What Advice Can We Offer Our Daughters about Debt?Mar 17, 2019
International Women’s Day 2019 has come and gone, but that doesn’t mean our efforts to close the financial gender gap should end. Mothers can keep this work alive through financial conversations with their daughters, as they provide advice to help avoid debt and build a strong foundation with money.
These mother-daughter relationships are important ones, as a mother can help prepare her daughter for life as an adult woman — including advice on how to handle debt and finances.
For Gen X mothers, it’s an especially important time. Women in their 40s and early 50s typically have teenage children. The teenage years are a critical time for moms to teach their daughters valuable real-life money lessons, like how to use a credit card wisely, save for short- and long-term goals and more.
Women also face unique challenges when it comes to money.
According to our Affordability Index from last fall, women are more likely than men to carry heavier debt (52 per cent vs. 45 per cent). In addition, women find it more difficult to save for retirement, save for a major purchase and afford transportation costs.
Discussing these issues with your daughter is important. Talk about why women may encounter different financial hurdles than men, such as taking more time off work to care for parents and children — time that can lead to additional debt and can negatively affect a woman’s ability to save money.
It’s also great if you can give actionable solutions to potential problems! In an attempt to help your daughters avoid unnecessary and burdensome debt in the future, here are three bits of advice a Generation X mom can share.
Think of wealth as a state of mind
This one is a finance tip from Yummy Mummy Club that’s particularly prescient. Sometimes, the best debt advice is to have a more holistic view about money. Teenagers today are presented with wealthy lifestyles on all of their social media accounts — YouTube and Instagram are just the latest ways to create FOMO (a fear of missing out).
Mothers can impart their wisdom here. Help your daughter understand that, as the article says, “it’s okay to want more” but to be grateful for what you have. Talk with your daughter about what you want rather than what you wish you had. Stress the importance of living within your means, with a budget will help you keep spending and expenses affordable.
Plan for the worst with an emergency fund
We think an emergency savings fund is essential for women and men. However, a recent Statistics Canada report found that women are still paid less than men with the same qualifications, and that women are over-represented in low-paying jobs.
Preparing for financial emergencies is unfortunately a real need for females.
Starting a rainy day fund doesn’t have to happen with a lump sum deposit. While an emergency savings account should eventually include enough to cover three to six months of expenses, just setting up an automatic monthly withdrawal can set you up for success. This way, if an unexpected expense comes along or you lose your source of income, you’ll be more prepared.
Build your financial literacy
Stats Canada data also shows that women, on average, have lower financial literacy scores than men and can be less financially confident. This can result in more borrowing, more debt and the possibility of a long-term need to pay off creditors.
If your daughter isn’t offered financial literacy courses in school, giving your teen some money lessons and debt advice at home can help. Mint has an article on some of the best lessons young adults can learn about money, with one of them being the value of understanding credit scores. Young adulthood is an especially critical time for laying the foundation for a good credit score. Understanding how to borrow wisely can pay off for years to come.
Do you have debt advice that mothers can share with their daughters? Join the conversation on social media by using the hashtags #LeaveDebtBehind, #IWD2019 and #GenXers.