As we celebrate Mothers in May, I want to share with you 7 tips for raising financially independent daughters. One of my goals is to have my ceiling be my daughter’s (and all girls) floor.
In other words, I want them to start where I peaked, and to that end, I am their “Money Mama Mentor.” I am the proud Mother of my 22 year old daughter. She has established her budget, has no credit card debt or student loans, and is contributing to her Roth IRA. So proud of her!
So how does this happen?
I took an active role in mentoring my daughter in the ways of money. It wasn’t always easy, sometimes the consequences weren’t well received, and tears came, but we both learned and she definitely is taking her finances to a new level. She is starting much farther ahead than I did at her age.
So, let me share with you 7 tips for raising financially independent daughters:
- Help your daughter open her own checking and savings accounts. Take her to the bank and help her set up accounts in her name. If your daughter is under 18, you’ll need to set up a custodial or joint account. Now whenever she gets money for jobs, birthdays, or holidays, she has a place to deposit it.
- Notice I said checking AND savings accounts. You can teach her early to save part of her earnings for future wants. This helps her learn to save first, then spend.
- Also teach her how to use a debit card. Make sure she deducts her purchase from her balance so there are no overdrawn accounts. Technology can make money feel like it’s not real sometimes, so it’s important that she understands the value of her digital dollars.
- Teach your daughter the importance of building credit and the resulting credit score. I did this by opening a joint credit card with my daughter with a very low limit. This gave her the opportunity to use a credit card, which she paid in full each time she used it so there were no surprises when the bill arrived. She also learned she couldn’t charge a purchase unless she had the money in her checking account, ready to pay the bill. Using a credit card also helped her to start building her credit score. This was important when she rented her first apartment and bought her first car. The higher the credit score, the lower the interest rate, thus saving her money on the purchase.
- Make investing fun and relatable by teaching her what it is and how to do it. For instance, if she has earned income, open a Roth IRA for her to get an early start on her retirement savings. You can also help her pick a stock in a company brand she uses, or an index fund (which I recommend).
- It’s ok for your daughter to make mistakes. I wanted my daughter to learn how to live with a budget while she was home. With her budget I gave her the freedom to shop for her own school clothes (when kids went to classrooms)! If she chose to spend it all on one pair of jeans and two tops, she had a very limited wardrobe for the next year! I can assure you, she learned early, how to streeeetch her dollars! To this day, some of our best-spent time together is thrift shopping!
- Set a good example with your money habits. Instil in her financial awareness by having her look at prices on menus at restaurants or the grocery store. Show her how to comparison shop and guide her on how to make good money decisions.
Our relationship with money is personal, and we pass a lot of that onto our kids. Teaching fiscal responsibility is one of the most important things we can do for our children to foster independence, especially for our daughters. It takes a little effort, but has huge benefits when you teach your daughter how to be financially independent!
If you need help teaching your daughters about money, feel free to schedule your free 20 minute money chat with me. Also join my private Facebook group, Women Talk Finances, where we continue the money talk.