Learning to Handle Money
What a thrill it is to teach your girl all you know about handling money, and more. This is such a gratifying process with nothing but advantages. There are no downsides. Even if your daughter learns only a little money management at a time, each bit she absorbs will bring her interest — not just in her financial skills but also in real cash. In fact, every hint you pass on to her now can save her thousands of dollars in the future, and you as well — starting right now.
Cash Know-How
While you are teaching your girl the “common-cents” basics, you get a chance to review your own money management. This is an intergenerational lesson you can both benefit from enormously. Start as soon as you can to discuss money matters with her.
Fact
In a 2004 survey conducted by Visa USA, only about a third of all girls ages thirteen to seventeen were able to define six common financial terms such as interest, IRA (Individual Retirement Account), and APR (Annual Percentage Rate), but girls who frequently discussed money issues with their parents scored much higher.
Involve your daughter in financial dealings as soon as you begin giving her an allowance. Teach her how to budget her money. Fill her in — in a general way — on your budget. Show her your monthly bills but don't show her dirty details, such as a fore-closure notice, unless she is old enough to understand. Discuss the price of hamburgers, movies, and gasoline with her. Let her make some informed choices at the grocery store — generic foods versus brand foods. Is it better to buy two more expensive muffins advertised “for the price of one,” or cheaper ones, priced individually? Teach her that usually you get what you pay for. Some things are more expensive for a good reason.
Cash Inflow
Teaching your girl about money is easy because she can see it, hold it in her hands, go to a bank with you, and watch the transactions there. Show her your paycheck, if you can, and how you handle depositing it. This is a concrete lesson with many levels of knowledge. Have your daughter follow the trail of your money and see how much is left after your expenses have been met and what you do with the leftover cash. Tell her savings are crucial, and have her deposit some of her allowance in her own savings account. Some parents ask their daughters to keep a money journal in which the girls record what they spend their allowance on. Other parents match their daughter's savings — dollar for dollar. Do what's best for you.
Money Growth
Tell your daughter a little — or a lot — about investments and growing money. The daily paper offers opportunities to study financial trends in its business or advertisement sections, and runs articles by financial planners to advise parents on saving money for college. Should your girl want to get into the stock market, tell her to use only money she can afford to “play with” — not her regular allowance.
Essential
Close to two-thirds of a group of girls interviewed by Visa USA recently said they would like to know more about personal finances. Only about 40 percent of them said they had discussed family finances with their parents, and only 13 percent had ever written a budget for themselves.
So what money can she use to invest? Well, help her to develop an entrepreneurial spirit. If she sees a job around the house — or at her grandparents' home or in the neighborhood — have her “bid” on it. Let her come up with the job and let her work out the details. Then she can use her extra money to try her hand in the stock market — one share at a time. If possible, let her make mistakes. She will learn from her failures.
Make discussing money a hot topic with your girl. If possible, take her to a mint or a coin collector, and show her old silver dollars and buffalo nickels. Let her see some Civil War money and give her a few euros. Talk to her about some of the more unusual forms of currency — which comes from the Latin currentia and means “a flowing” — such as a farthing, a former British coin worth one-fourth of a penny. How would she like to have her allowance in farthings? Then, depending on your daughter's age, be sure to move on to discussing the advantages and disadvantages of the following items with her:
Personal checking account. Help her set up her own account at your bank, help her balance her checkbook, and keep up with her statements.
ATM card. Many girls prefer using the automatic teller machine to get quick cash out of their accounts. Warn her to use hers only at a supervised location and during daylight hours.
Debit card. Although a debit card limits her to the cash she has in her account and she cannot overspend easily, she may not need one until she goes to college but should understand what it is.
Credit card. This is an expensive way to delay paying for her purchases, but it can help build a good credit record for her, has more protection, and is safer than a debit card.
Even if your girl gets a scholarship or a great financial aid package, and earns her own cash during her summers, she needs fiscal advice long before she leaves your home. The sooner you talk with her about every possible money issue that might come up, the better. Warn your daughter about the dangers of losing her checkbook or credit card. Teach her this motto: “If you can't pay it off at the end of the month, don't buy it.”
Fact
Be sure to educate your girl as to the latest financial terms mentioned on TV every day. One such term is TARP. It means Troubled Asset Relief Program and is a government program meant to buy up mortgages from across the country to free up money, according to
Let your daughter glance at the Wall Street Journal now and then. Make mulling over money matters fun for your girl. Teach her to be careful with every hard-earned buck, to bank her birthday checks, and to be miserly with her balance — to a healthy extent. Take her on a visit to see Wall Street. Tell her that at the moment men dominate the world of corporate finance, but not for much longer with smart girls like yours coming up through the ranks.
Help your daughter to secure an internship at a financial institution — maybe a lending business or a mortgage company. Officially welcome her to the high-pressure atmosphere where hushed tones and hundreds of thousands — no millions! — of dollars rule.
