Teaching our daughters about financial independence

Many parents dream of their children’s firsts: their first step, their first word, their first school dance. Rarely at the top of the list is their first money conversation. Money is incredibly personal and your own road to financial independence might have been a winding path to hard-won financial freedom.

Most Americans believe young adults should be financially independent by 22 years old, but U.S. Census Bureau data showed that in 2018 only about 24% of young adults had reached that milestone.¹

Furthermore, young men were 10% more likely than young women to be financially independent. This isn’t just a U.S. phenomenon – parents across the globe are looking for strategies to activate their kids’ money management and financial planning skills.

With that in mind, making money conversations a family affair is a critical opportunity to connect children and young adults to the knowledge, skills and resources that can prepare them for the twists and turns and avoid some bumps along the way.

This Mother’s Day, here are some things to keep in mind as you set your daughters and younger loved ones on the path to financial independence. 

Start early

You don’t need to wait until your children are in middle school or high school to discuss money with them. Once a child can talk, read and count, they can start with the fundamentals of what money is and the purpose it serves in day-to-day life. It is important to tailor these discussions in an age-appropriate way.

Set goals

Achieving financial independence is all about thinking ahead. Talking to children about goal setting is an essential foundation for money management. Young children might benefit from parental support in identifying a specific and relevant goal, but older children will likely have a few ideas of their own. Using a format like SMART goalsOpens definition tooltip can help concretize a vague goal and help establish what might be realistic over various periods of time.

Lead by example

Your own money management habits tend to be the most impactful on your children. So, engaging children in tasks that require money, such as grocery shopping, paying bills, planning for an upcoming trip or donating to charity demonstrates the value of money and provides an opening for quick, high-level conversations about money matters. Including your children in these conversations can help ease anxiety around discussing money and help them feel invested in financial decision-making, allowing them to develop a sense of confidence and connectedness.

A helpful consideration: beware of gender bias in teaching, discussing and modeling money habits for children. A 2018 study showed that parents were more likely to teach their daughters about budgeting and savings and their sons about credit and wealth building.²

As girls age, it is important to acknowledge the existing disparities in financial confidence, pay and wealth that impact women’s ability to achieve financial independence, but mirroring those discrepancies in your household can be avoided with careful intention. There are many aspects of managing one’s financial health, and a well-rounded individual should be exposed to all of them.

Practice, practice, practice

I still distinctly remember my first visit to a local bank in third grade with my mom and classmates, where I got to learn about the purpose of savings and was fascinated by watching a machine roll quarters into paper packaging. Making money fun via field trips and exposing children to trusted experts can deepen the impact of your discussions.

And what’s a lesson without application? Allowance, monetary gifts or a paycheck from a summer job or internship all position a young person to start building habits that they can use for the rest of their lives. Providing a safe space for experimentation with money is critical.

Many financial institutions now have budgeting tools aimed at kids and teens built into their web or mobile banking so they can observe trends and become more comfortable managing their daily financial affairs. Parents can have a hard time when their kids make financial mistakes, but it’s a necessary step in the learning process and critical for development.

Keep the conversation going

Your child’s financial journey is not one and done. Keep in mind that there will be many avenues to explore and as they get older, your role might shift from educator to coach. Consider asking open-ended questions to encourage problem-solving, inspire them to do careful research and engage in conversations about other factors like their job prospects and how the market is performing.

Finally, an important thing mothers can do is to be financially confident themselves. If there are any money matters you haven’t tackled yet, there is no time like the present. And remember, financial independence doesn’t mean you can’t ask for help from a financial professional as your needs or goals change. In this way, you can continue to model for your children that intentionality is crucial to attending to your journey to financial independence.

^{The views, opinions, estimates and strategies expressed herein constitutes the author's judgment based on current market conditions and are subject to change without notice, and may differ from those expressed by other areas of J.P. Morgan. This information in no way constitute J.P. Morgan Research and should not be treated as such. You should carefully consider your needs and objectives before making any decisions. For additional guidance on how this information should be applied to your situation, you should consult your advisor.}