It has recently hit me like a tonne of bricks that teenage girls need help with their finances. Why you might be asking?
· Firstly, my eldest daughter has now officially joined the ranks of teenager and I have noticed a dynamic shift when it comes to her thought processes around money and spending (cue the first alarm starting to ring)
· The gender pay gap in Australia is real (difference between men and women’s earnings). Women earn 21.3% less than men[1]. This means men working full-time earn $25,717 on average a year more than women working full-time – are you kidding me! (alarm bell is starting to ring a little louder)
· The gender superannuation gap is even worse. On average women retire with $113,000 less super than men due to that pesky gender pay gap and then adding insult to injury you won’t be accruing super during maternity leave and when returning to work it will most likely be part time (the alarm is getting louder and I can’t snooze it)[2]
· A well renowned child psychologist that I know advises that she is aware of girls taking out loans and credit cards at the request of their partners and providing them with the funds, ever heard of sexually transmitted debt! (Oh for goodness sake - final nail in coffin – alarm so loud I can’t ignore it and so here we are)
I unashamedly admit I’m a numbers girl, always have been. I realise however a lot of girls are not, that however does not mean that they can’t be, so here are a few finance tips to help girls be SAVVY with their finances.
1. When it comes to their finances they need to think with their HEADS not their HEARTS and TAKE CONTROL EARLY.
2. Don’t spend more than you have/earn! Sounds simple right, in reality it can be hard for them. Planning is key here. The first step may be to help them utilise a budget (it’s not a dirty word). When they receive money (pocket money/gifts/wages) try this rule of thumb
a. 20% for savings
b. 50% for needs (the necessities)
c. 30% for wants (discretionary)
This requires them to analyse need v want. A caution here, the Fear of Missing Out (FOMO) is real, don’t let them be sucked into it! Don’t let them be played/fooled by social media influencers, partners or friends. Help them to stay strong and be true to themselves when looking at needs v wants.
3. For the 20% they save they should have a plan in mind for what they want to do with it. Make sure there are some small targets (quick wins) and some longer term targets (big bang stuff). As with most things in life – balance is key.
4. Invest sooner rather than later and help them to diversify, ie, don’t put all their eggs in one basket. The investments could be an interest earning bank account, a term deposit, shares or property or something else that takes your fancy (no get rich quick schemes here please).
*Disclaimer – I am not a financial adviser so can’t provide financial planning advice. Best to seek expert professional help on this one if they need it.
5. When they start working encourage them to put a little extra into their super each pay packet (this is called salary sacrificing). Trust me, their retired self will thank you for it!
6. Finally, encourage them to talk to someone they trust and seek advice to ensure they are on the right track
WARNING:
1. They shouldn’t rely on others to look after their finances or save them – it’s their responsibility
2. Credit cards, after pay, lock in contracts, loans, etc are NOT their money. You need to teach them they are borrowing it from someone, usually a bank and they need to pay them back. They will be charged handsomely for this service and PS. Minimum repayments will never pay down the debt!
3. Don’t let them stick their head in the sand – they are not ostriches. What did Beyonce say ‘who runs the world? GIRLS. They should run their finances!
So that covers what they can do, but how can you help (this applies for all children):
1. Some children are naturally more inclined to spend. This doesn’t mean you let them rule the roost with their natural inclination. Provide guidance and teach them how to implement strategies that may not come naturally to them. Role modelling the right behaviours around money will go a long way to help them succeed financially.
2. Start them young with providing regular pocket money, it helps to familiarise them with the concept of money.
3. Our children will be less accustomed to cash (whether you like it or not) so I believe it’s important that they build skill with the plastic, debit cards that is. There are some great kids debit cards and apps that are available. Our family use Spriggy. You download the app and the children receive their own debit card. You transfer their pocket money on a regular basis and they are able to make purchases on their card and transfer funds to savings and create goals. They and you can track their savings and spending. My daughter advanced in her finance skills overnight through the use of this system – the awareness of her spending became very real to her.
4. Start them on simple budgeting and then build their skills. You could start by setting them a budget for an event, ie, they have $100 to spend at the show which needs to include show rides, side allies, showbags, food, etc and let them take ownership and do the math. This is a tried and true method for me. It really does lift their finance game.
As they get older and more capable move them to the 20/50/30 rule – see point 2 above. Work diligently with them on how to decipher between needs and wants and start adding ‘necessities’ into their pocket money as this will help them gain their financial independence earlier.
5. Finally, be open and talk about money and finances with them including warning them of the dangers and pitfalls but also the opportunities.
WARNING:
1. Don’t moddie coddle their finances. Give them guidance but don’t control it!
2. Don’t buy them everything they want - you are allowed to say No or make them wait. This teaches them great skills for their financial future.
I don’t want the above facts to be a feta complete for our girls so I’m coming out swinging. I’m going to be putting my boxing gloves on and getting in the ring by running workshops in the very near future to help girls on their financial journey so follow me on Facebook (Allinadvisory), Instagram (allinadvisory), Twitter (@GarrettAly) and Linkedin (alygarrett) for the details to be released soon.
Each and every one of us needs to take ownership of this (in whatever way that means for you) so let’s do this!
[1] https://www.wgea.gov.au/topics/gender-pay-gap (FTE remuneration) based on the 2017-18 Workplace Gender Equality Agency (WGEA)