Thanks, Mom, for all the great financial advice!
Several of our women leaders remember the valuable lessons their mothers taught them and share tips to help you teach your children about money
THINK ABOUT THE SATISFACTION you feel when you work hard, rise in your profession and can give to the charities you care about. Or the regret when you realize you’ve missed out on a potential investment opportunity — or a really good sale.
Where do those emotions come from? Your approach to money likely has its roots in childhood when your parents passed on valuable financial lessons. Every mom has her own methods for creating teachable financial moments, says Jennifer Chandler, head of Philanthropic Solutions at Bank of America Private Bank. “My mother led by example. She was very creative with the little we had, and I knew that if I wanted something I had to work for it.” Others provide their kids with the means to learn by doing.
In the slideshow below, several women leaders at Bank of America share more of what their mothers taught them — plus some tips that you may find helpful in passing on financial lessons to your children. (Use the Financial Flash Card and Pop Quiz at the bottom of the page to get your kids thinking about key money concepts.)
“The thing that she impressed upon me is that you can’t take anything for granted,” Auerbach-Rodriguez says of her mother, who emigrated from the Dominican Republic in her early teens, putting herself through college and always working to earn money. “She always said how important it is to have your own money. I would never be extravagant or frivolous with money because my mom constantly reminded me how much work went into every single dollar earned.”
Even though her son is just a toddler, Auerbach-Rodriguez is beginning to dispense fiscal wisdom, using everyday experiences to express gratitude. “We’ll talk about never wasting or playing with our food, and I feel strongly that he understands our family’s history was not one of abundance,” she says. She also tries to model good behavior. At the toy store, she’ll narrate her spending decisions in real time. “I’ll say, ‘We are here to buy this one thing, and that’s it.’ ”
Though Chandler’s mother came from very little, she always saw the silver lining. “She believed that you take what you have and do something creative with it,” Chandler says. There will always be people with more than you, so you appreciate what you have and give what little you have left over. “Joy is in the act of giving, like when she made a prom dress for a friend who couldn’t afford one. She got a lot of pleasure from those moments,” Chandler says.
Chandler encourages her four kids, ages 9 to 15, to give back like their grandmother did, including donating a portion of profits from their lemonade stands. Those stands also offer opportunities to teach entrepreneurship. “We’ll talk about things like inflation, what they’re going to charge, their location and net revenue,” she says. And gratitude underlies all her lessons. The kids can’t keep a present until the thank you note is stamped and sealed. “That’s not easy when they’re young!” Chandler says.
The most valuable money lesson Fahmy’s mother taught her was to invest in herself. For her, that meant pursuing an education. Her mother had paused her own career after having three children. “However,” says Fahmy, “it was very important to her that her daughters had the best education so they could stand on their own feet and achieve financial independence.”
Fahmy teaches her 10-year-old daughter to set goals — and develop patience. “A few years ago, Riley really wanted a dog,” Fahmy says, “but I told her that was a want, not a need, and she should save for it.” They created a “puppy goal” chart to tally her progress. “She earned money by completing chores and put away what she received for her birthday.” Now she has a new goal — a bike. And Fahmy takes her to the local bank branch to deposit her savings.
When Dugan headed off to college, her mother cosigned her first credit card — an action that led to a lasting money lesson. “I maxed it out,” Dugan admits. Her mom bailed her out, then set up a repayment plan. “She sat me down and said, ‘I want you to feel what happens when you do something like this.’ I worked for an entire summer, and I was paying off things that I had purchased months earlier. I couldn’t even remember what they were.”
When each of Dugan’s two teenage sons turned 14, she opened bank accounts with debit cards for them. They deposit their allowances (and she can monitor their spending). “When it’s something they are paying for, they are savvy about questioning if they really want it,” she says. Other lessons are indirect: She and her husband are not shy about discussing finances within earshot of their sons. “I want them to know what a car payment and a mortgage can cost, so they can take that knowledge into the future.”
How early can you start? Sooner than you think; researchers have found that by age 4 or 5, children start to understand the relationship between buying and owning things; by 5 or 6, they start to grasp the idea of prices and how they’re connected to supply and demand.1 Jennifer Auerbach-Rodriguez, head of Strategic Growth Markets at Merrill Wealth Management, has already begun explaining the concepts of “have” and “have not” and “wants” and “needs” in very basic terms to her 2-year-old.
As your children enter their teens, there are other more hands-on activities you can encourage them to try. In the video below, Savita Subramanian, head of U.S. Equity & Quantitative Strategy and head of ESG Research at BofA Global Research, shares how she started teaching her kids about the power of investing.
What about allowances — should you tie them to chores? More than half of parents support tying allowances to chores, according to a survey conducted by Mint.com.2 Nancy Fahmy, head of the Investment Solutions Group at Bank of America, started her daughter on an allowance tied to chores, like making her bed and cleaning her room, at age 10. Chandler ties her children’s allowances to chores as well, saying that “it helps to instill the value that you have to work for things you want.” When she lends her children money over and above their chores-linked allowance — say, for an activity like going to the movies with their friends — she’ll charge interest, creating another teachable financial moment.
The resources below can help you start conversations about money with your children. Use them to create your own teachable moments. (For more suggestions, check out this “Financial Education Handbook: Practical Ideas to Engage the Rising Generation,” from Merrill.)
Those conversations will change and become more complex as your children grow, and at some point, your financial advisor may be able to provide resources and guidance as well. But getting started early is key. “Motherhood is a journey and raising your children to be financially responsible is part of that,” notes Kristen Dugan, Chief Supervisory Officer, Merrill Wealth Management. Thinking back on her own childhood, Auerbach-Rodriguez recalls, “Early experiences made me who I am.”
What’s a ‘want’? What’s a ‘need’?
Moms, download this flash card and ask your kids, from toddlers to tweens, to identify the “wants” and the “needs.” Use this exercise to jumpstart conversations about how knowing the difference can help you create realistic spending habits. Explain the importance of budgeting for your needs and saving up for the things you want.
True or false: Your credit score is as important as your school grades
True or false: Saving and investing are the same thing
True or false: There’s more than one way to save for college
Choose your advisor in a more personalized way
All our advisors are committed to putting your needs and priorities first. Find some who match your personal preferences too.
Try Advisor Match
Want us to contact you?
How we can help
Explore what it’s like to work with a Merrill Financial Advisor