When we coach our daughters to get smart about money, we give them the gift of an independent future.

by Susan Berrin

Over the past few months, a volatile financial market has forced us to look, fearfully, at our future. As mothers, we know about “teachable moments”—the best times to offer advice and provide life lessons to our children. And today, we have one of those “moments” in which our children will be receptive to learning not only about their allowances and how their family’s fiscal health is secured, but also how to swim in financial waters. As parents, we’re obligated not only to provide for our children’s immediate and future monetary needs, but also to teach them to be smart, sensible and conscientious about money.

Yet talking to our children—and our daughters in particular—about money means that we must get beyond our own discomfort. We’ve learned to talk about sex and God; money can’t be that much harder. At a first meeting of a women’s investment group I belong to, we shared our expectations of the group (to become more familiar with what money we had and how to invest smartly for retirement), and our experiences and associations with money (not much, other than earning and spending). While we could talk comfortably about our lives, children, work, loves, disappointments and accommodations, without exception we felt talking about money was uncouth. We had grown up without fiscally responsible women as role models. And although we have successful careers, we still often rely on someone else—a husband, father or male associate—to handle financial matters.

Life$avings®, JWI’s workshop series that teaches core financial literacy skills to young women, has been a hit with college and post-college women. JWI created the project to help young women living on their own for the first time make informed and careful choices about spending, saving, investing and use of credit cards. “Having basic financial literacy skills will make it possible for young women to enjoy a healthy financial future,” says Lori Weinstein, JWI's CEO. “JWI’s commitment to bolstering economic literacy comes directly from our work to ensure the safety and well-being of women and girls. We know that women with resources have choices, while women without money have fewer choices and vastly reduced options.”

“Spending wisely” is like flossing. We all know it’s important, and we must practice it daily, as a habit.

Men don’t have a corner on money knowledge. We all know—especially in challenging economic times—that finance is complicated and requires an expertise that is not embedded in the Y chromosome. As women we need, finally, to learn to understand and manage our money. We need to demystify it, put to rest any social taboo, learn to track and wisely make decisions about the money we earn, spend, save and invest. We shouldn’t be ashamed to seek expert advice from a certified financial planner when we need it. Women tend to earn less, live longer and have smaller pension funds (due to earning less and spending time outside the job market because of caregiving). Some 80 to 90 percent of women will be solely responsible for their own well-being at some point in their lives. Facing these facts is frightening, yet ultimately empowering.

“Spending wisely” is like flossing. We all know it’s important, and we must practice it daily, as a habit. As moms, we can model this behavior and help our daughters develop a relationship with money that is healthy, balanced and esteem-building. Discussing money with them doesn’t mean we need to share the details of our financial habits or the family’s bank statements. It does mean that we begin early teaching our daughters to weigh options, to scrutinize advertisements that bombard them about what they need to consume, how they need to look and how to spend their money. (These conversations won’t be easy, certainly, considering the pressure teenage girls feel to dress how peers and media fashionistas dictate, but we still need to have them.)

We offer them opportunities to practice being financially responsible—with allowances and savings. And, though this might be difficult to live with when our daughters are teenagers, we teach them how to negotiate for themselves. This is part of the life-training program we subtly—and sometimes emphatically—offer.

Remember the line “We need to be our own best friend”? We need to teach our daughters to be their own best financial friend (not adviser—get professional advice!). We can read and discuss the financial news in the newspaper or on the Internet together; we can talk about how much of their paycheck is going into a pension fund—and why that’s essential; and we can explain how those funds are being invested in their names (for example, is the money invested in socially conscious funds?).

We can talk to them about valuing their own work, about recognizing that standing up for themselves when negotiating salaries has a long-term impact on their financial well-being. According to Linda Babcock and Sara Laschever, authors of Women Don’t Ask: The High Cost of Avoiding Negotiation (Bantam), women often are afraid to assert their own value in salary negotiations with potential employers. Men are four times as likely as women to negotiate a first salary. By failing to negotiate, the authors add, “an individual stands to lose more than $500,000 by age 60.”

Start early to teach even young children money basics, says Jayne Pearl, author of Kids and Money: Giving Them the Savvy to Succeed Financially (Bloomberg Press). They can learn how to balance spending and saving; to distinguish between needs and wants; and to understand that money is a finite resource. Pearl counsels parents to share with their children their family’s history and values about money, and suggests that parents adopt the role of coach rather than arbiter.

Since teens love to spend money, they might as well learn the mistakes of overspending and instant gratification with small amounts of money when young, rather than as adults. The global financial crisis can be used as an object lesson for the need to delay gratification—that buying now and paying later costs substantially more in the long run.

As Jewish parents, we can frame discussions about money within a larger context of values—Jewish and other. The familiar adage of our sage Hillel (Avot 1:14) provides a useful framework for teaching our children about financial management:

If I am not for myself, who will be for me? This refers to the money that we use—that we are responsible for our own well-being, the importance of self-sufficiency.

And if I am for myself alone, what am I? This refers to what we give away—that even when we’re young and not big earners, we can provide for the needs of others.

And if not now, when? This refers to investment and the crucial role that saving and investing plays in our long-term financial health.

Our conversations about money are not about becoming rich. The conversation is about our “net worth” within the context of a broader conversation between parents and children about well-being that deepens the family discussion about what matters in life, what values we live by, and how values shape our decisions. Elliot Dorff and Louis Newman, in their book, Jewish Choices, Jewish Voices: Money (Jewish Publication Society), explain that how one handles money is a “barometer of the moral mettle” of that person. They suggest establishing “a balanced and healthy relationship with money and the power it has to make our lives secure and to improve our world, but that also ensures that money will not displace the other values and goods that ennoble human life.” This conversation is about abundance, gratitude, compassion, responsibility, partnership, inner richness—all in relationship to money, and how thinking about money in terms of scarcity—fear, greed, hoarding—can undermine financial health.

Whatever paths our daughters choose (and isn’t that ability to choose ultimately what feminism was about?), we want them to be comfortable with and informed about how to spend, save and invest their earnings. We want our daughters who work part-time or stay home to raise their families to be comfortable asking informed questions of their spouses and asking to be equal partners in making financial decisions that affect their family.

Virginia Woolf wrote that a woman should have “a room of her own.” My mother taught me that as a woman, I should have “an account of my own.” Our daughters must have not only the space to think and be, but also the courage to ask questions—even the tough ones about money.

Teachable Moments

Start early teaching children about financial responsibility; include teens in routine discussions about household finances.
Model Hillel’s dictum with a “three-bucket” strategy. Starting with bat mitzvah, ask the child to think about what to do with the gifts she’s received: What gifts do you want to keep? What gifts do you want to put away? What gifts do you want to give away to others in need? Learning of Jewish texts can be woven into discussions about making financial decisions.
Our daughters learn by watching what we do, not what we say. Become a good money manager (spend less than you earn; save and invest) and talk about your decisions (appropriately). Become an investor. Become a philanthropist, even if it’s only with small amounts of money.
Teens begin to accumulate at least some funds that can be directed to those in greater need. Adapt lessons as teens mature. Use world events as opportunities to teach about tikkun olam and philanthropy. When there’s a natural disaster (like a hurricane or tsunami) ask what, as a family, you can do to help. Talk to children about how financial decisions mirror your family values.
Encourage your teen to get a part-time job. Teens who work are more likely to save than spend.
Share (when appropriate) decisions with your daughters about your financial assets, what you want to have when you retire, and how to get there from where you are.
Financial health is a long-term process; think decades ahead, not weeks and months. Share (as appropriate) the quarterly statements from your 401(k) so your teen will see how money invested grows. And explain how to take calculated, not crazy, risks.

Life Lessons

“Spending wisely” is like flossing. We all know it’s important, and we must practice it daily, as a habit.

Teachable Moments