What I Want My Daughters to Know about Managing Money


Written by: Harmony Wagner, CFP®, CPWA®

As a mother to three young daughters, much of my time and energy is devoted to teaching my girls the skills and principles that will help them thrive in life, ranging from how to build a piece of furniture to how to stand up for yourself. Given my chosen career, it probably comes as no surprise that financial literacy is top of mind for me, and I’m focused on making sure my children grow up having a healthy relationship with money. After working with hundreds of clients and families, I know how important these early years can be and I’m familiar with the considerations that tend to affect women disproportionately. Based on my experience as a financial advisor and a girl mom, here are the top 5 things I want my daughters, along with other young women in their generation, to understand about their financial lives.


  1. Invest as early as possible.

This practical wisdom is one of the first values I intend to communicate to my daughters. While there are many financial maneuvers that can be done any time in life, this particular principle works best when practiced in the first decade of adulthood.  Open and fund a Roth IRA as soon as you get your first job (even a summer job as a teenager will make you eligible for a Roth!). Start contributing to your 401(k) the first pay period that you are eligible. Start an automatic monthly contribution to an investment account as soon as you have a regular job. The power of compounding over decades has turned many a disciplined young saver into a wealthy adult with financial freedom to retire early, make career changes, give to family members, and more.


  1. Keep a close eye on your risk allocation.

Research shows us that on average, women are more successful investors than men because they are less likely than their male counterparts to fall victim to overconfidence that can lead to major, portfolio-draining errors, such as investing too great a proportion into individual stocks. However, women often are more risk- averse than men when it comes to investing which can lead to mediocre investment returns over time. Considering that women have longer life expectancies and need to plan for a longer time horizon, it’s important to take a disciplined, non-emotional approach to investing risk and to monitor that level regularly.  My advice for young women is to select an aggressive allocation for any long-term money--think 401(k)s, IRAs and Roth IRAs, and any brokerage accounts that are earmarked for long-term goals. Once the appropriate risk management strategy is implemented, I’d recommend setting an annual calendar reminder to review that allocation, rebalance if necessary, and invest excess cash above the established emergency reserve threshold.


  1. Debt is a powerful tool.

The messaging on debt in today’s world can be confusing. Many American households glamorize debt, particularly credit card debt, as a way to live above their means. Other people, including some well-known financial gurus, may demonize debt and suggest that it should be avoided as if it were a deadly poison. My advice to young women on debt is that depending on how you use it, debt can hold the power to grow your household wealth or to drain it. Those who learn to utilize it within safe parameters can leverage their ability to grow wealth and earnings potential far beyond what is possible with just cash on hand. However, women who want to take advantage of this powerful tool should fully understand the effect of interest rates, the ideal debt-to-income ratio, and the ways debt can be secured in order to make a wise debt management plan. Visit my colleague Katie’s recent blog to learn more.


  1. Find a financial mentor.

All young women should aim to build a relationship with a trustworthy person who exemplifies prudent money management and is willing to discuss it openly with them. While I hope that I can be this person for my daughters, I understand that sometimes wisdom isn't as well received coming from a parent and at times it may be best for another relative, family friend, or respected colleague to fill that mentor role. Listen to that mentor’s practical tips for handling finances. Learn from their mistakes. Use them as a sounding board for financial decisions throughout life. An example of a decision that would be greatly enhanced by wise guidance is choosing a college, especially given that many high school graduates do not fully understand the financial repercussions of student loan debt, expected future earnings potential, etc. Having a wise and honest mentor to gently pose the question such as, “Is it wise to take on $200K of student loan debt for a career where you can expect to earn $50k annually?” can mean a world of difference for a young woman who may not yet have the life experience to evaluate financial realities.


      5. Wealth is not innately valuable.

The final, and perhaps most important point I want my daughters to understand is not to pursue wealth for its own sake. I hope that my girls will never have to worry about money, but I also know that there is no magic net worth or income level that will bring lasting them happiness or contentment. This principle is more than a cliché; in recent years, it’s been backed by scientific research. A 2010 study from Princeton showed that income was positively related to people’s happiness only to a certain point, but after reaching that threshold (which the study identified as annual income of $75K), higher-income individuals actually reported a negative correlation between income earned and happiness. This data suggests that having enough income to meet basic needs is a benefit, but beyond that relatively modest level, wealth doesn’t have the ability to increase happiness. True contentment comes from building a life that supports your values. Spending time with loved ones, working in a field that is inspiring and rewarding, and prioritizing physical and mental health are all examples of “investments” that pay returns far more meaningful than a seven-figure portfolio ever could. Wise financial management may only require a couple hours of focus a few times each year. I hope that beyond that, my girls learn to spend the rest of their time and energy focusing on the things that bring real joy.



On a day that is dedicated to celebrating the accomplishments and progress of women everywhere, I feel grateful that my daughters are growing up in a world where they will have the opportunity to succeed. Here at Bouchey, we are passionate about helping the women in our community have that same opportunity. Happy International Women’s Day to women and girls around the world!

Posted in