Our parents are often our first teacher and most lasting example of how to manage money. A new study, however, suggests that parents are talking to boys and girls about personal finance in different ways, and it might be responsible for shaping habits and expectations that can last a lifetime.
According to a survey of 1,000 parents conducted by Giftcards.com, respondents were more likely to teach their daughters fiscal restraint, while their sons were more likely to be taught about building wealth. For example, 61% of boys received a lesson from their parents on credit scores by the time they reached high school, compared with 46% of girls. Boys were also 9% more likely to be taught how to pay taxes, 5% more likely to be taught about bank accounts, 3% more likely to be taught about credit cards, and 2% more likely to receive an education on investing.
Girls, on the other hand, were roughly 13% more likely to be taught how to track their spending, 5% more likely to be taught about budgeting, and 3% more likely to receive a lesson on investing by the time they reached the same age.
The discrepancy, however, wasn’t only found in the lessons taught to each gender. The study also found that girls receive less money from their parents, with boys in high school and elementary school getting roughly $20 more on Christmas, $3 more for completing chores, and $1 more for allowance.”Girls are paid less, and are taught that they need to save and budget, while boys are paid more and taught about investing and credit scores,” says Bri Godwin, a media relations associate for Giftcards.com.
The study also found that moms were more likely to teach personal finance to their daughters while dads were more likely to teach their sons, which Godwin says could serve to pass the expectation of a gender pay gap to the next generation. “Girls are watching their moms do one thing and boys are watching their dads do another thing,” she said. “It definitely could set the foundation for the future of a gender pay gap, and for men to be more financially successful than women.”
Nature or nurture?
Men and women tend to view money, and its purpose, in dramatically different terms. Whether by nature or by nurture, experts say there is a significant discrepancy in financial priorities, outlook, and management between the average male and female adult.
“Men tend to trade much more frequently, they tend to be overly confident with regard to their investment performance, and much more willing to take risks,” says Greg McBride, Bankrate.com’s chief financial analyst.
McBride, however, believes there are much more powerful forces at play than parental instruction during childhood. “The tendency for women to trade less frequently, to be more risk-adverse, and to be more focused on the long haul are byproducts of longer lifespans, the greater likelihood of having to support themselves and their children on one income, and a greater likelihood of outliving a spouse,” he says.
Author, television host, and financial adviser Suze Orman, however, believes that when it comes to personal finance, the most significant discrepancy between men and women is who they feel their money belongs to.
“Women will always think, especially if they have children, that their money is for their parents, their spouses, their brothers, their sisters, their pets, and everybody but them, because a woman’s nature is to nurture,” Orman tells Fast Company. “Men, on the other hand, know absolutely that the money that they make is for them; they don’t have trouble saying no, they have no problem keeping it for themselves, investing it for themselves, and not sharing it with their spouses.”
Setting an example
While direct lessons from parents can help shape a child’s perception of money and finances, experts agree that the most effective education is through demonstration.”It’s impossible to train a child how to grow up financially fit if you’re a financial wreck,” says Orman. “Kids do not listen to what you say; they do what you do.”
Orman adds that simply reframing how parents approach financial conversations in the home can go a long way in teaching children healthy financial habits. For example, rather than complaining about work and portraying it as a negative experience, Orman says parents should strive to celebrate their employment, emphasizing the value of hard work and the importance of having an income.
“There’s so many parents who will offhandedly make these money-negative statements like, ‘We’re so broke,’ or, ‘The taxman takes everything,’ but a kid is going to take that at face value,” adds Paula Pant, the founder of AffordAnything.com. “If parents can instead make extremely thoughtful remarks, like, ‘In a year and a half we’d like to all go to Hawaii for a week, here’s how we’re thinking about it in advance,’ those types of conversations are quite useful,” she says.
Pant explains that these conversations can be helpful in establishing healthy personal financial habits, but parents can take those lessons a step further by helping their children put them into practice.”If there’s something that a child really wants, help that child plan for that purchase,” she says. “See what it costs and work backwards to see how much money they need to save over what length of time in order to buy it. There are people in their 30s who still haven’t mastered that.”
Orman, who published a children’s book on personal finances titled The Adventures of Billy and Penny, believes it’s also important for children to understand the distinction between wants and needs. “A want is you’re going out to a restaurant to get food; a need is you’re buying food at a grocery store,” she says. “Every time you buy something, you should start asking, ‘Do you think this is a need or a want?'”
Orman says that she will “forever thank” her parents for raising her in poverty, adding that the most important lesson to teach both boys and girls when it comes to money is that it’s not what really matters in life.
“If you think money is the key to raising a successful, financially literate child, I’m here to tell you that it is not,” she says. “Teaching [the importance] of who you are, what you’re capable of, and putting the importance on ‘who’ versus ‘what’ will be the key to a financially fabulous kid.”