Yesterday, I got an email from my father. The body of the message contained a link to a Forbes article titled "7 Ways You're Hurting Your Daughter's Future." Always a succinct man, he simply wrote, "Hopefully we didn't mess up too bad."
My parents could've written that article 24 years ago. My little sister and I were raised with both Barbies and Nerf guns, our appearances weren't the focus of compliments, and we were never called princesses. However, the point shouldn't just be that raising your daughter to believe she's a princess could manifest in some unsettling entitlement behaviors later in life. Both genders have issues when it comes to handling money, and we need to create ways to teach all kids how to find their finances empowering rather than intimidating.
For me, the lessons started at home. Here are three ways my parents conveyed them.
1. Using Holidays to Teach About Finance
At the tender age of 3, I experienced the injustice of taxation without representation. After a hard October night of hustling the suburban streets dressed as a pint-size Peter Pan, I'd brought home quite the haul of Halloween candy. I dumped the candy on the floor and tried to defend my loot against our two large dogs, who easily had a combined 20 pounds on me. In warding off their attack, I turned my head to see my father eyeing my stash. Before I could throw myself on top of the candy, he'd plucked a few mini Snickers and a some Skittles from my pile.
I glared up at him with my baby blues and demanded he put my candy back.
"I took you trick-or-treating," he said. "So I get a cut of your candy. It's called candy tax."
Over the years, candy tax kept happening and eventually led to a conversation about paying taxes to the government.
Our family Easter egg hunt would pit daughter against daughter to find the one golden egg filled not with jelly beans but cold, hard cash. There was an equal distribution of candy in our baskets, but one of us would always earn more than the other each year.
Christmas taught us the value of giving some of the money we'd earned back to those in need.
2. Encouraging Entrepreneurship -- and Not Footing the Bill
From ages 7 to 18, I dabbled in small entrepreneurial endeavors.
They started with selling Krispy Kreme doughnuts during my mother's yard sale. After counting up my earnings, my father insisted I pay my sister for her work and then pay him back his outlay for my inventory: the doughnuts. He patiently explained the remainder was something called net profit.
Over the years, I moved on to operating a small friendship-bracelet empire, then to co-owning a pet-sitting business, and eventually watching small humans in exchange for money. Regardless of which business we were engaged in, my parents were there with love and emotional support, but insisted that my sister and I take responsibility for not just the cost of materials for our ventures, but the follow-through. If we had to wake up at 7:30 a.m. to walk a dog during summer vacation, slacking off and having Mom or Dad pick up a shift wasn't an option -- unless perhaps we paid them.
We learned at a young age that hard work could lead to riches, because making several hundred bucks in a summer walking dogs and changing kitty litter is no chump change to a 10-year-old.
3. Making Sure We Had 'Skin in the Game' When It Came to Purchases
These ventures into small business were important because it taught me to value both my time and my money. %VIRTUAL-article-sponsoredlinks%If something I wanted to buy cost $20, I learned at a young age to think how many hours of work that would cost me.
It also afforded me a small amount of purchasing power. If I saw a stuffed animal in a store or wanted the latest Christina Aguilera album (because she was in when I was 8), my parents would ask if I'd stake 50 percent. This tactic trained me to evaluate my purchases and drastically curbed my impulse spending before I even hit puberty. This also forced me to develop the fine art of negotiating.
In later years, they started to wean me off the 50 percent plan; I paid for more of my teenage adventures in full. Thankfully, those early lessons in evaluating purchases prevented me from slipping into consumer debt when I got access to my first credit card.
Tough Love Works
Some people might criticize my parents' strategies as too harsh. Perhaps you'd have trouble taking the startup cost for a doughnut stand out of your child's hand. Maybe asking a kid to pay $5 for a $10 toy seems unreasonable to you. All I know is under my parents' tutelage, money became a source of empowerment instead of anxiety.
Erin Lowry writes for DailyFinance on issues relating to millennials, money and personal finance. She's also the blogger behind Broke Millennial, where her sarcastic sense of humor entertains and educates her peers.
3 Smart Tactics for Raising Financially Fit Kids (and How They Worked on Me)
Interest rates are low, but that's no excuse to accept 0.01 percent interest rates on your savings. Just a little shopping can find you many FDIC-insured savings accounts paying as much as 1 percent in interest, usually with no fees and easy availability to your money through electronic funds transfers. Compared to the near-zero rates that uninsured money-market mutual funds and other alternatives pay, high-interest savings accounts are a much safer way to save.
Banks still try to get customers to pay more for less, with one recent threat to charge fees for basic deposit accounts if the Federal Reserve cuts interest rates further. But many online banks not only offer fee-free options on their checking and savings accounts but also pay interest, and many have extensive fee-free ATM networks or reimbursement arrangements. If your bank follows through on threats to raise fees, taking your business elsewhere is your best move.
Bankrate reports that the average credit card charges around 16 percent in interest. That's a guaranteed money-maker for the banks that issue cards, but a big loser for those who carry balances on their cards. With many cards offering promotional interest rates as low as 0 percent, using them to get rid of high-interest cards is a no-brainer move and can help you pay your debt down faster.
Mistakes on your credit history can keep you from getting a loan that you want to buy your next home or car, but they can also have consequences you'd never imagine. Increasingly, insurance companies, apartment rental agents, and even prospective employers order copies of your credit report to see if you're financially responsible. Be sure to take advantage of your free credit check at the government's annualcreditreport.com website to make sure the three big credit-rating agencies have everything right before mistakes come back to bite you.
Payday loans have gotten more tightly regulated recently, but banks and other financial institutions still offer ways to let you get quicker access at your cash -- for a hefty fee. Resorting to short-term money fixes can land you in even more problematic situations down the road, because those solutions often create debt spirals from which it's hard to emerge unscathed. Set up an emergency fund instead and be prepared in advance for the money woes that life throws your way.
Interest rates have risen during the last half of 2013, with a typical 30-year mortgage carrying a 4.5 percent interest rate. But many homeowners still carry higher-interest mortgages from before the financial crisis. Now that home prices have risen, you might be able to refinance for the first time, and many homeowners have used lower rates to cut hundreds from their mortgage payment or shift to a shorter-term 15-year mortgage to pay off their debt faster.
Too many people never update their insurance coverage to deal with changes in their coverage needs, whether it comes from changes in family status for life insurance, health conditions for health-care or long-term care insurance, or even what types of property you own for homeowners' insurance. Don't wait for disaster to strike; check with your insurer or agent to see if your current coverage meets your needs.
In the past, investors had to pay hundreds or even thousands of dollars just to make a simple stock purchase. Now, though, the rise of discount brokers, low-fee index funds and exchange-traded funds, and freely available investment news and advice have made it silly to spend large amounts to get access to the financial markets. If you're still paying your broker too much to invest, look into alternatives that can help you avoid cutting serious money out of your retirement nest egg.
Everyone likes a tax break, and one of the best ones for you to use involves making contributions to a tax-favored retirement account. By putting money in an IRA or 401(k), you can reduce your current taxable income and save on your taxes while also preparing for the future. With 401(k)s, your employer might even chip in a bit on your behalf. Even when times are tough, finding even small amounts to save can put time on your side and make a big difference down the road.
Many investors found out the hard way this year that bonds aren't as safe as they thought, with some major bond funds posting double-digit percentage losses in 2013. Despite those losses, bonds still carry substantial risk in 2014, with many calling for imminent interest-rate hikes that would erode their value further. Even now, bond rates are so low that they don't compensate you much for their risk.
If you pay full price for just about anything these days, you're paying too much. The rise of deep-discount stores has led to falling prices at stores and shopping malls. Moreover, online tools like coupon sites, daily-deal offers, discounted gift cards, and cash-back credit-card deals can cut your costs as well. With all these tools, you won't find many situations in which you have no chance of getting a bargain on the items you want.
In the past, many young adults focused on getting into as strong a college as they could, figuring that their degree would pay them enough to make up for the costs they incurred. With college graduates facing a more challenging job environment than ever, smart students are thinking about college costs before they make a decision on a school. By maximizing financial aid and looking at lower-tuition schools with nearly as strong educational quality, you can avoid creating a big debt hole that you'll struggle with for years into the future.
If you don't have a will, a power of attorney for financial and health-care matters, and an advance directive to tell medical professionals whether you want certain life-preserving measures taken if something happens to you, then you're putting your family at risk. Many people don't have even these basic estate-planning documents, but getting them in place is easier and less expensive than most believe. Get your affairs taken care of in 2014 and save your loved ones some big future hassles.
Resolving to be more financially astute and to avoid common mistakes will help you get your finances in order more quickly. These tips should give you more money to help you meet all your financial goals.