Woody Allen's latest film, Blue Jasmine, is the familiar story of an "innocent" socialite whose life comes crashing down after her husband's illegal financial dealings are exposed. Although fictional, Jasmine represents the poster child for many women claiming ignorance about money, relinquishing personal financial matters to a spouse. Jasmine symbolically signs tax returns and legal documents with a blind eye -- after all, her husband asks, "Is there anything you want you don't have?"
Jasmine is imagined, but the problem is real, especially when it comes to long range planning and investing. Even a role model like Sheryl Sandberg, falls into the trap, by deferring financial matters to her husband as she writes in Lean In:
Our division of household chores is actually pretty traditional. Dave pays bills, handles our finances, provides tech support. I schedule the kids' activities, make sure there is food in the fridge, plan the birthday parties. Sometimes I'm bothered by this classic gender division of labor. Am I perpetuating stereotypes by falling into these patterns? But I would rather plan a Dora the Explorer party than pay an insurance bill, and since Dave feels the exact opposite, this arrangement works for us.
While I don't know what is discussed around the Sandberg's kitchen table and do appreciate Sheryl's honesty, I also know that too often, attitudes like hers start young, and as proven time and again, can lead to future hardship for many women.
We must recognize this shortfall and begin the money conversation early and often, especially with our girls. Statistics show our daughters will live longer than our sons, women on average earn less money over their lifetime than men, and in 40 percent of all households, mothers are either the sole or primary breadwinner, an upward moving trend. Excuses such as -- "not interested," "boring," "father/spouse will take care of me" -- are no longer valid. Yes, I too would rather plan a Dora party than pay an insurance bill, but preference is not the point.
Born in the "peak" year of the baby boom, money was the taboo conversation in our family and still is for many. Parents are more willing to discuss sex and drugs with their children than money. I was cared for by my father not realizing he built up credit card debt to buy me clothes, struggled to cover my college tuition and like his parents made many bad investment decisions. I am financially literate through self-motivated education, experience, mistakes, professional advice good and bad -- not because of my upbringing. As so many women of my generation say, "If I only knew then what I know now."
What about the next generation? According to an April 2013 report from the Girl Scout Research Institute, girls feel optimistic about their financial futures. As a matter of fact, 90 percent of the girls surveyed expressed the importance of managing their own money, which on the surface is good news. Unfortunately, optimism doesn't always translate in the real world. "Our research is clearly telling us that girls understand the world -- they know how important it is to be financially literate in their daily lives," said Anna Maria Chávez, CEO of Girl Scouts of the USA. "It's also telling us that too many girls lack the confidence needed to become financially independent and responsible citizens." With only 12 percent surveyed voicing assurance in making financial decisions, Ms. Chávez' message rings loud and clear.
Although financial literacy empowerment for girls is in the limelight, I'm not convinced the approach is comprehensive enough. Helaine Olen in Pound Foolish writes, "[B]y every available measure, the financial literacy of the American public has remained dismal in the almost two decades since the movement began." I suggest change involves more than reading a book or blog, taking a course or watching Jim Cramer on CNBC. We need a cultural shift involving parents as well as educators. Like sex and drugs it will take a village.
Mothers and fathers equally must make a concerted effort with their girls. Serving as role models, parents can have the biggest long range impact. Start in pre-school with saving, spending, giving -- a weekly allowance is a great teaching tool. Talk about money at the cash register, bank, and through play. Even Sesame Street joined the financial literacy bandwagon.
Over time introduce new concepts such as earning money and budgeting. Explain credit cards and their use, insurance, good debt and bad debt, money issues that worry you. Be honest as truthfulness moves the learning curve forward.
Have your daughter join you while paying bills. Discuss your spending and saving habits. Present compound interest and its effect when saving and borrowing. Show her a credit card bill highlighting the implications of not paying in full each month. Give her tasks such as buying school supplies or clothes on a fixed budget. If you are shopping for a mortgage or big ticket item such as an automobile, ask your daughter to help research and weigh in on the decision.
By college age, your daughter should have a credit card, checking and savings account in her name. Include yourself on the accounts to monitor and teach, but let her take full responsibility for paying her bills, budgeting and balancing the checkbook.
Move the dialogue beyond day-to-day money matters and into lessons that represent the crux of lifetime financial independence: Investing, Estate and Retirement Planning. Your daughter should understand the financial implications of buying a home as well as how taxes impact income, savings and investment. Most importantly, she must recognize those unfortunate unknowns life may bring and the value of putting essential backstops in place to prepare--job loss, illness, early death of a spouse, divorce and litigation to name a few.
Teach her the lay of the land, hands-on education will go farthest. The key is to protect her from becoming victim to the so-called financial gurus who may prey on her emotions for personal gain. She must know the questions to ask and professionals to trust. If a proposal sounds too good to be true or overly complex, she should avoid it. The power of knowledge is crucial whether she remains single or marries, pursues a career or not.
For those not involved in the family finances and like Sheryl defer to a spouse or partner, I encourage you to "lean in" and take this opportunity to learn and lead by example. Gain an understanding of the basics by asking questions using the words who, what, what if, where, why and how. Confirm there are strategies in place to meet your family's short- and long-term financial goals. Do they make sense? What is the risk? Are the benefits exceeding the costs? Think about whether your behaviors positively contribute to the family's financial objectives. Are you prepared for the unknowns? Join the team, if not for yourself then for your daughter.
Financial literacy must become part of our daughters' DNA. Let's not let Jasmine's shattered life become a reality.
Robin Patinkin, CFA, CFP® is a Principal at Cedar Hill Associates, LLC an investment advisory firm based in Chicago serving high net worth individuals, families, foundations and endowments.