With Christine Lagarde as Managing Director of the International Monetary Fund (IMF) and Janet Yellen serving as chair of the Federal Reserve, women are achieving more prominent positions in the once male-dominated world of high finance. On a more domestic level, you can be a great role model to your daughters by teaching them a few important lessons.


Although two of the most high-profile roles in economics are occupied by women, I meet many female clients who seem hesitant about making important money decisions. When I dig a bit deeper, I often discover that when they were growing up, their mothers occupied a more traditional, housewife role; moms didn’t generally discuss money management or budgeting with their kids.


Regardless of whether you control the household purse-strings or share that responsibility, you can help raise your daughters to feel more at ease with financial decision-making. The more these finance-related discussions become matter-of-fact and routine, the more confident and competent you can expect your child to be as they mature. Here are some of the ways you can help your daughter grow into a money-savvy young woman:


  • Provide financial incentives. If you give your daughter an allowance, think of it as her base salary; by doing extra chores around the house, she can earn her bonus. Even at a young age, this can help your daughter to associate work, and types of work, with monetary gain.
  • Let that money work for her. Help your daughter open her own savings account; before the age of 11 sounds right to me. Her account will earn a little interest, giving you the opportunity to discuss that aspect of financial management with her. She can save birthday or holiday money and watch it grow, and begin saving for larger, long-term purchases. I remember going to the bank on a weekly basis with my mother to make deposits and watching the numbers grow larger in my account. It taught me the significance of a paycheck.
  • Teach the difference between short-term and long-term savings. You may encourage her to purchase a Certificate of Deposit (CD) with a two-year term. She is required to hold the CD for two years or she will incur a penalty for early withdrawal. This helps her understand that with some long-term savings vehicles, the money isn’t supposed to be touched and doing so may bring a penalty. Two years seems like a long time to children, so I suggest starting out with a shorter timeframe.
  • Match her earnings dollar for dollar. That savings account will really come in handy around age 15, when many teenagers begin to anticipate one of their first large purchases—a car. I like the idea of Mom & Dad Inc. providing some type of savings match if they are able—either a percentage or a dollar-for-dollar match of what she puts into the account. This method not only incentivizes and cultivates good saving habits, but also introduces the concept of the company match she would be wise to take advantage of as soon as she begins working full time. A college friend of mine was able to buy a new car right after graduation because his parents matched his savings account deposits all through school. And he graduated with no credit card debt—a feat not even I was capable of pulling off at that age.
  • The credit card conversation. Speaking of debt, it’s essential to talk about credit cards well before kids reach college age and are able to sign up for cards with abandon. Search for apps and online calculators that starkly demonstrate the real cost of credit card purchases if paid off over time and with accrued interest. Though credit card debt is now commonplace, kids can be taught to just say no.


Although kids need to make their own mistakes to really learn life’s hard lessons, the best thing we can do as parents is teach by example; include children in budgeting for grocery shopping. Let your kids observe you making good financial decisions; simple things, like paying bills on time and comparison shopping for the best online deals. Your daughters will thank you.


C14636