playing field, try looping in finance as a dinner table topic to promote transparency and teach basic financial concepts to your kids.

“Explaining over dinner how things like credit cards work or how debt can spiral out of control will already put them far ahead of their peers in terms of being wary of signing up to financial products,” Barker says.

You don’t have to go into heavy detail, but relaying your own budgeting plans for the family and asking your daughter about her spending and savings goals can help normalize money as a conversation.

See related: Lessons from female financial role models

Hands-on learning opportunities are key

Learning by doing is one of the best ways to fully understand a topic, tool or process when it comes to personal finance.

“My parents, both with careers in wealth management, began to introduce me to finance when I was about 10 years old,” says Sarah Schweppe, financial adviser for Wells Fargo Advisors in Charlotte, North Carolina. “My mother encouraged me to separate my money into three ‘buckets,’ including spending, savings and charity.”

Separating money into categories can help your daughter better understand the various ways in which a lump sum of money can be utilized. The way you “bucket” the money can vary – if your daughter is on the younger side, consider setting up three clearly labeled jars so she can deposit cash or coins and watch the jars fill up.

Establishing goals for each bucket is key. If your daughter has an allowance, you can help her determine how much of it is allocated toward spending, savings and charity. If she receives money on other occasions – such as holidays or for completing chores around the house – allow her to decide where her funds are best suited.

To further the learning potential of money jars, Barker suggests establishing parent-paid interest for your daughter’s savings jar.

“By promoting the benefits of savings from a young age, you’ll [be] laying the foundations for a positive money mindset as they get older,” Barker says.

If your daughter’s a little older, a checking and savings account may better suit her needs as the potential for part-time jobs, check deposits and ATM withdrawals draws closer.

When they’re older: Consider introducing financial products

According to the Girl Scout Research Institute report, girls ages 11 to 17 say they’re most knowledgeable about saving and “how to shop for the best values,” while knowledge on topics like establishing good credit and credit card interest rates is notably lacking.

If you’re comfortable doing so, adding your daughter as an authorized user on your credit card can help her establish and build credit while learning to spend responsibly. As the primary cardholder, you can set spending limits and monitor her purchases within your online account.

Though an authorized user isn’t responsible for paying the card’s bill, you can set up a particular day each month in which your daughter owes the amount she spends with the card – either in cash or digital payments. If she fails to make the payment, you can request a late fee or tack on interest to what she owes you. Whatever rules you put in place should be written out and thoroughly explained prior to handing over the card.

A new breed of debit cards and money-management apps for kids, supervised by parents, is another option. Fintech startups like Greenlight and GoHenry offer parent-controlled debit cards and a mobile platform for kids to safely develop a relationship with money.

Greenlight, in particular, offers two app experiences. In the parent version, guardians can track their child’s purchases, set spending and ATM withdrawal limits and assign chores in return for allowance payments. Kids can manage their cash flow within separate “Spend,” “Give” and “Save” accounts, view their spending and set savings goals.

See related: When should you get your child a credit card?

The bottom line

While you can’t fully prevent gender bias from seeping into your daughter’s financial mindset, you can at least try and prevent it by offering her a seat at the table when it comes to discussing financial topics and providing hands-on learning opportunities from a young age.

“This will help [girls] to avoid many of the financial mistakes so many of us make at a young age (and continue to make as we get older) and, ideally, help them to work toward closing the wage gap, putting them solidly on the path to financial security,” Barker says.