Lately, my 4-and-a-half-year-old daughter, June, has been asking more questions about money:
“How much moneys is that toy?”
“How many dollar bills are in my piggy bank?”
“Why can’t you buy that for me?”
I try to keep my responses short and sweet:
“You have $25 in your piggy bank.”
“Because mom doesn’t have the money.”
I try to be conscientious of how I speak to June about money. I don’t want to overemphasize material possessions, but as she gets older and inevitably sees kids with more gadgets and newer clothes than her, I want to spark a connection between one’s ability to buy stuff and work ethic; the harder you work, the more money you make and the more money you have available to take care of yourself and those around you.
It’s what makes America go ‘round, right?
But lately, I’ve become aware of a more pernicious tendency in parents’ discussions with their kids about money.
Plenty of research shows that parents talk differently about money to girls versus boys, according to the New York Times “Your Money” columnist Ron Lieber’s fascinating new book, The Opposite of Spoiled. “Parents are much more likely to talk to boys than girls about investing, protecting their personal information online, how credit card interest and fees work, whether it’s wise to use check-cashing services, and what a 401(k) is,” he writes, adding, “And what do girls get more of? Parents tend to talk to them more often about giving money away.”
Not surprisingly, this sort of gendered messaging can leave a lasting impact. He cites one 2011 survey by Charles Schwab Investments that polled 1,132 American teens between the ages of 16-18 to better understand their knowledge of finance.
The results showed that 24 percent of boys reported that their parents spoke to them about the pressure to have more things, compared to 16 percent of girls. Additionally, 23 percent of boys reported their parents spoke to them about how to invest money to make it grow, compared to a mere 13 percent of girls.
You can see how the pay gap is already in play by what boys versus girls expect to earn once they launch their careers. The same survey showed that teen boys expected an average starting salary of $79,700 versus $66,200 expected by girls. The gap widens as both boys and girls look further into their financial futures. Boys expect to earn $162,300 once they’re established in their careers, versus $126,500 expected by girls.
Grown-ups often blame “society” for the continuing pay gap between men and women, but when you look at survey results such as this, you see that parents themselves shoulder some of the blame — we inadvertently inculcate boys with one message about finance and girls with another.
I don’t want to make that mistake with my daughters. I don’t want them to grow up thinking that making shrewd investments is more of a masculine pursuit, while financial generosity is linked to ladies. I want them to grow up fully expecting to earn the same as men for the same work.
So even though she’s only four, I’m setting the financial wheels in motion now.
One thing I very recently started doing — inspired by Lieber’s book — is giving her an allowance — $1 a week for every year she’s been alive. The money is not necessarily tied to chores, though she is expected to complete a few basic tasks each week as a contributing member of the family (things like: emptying her backpack, putting her toys away, loading her cereal bowl in the dishwasher).
Then we “decide” how to divvy up the allowance. We assembled three clear plastic old juice containers, one labeled Spend, another one Save, and the last one Give. June deposits $1 each into Spend and Give and $2 into Save. It’s been really neat to watch her connect to this money — to anticipate the allowance, to deposit the bills into their appropriate containers, and watch the (small, very small) piles of bills grow. (If you haven’t read Lieber’s book, I highly recommend it.)
When the time is right, I’ll let her decide where to donate the Give portion — she already has a soft spot for neglected animals, so maybe a donation to the SPCA is in our future? — and we’ll talk about where to invest the Save pile — I’d like to add it to her college fund, but she will probably have other ideas.
As for the Spend pile, I don’t mind if she treats herself to a few useless plastic toys.
After all, it’s these kinds of expenditures, using her own money to buy her own stuff — as well as donating and saving some of her precious cash — that gives little girls a head start on finance.