By Claudia Mollerup-Madsen
Mothers tend to have a habit of constantly giving: love, time, energy, attention – the list goes on. Even on Mother’s Day when the day is supposed to be centered around you as a mother, your instinct is to want to give back, and the best gift you can give back to your children, is the gift of financial knowledge.
Last month, The Women’s Resource of Greater Houston hosted a luncheon where the keynote speaker spoke to participants about the power of money and how investing in each other financially, along with education and professional mentoring, will propel the future of equality and respect.
There are many life lessons you will teach your children as they grow older; don’t pass up the opportunity to be a financial role model for your little ones. Talk openly about money at the dinner table, in the car, and at the mall. By doing so, you are helping to ensure your children are financially prepared and money wise by the time they become independent young adults.
To understand the importance of being well versed financially, as well as financially savvy, it is important to know the facts. More than one in seven women live in poverty; that is nearly 17.8 million women. There are many factors contributing to those statistics: women living longer than men but lacking a retirement plan, and taking time off from the workforce to have children.
So, here are some key pointers when talking to your daughters to ensure they won’t be adding to those statistics:
Considering that women, in general, tend to live longer than men, it is crucial to be just as financially versed as men when it comes to handling your finances. This advice may seem obvious, but recent studies prove that knowledge is still lacking according to a recent literacy study of men and women conducted by the Global Financial Literacy Excellence Center. The study asked questions related to inflation, interest rates, and the stock market, revealing that 16% more men answered the financial questions correctly than women.
Change starts with becoming educated in all things finance, that way you feel confident and are able to explain the importance of saving and investing to your children so they can potentially avoid being impoverished later in life. Don’t be afraid to ask questions; it’s a great opportunity to research it together.
While living longer and taking time off for children have its perks, they also have some drawbacks. For instance, living longer and taking time off from the workforce means you need a more substantial amount of savings to live comfortably longer. Additionally, health complications as we age means women will be paying for more years of healthcare including prescriptions, doctor visits, and medical procedures.
Therefore, saving early is key. The power of compound interest makes a vital difference in your long-term savings. Being patient and deliberative will help even a small amount of money invested at a young age grow to significance later in life. After all, every penny counts when potentially facing time off from work and a living longer without an income.
Sign up for a plan
Whether it is your employer’s sponsored 401(k) or opening your own IRA, make sure you are consistently contributing to a retirement plan. It is easy to thwart your good intentions when other expenses come along such as braces for your child, college savings, home repairs, or a car payment, but stay the course. Each month that you contribute to your retirement savings can differentiate between a stressful retirement or a comfortable one.
This Mother’s Day you can give back to your children with a gift that will benefit them for a lifetime. Don’t pass up the opportunity to educate your sons and daughters, helping prevent them from being a statistic.
Goals-based wealth management that helps prepare for different stages of life is how Morgan Stanley Wealth Management plays an important role in its clients’ lives. Financial advisors, like me, are focused on safeguarding our clients’ financial health and helping them meet their lifetime goals.
Claudia Mollerup-Madsen is a Vice President and Financial Advisor with Morgan Stanley in Houston.