What We Teach Girls About Money Can Keep Them Safe

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There is no way to protect girls from everything. But making sure they're financially savvy can give them the confidence to get through tough times.

There is no way to protect girls from everything. But making sure they're financially savvy can give them the confidence to get through tough times. 

Think of the girls in your life -- your daughters, nieces, or granddaughters. How much do they know about finance? If you're not sure, it may be a good idea to find out. Girls who learn about money today will be more confident in their ability to take care of themselves as adults and less likely to be dependent on someone else. 

It's impossible to overstate the value of teaching girls to be financially independent, rather than depending on their potential future husbands. According to the U.S. Census Bureau, 30% of adult women have never been married.  And married women are likely to outlive their husbands by five years, on average. Teaching financial literacy now can lead to a lifetime of security and confidence. 

In addition, the Credit Suisse Research Institute reports that females currently control 40% of global wealth. That percentage is expected to be closer to 77% by 2029. Whether they earn the money themselves or inherit it from parents or a spouse, women will control the purse strings. This influx of wealth makes the issue of financial management vital. 

There's also a very serious reason why it's important for women to be financially savvy.

Studies have shown that as many as 99% of domestic violence cases involve financial abuse, and seven out of eight victims who leave their abusive partner report that they return due largely to financial difficulties. Having a solid understanding of money can help them avoid becoming stuck.

Studies show women lack financial confidence

Although it's important that girls and women be financially literate, studies show that many women lack confidence about money. 

In 2012, the Girl Scouts of the USA's Girl Scout Research Institute (GSRI) conducted a survey about girls and finances. The study, Having it All: Girls & Financial Literacy, showed that most girls believe that they will grow up to be independent and financially successful. However, the GSRI noted that girls lack confidence when it comes to making financial decisions, with only 12% considering themselves "very confident."  

Unfortunately, confidence doesn't always come with age. The Global Financial Literacy Excellence Center (GFLEC) asked 150,000 randomly selected adults -- representing more than 140 economies -- basic financial questions. Across the board, in both advanced and emerging economies, only 30% of women were deemed financially literate. According to the study, women were disproportionately more likely than men to answer "Do not know" to a financial question. Rather than taking a shot at the answer, they chose not to risk it. 

That lack of confidence can impact everything, from buying property to investing for retirement. A 2017 study conducted by Willis Towers Watson found that more men than women consider saving for retirement a top priority. It's not that women don't want to plan for retirement, but a greater percentage feel unable to do so due to other financial pressures. Not surprisingly, 54% of men believe they will have enough money to last 25 years into retirement, while only 39% of women have the same level of confidence in their ability to retire.

Simple things you can do right away to help girls learn

It's up to you to make sure the girls in your life have what it takes to become financially savvy. Here are some stress-free ways to introduce your daughter, niece, or granddaughter to finances:

  • Give her an allowance each week (a good rule of thumb is to match the dollar amount to her age) and teach her the value of sticking to a budget.
  • Help her open a savings account and talk about how compound interest will help her money grow.
  • Teach her how to budget and the importance of "paying herself first" by putting money away in savings. Emphasize the importance of building an emergency fund
  • Encourage her to save for the things she wants and allow her to experience the satisfaction of buying things for herself.
  • Show her how to set personal financial goals
  • Play games that involve money, such as Monopoly, The Game of Life, and Payday, or make up games of your own. It may sound silly, but games offer an opportunity for relaxed discussions.
  • Create a fantasy investment portfolio and track it together. Customize your child's  portfolio to reflect her interests, and let her choose her own investments. A fantasy portfolio allows girls to learn more about how investing works, including the ups and downs of the market. 
  • When she's a bit older, help her open a no-minimum brokerage account and encourage her to become comfortable with investing.
  • By the time she's in her teens, make her part of the family budget meeting.
  • Make sure she understands what a credit score is and how to make the most of hers. 
  • Consider helping her establish credit in her name by cosigning a credit card. Let her make small charges and pay them off right away. 
  • Teach her the danger of high-interest credit.
  • If she wants to attend college, help her come up with a plan for how to pay for it. 
  • Take advantage of a free online financial literacy program for kids. For example, Biz Kid$ is a financial literacy program that consists of 65 short (and truly amusing) episodes created to teach older kids how to make and manage money like a pro. For younger kids, The Washington State Department of Financial Institutions offers free online games and apps designed specifically for children. And Kids' Money provides you with smart, simple activities that can help you keep the ball rolling. 

The more you teach a girl about finances, the more confident she will become. While financial literacy cannot insulate anyone from life's challenges, or prevent them from falling for the wrong person, it can help instill confidence. And at the end of the day, confidence may be what she needs to stay safe.

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