A man is not a financial plan: how to teach your daughter about money


No place for a princess

If there is one financial message to pass onto your daughter, it is to be financially independent.

Always emphasise that she doesn't need to rely on anyone for financial support apart from herself.

It isn't what the fairytales would have her believe. But I don't think it's a good idea to raise a daughter with princess expectations. When the prince fails to materialise, or turns into a rat and scurries away, the princess will have to lean on the parents.

Do her (and yourself) a favour and help her understand how money works. When she is young, teach her about saving, budgeting and financial goals; that it's important she learn to delay her spending on "wants", as opposed to "needs", as she weighs up the costs, the advantages and disadvantages.

Splitting pocket money four ways - spending, saving, gifting and investing, say, but not equally - helps get the message across.

As she grows up, explain the perils of credit cards, fees and debt. Then as she saves, talk to her about taxes and investing.

While mother-daughter shopping expeditions can be fun, your daughter needs to appreciate that her financial circumstances as a young adult will mean more limited consumption patterns than yours. Are your shopping habits a good example to follow?

Whatever financial wisdom you have, pass it on to your daughter.

Tell her about buying a home: how you saved the deposit, found the right house for your budget and endured the gruelling process of paying off the debt and how much it really cost you. Explain that your experience with home value appreciation may not be her experience. Super and insurance are important to get right too.

There are plenty of reasons why you want your kids to be on top of their money. Not the least is that you don't want them coming, cap in hand, to be bailed out of a financial crisis. And you don't want them living beyond their means, running up debt and scoring a poor credit rating to come back to haunt them.

But one huge reason you don't want your daughter depending on someone else is that they can get ripped off when they grow up and are in a relationship. You don't want them to be financially manipulated by their partner, particularly if the relationship breaks down.

Your daughter will need to be smarter with her money because she will probably earn less than men - typically women are 24% worse off. Women retire, on average, with $138,150 in super savings - $154,350 less than men.

You don't want your daughter to be financially abused and worrying about money later in their life. New research from CoreData has found that three in five Australian women in a relationship are vulnerable to the risk of "financial abuse".

"We found that only two in five women have assets that are completely theirs or in their name only," says Kristen Turnbull, CoreData's head of Western Australia.

"Even fewer have a savings account (39%), transaction account (33.5%), credit card (36.3%), shares or other investments (17.5%), residential property (8.8%) or an investment property (4.6%) in their own name."

One in seven (14.3%) have felt that a partner or husband has used access to their personal finances to control them or the relationship.

Only one in 10 women fall into the "taking charge" segment, feeling confident and determined to forge their destiny. You want your daughter to be in that group.

Seven key steps

  • Take control of your child's financial education. Use everyday examples to teach them about finances.
  • Give them an allowance based on spending and saving requirements.
  • Let them make mistakes with money. These can be powerful lessons.
  • Give them a cash card linked to their everyday transaction account but not their savings account.
  • Match your financial lessons to the child. Different kids need different guidance. Some catch on quickly; others need time for it to sink in.
  • Do a deal to encourage them to save. Match their savings with a bonus.
  • Lead by example. Manage money responsibly yourself and don't get into excessive debt.



Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.
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