TALKING TO DAUGHTERS AND GRANDDAUGHTERS ABOUT MONEY
As well as the gender pay gap, raising children, running a household and caring responsibilities can hinder women’s earning, saving and investing potential. Girls need help to achieve parity with boys, and financial education is vital to this. It’s important both sexes learn the same about budgeting and building wealth. Parents are the biggest influence on their children’s behaviour, so it’s vital to model good money management.
We need to ensure that the way we talk to girls about money is the same way that we speak to boys. Girls needs a leg up – not to set them ahead of boys, I might add, just to put them on an equal footing.
We’re all aware of the gender pay gap, of course – and slowly but surely it is starting to close. But women earning less than men is only part of the problem. Having babies, raising children, running a household and caring for older family members further down the line all conspire to hinder some women’s earning, saving and investing potential, meaning that women are likely to retire with a 40.3% smaller pension pot than the average man’s (1).
Women may need more money in retirement than men, too, with women living longer and on average needing to spend longer in residential care than men (1).
These challenges are the result of long-standing social attitudes and acceptance of cultural norms for women in Britain. Put bluntly, they are embedded in our society.
As a mum, I hope that it will become the norm for child caring responsibilities to be more evenly shared between parents and elder caring more evenly split between genders. But in the meantime, there is still plenty we can do to support our daughters, granddaughters, nieces or goddaughters.
Provide the tools to overcome challenges
Of course, we must teach them they can change the world if they want to, but even if they have more modest aspirations, we can still teach them how to thrive in the one we currently live in. It all comes down to financial education.
With the right savings and investment strategy, women can start to overcome the hurdles in their path. Taking time out to raise a family doesn’t have to mean your pension takes a hit if you plan for it. Working part time doesn’t mean you have to sacrifice career progression.
The key is to not only make our daughters and granddaughters aware of the challenges, but also give them the tools to beat them.
Financial education in schools is patchy to say the least, so the onus is very much on families to do the teaching.
Children can learn about budgeting by helping with the weekly shop or planning an outing, and about the benefits of saving with their own cash account. Paltry interest doesn’t provide much of an incentive, but parents can always pay their own top-up – perhaps 20p for every £1 saved.
We need to make sure that we are teaching girls the same things as boys. I recently read about a survey (2) done in the US, which suggested that parents were far more likely to talk to girls about fiscal restraint – in other words, how to save money – while boys were taught about how to build their wealth.
These are equally vital skills and should be taught to both boys and girls. Men need to be able to do a weekly shop without busting their budget as much as women need to invest for their futures.
Set an example – they will follow suit
Thankfully, there is a lot of advice and resources available to parents to help teach their children the financial skills they need for life.
Rob Gardner, our Director of Investment is an advocate of providing financial education to children and co-founded a company called RedSTART to improve the financial literacy of children and young people.
Rob has also written a book on the subject called Save Your Acorns. As they get older St. James's Place runs its own Financial Education Programme for Young People which has been created alongside teachers and is delivered by our own financial education specialists in schools across the country.
Some of the fun ideas from this programme are available on our website for you to use at home.
St. James's Place is also a founding sponsor of a new charity, the Centre for Financial Capability, whose mission is for every primary aged child to receive an effective and high-quality financial education.
Ronni Allsopp, Corporate Responsibility Specialist for Education at St. James's Place said “Equipping our children with the knowledge and skills to manage their day-to-day finances is fundamental to their long-term financial well-being.”
“It is part of our goal to ensure that all people, especially children and young people, are confident and in control of their financial future and we are proud to be a working with the Centre for Financial Capability, schools and charities to make this a reality.”
However, as valuable as these activities can be, I also think we need to be mindful that the biggest influence on children’s money habits will always be their parents.
How we manage our own finances and how we talk to our children about money can benefit them far more than any one-off educational activity. Talk to your St. James's Place Partner to find out how they can help.
1 Achieving Gender Equality in Pensions, Prospect 2020
2 Adolescent Income and Financial Literacy, Giftcards.com, September 2018, results from a sample of 1,000 parents