Money Lessons for Our Daughters

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3 Money Lessons for our Daughters

Money is often taboo, something we do not feel comfortable talking about. But we owe it to our daughters to have open conversations and to teach them about money. Not sure where to start? Here are 3 money lessons for our daughters.

Everything is negotiable

When it comes to money, everything is negotiable. And learning to negotiate is a valuable life skill. When negotiating, always look for a win-win. And try to have the other party start with their opening offer.  You never know, it may already be higher than what you were expecting.

On a small scale, start with trying to negotiate your cell phone contract or internet package. By negotiating, the company may lower your bill, or they may do nothing. But they will not increase your bill just for asking. 

You have nothing to lose by asking and everything to gain.  

This makes negotiating with your cell phone or internet provider a low barrier to entry. Practice your negotiating skills here. The more you negotiate, the more comfortable it will become.

And then when you are feeling more confident, it is time to negotiate your salary. This can be a game-changer for your career and will set the bar for future raises and bonuses.  Negotiating even a few extra thousand dollars can have a great impact later on.

Here are a few tips to keep in mind when negotiating with an employer:

  • Research the competitive salary range
  • Be good at your job and enter the negotiation with proof of your worth
  • Let your employer make the first offer
  • Start higher than where you want to end up

Compound Interest

Compound interest can either help you or hurt you.

In its simplest form, compound interest is when your interest earns interest.  So if you have $100 that earns 10% annual interest, after a year you will have $110. And without adding any more money after a second year you will have $121. Your interest gained more interest.

But the same is also true for paying interest. When you are paying interest on something you are paying interest on interest. So that simple thing you bought can end up costing you substantially more the longer it takes you to pay for it.

Rule of 72

When we are talking about compound interest, the rule of 72 is important to understand.  The rule of 72 is an easy way to calculate how long it will take your money to double (or the amount you owe to double).

All you have to do is divide 72 by the interest rate. So an interest rate of 10% will result in your money doubling in 7.2 years. And that’s without adding any more money to the original amount. It doesn’t seem like much, but once your money doubles and then doubles again the exponential growth can really add up.

Let’s go back to the $100 example. If that $100 is earning 10%, after 7.2 your $100 is now $200, in another 7.2 years it’s now $400, and in another 7.2 years, your money is now $800. So in less than 22 years, your $100 is now worth $800 – an increase of 800%.

But remember the same is true if you are paying interest.  

For this reason, you will need to be careful with loans, mortgages, and credit cards.  Credit cards are the worst as they often have interest rates greater than 15%, some even closer to 20%.  At 15% it will take less than 5 years for the amount you owe to double.

How to make the most out of compound interest:

  • Always pay your credit card off in full every month
  • Keep your savings in a high-interest savings account
  • Avoid buying things on credit
  • Stay away from investments that sound too good to be true

Nobody will care more about your money than you

Never give up the responsibility of managing your money because nobody will care for it as you do. Yes, it will seem easier at times to hand over managing your money to someone else, whether it be a partner or a professional. But in doing this you not only lose control, but your future net worth could also be greatly affected.

Work with someone with your money, a partner, or a professional. But never give up the responsibility of understanding your own money.

You don’t have to know everything, especially at the beginning. Seek the knowledge you are lacking.  There are tons of online resources and content creators.  Find one who has a story that resonates with you and learn from them.

Managing your money may feel messy or overwhelming sometimes, but stick with it and you will feel empowered.

Ways in which you can care about your money:

  • Always know where all your money is
  • Understand everything that you are invested in (if it is too complicated to understand you shouldn’t be invested in it)
  • Discuss money with your friends and family
  • Never be afraid to ask questions when you don’t know something

We may not have all the answers and that’s okay to admit sometimes. Moms don’t have to be perfect with their money.  But by sharing these 3 money lessons with our daughters and having open conversations we can learn and grow together right beside them. 

Maria Smith

Maria Smith

Maria is the founder of Handful of Thoughts, a resource dedicated to helping moms take control of their time and money.  At the age of 30, Maria was mortgage-free after paying off a $342,000 mortgage in less than 5 years.  She is working towards achieving financial independence while helping other moms to do the same. For more information contact: [email protected] 

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