Why teach girls about money?
End the gender wage gap?
Promote economic empowerment?
Ensure a safe retirement?
Create opportunities throughout life?
When girls learn about money, they learn critical life skills like salary research and negotiation, and the need to maximize their incomes throughout their lives to build wealth and financial independence. They also learn about investing, and the power of compounding and time. That information can help girls learn to start saving early in their careers, to ensure sufficient funds for retirement. Finally, girls’ financial literacy means a foundation for creating a life with opportunities and choices to help women with economics and business management.
The scary financial story for our girls today is that despite the Equal Pay Act of 1963, and lots of press about Hollywood and other industry wage discrimination, women working full-time continue to earn a fraction of what their male counterparts do — coming in at 80 cents on the dollar in 2017, according to the U.S. Census Bureau. Even scarier is that our academically successfully — and frequently superior — recent women college graduates continue to under-earn their male counterparts. According to a recent study by the Economic Policy Institute, recent women college grads earn 86% of what men earn in 2015, down from 91% in 2000.
So, what does that cost women in a lifetime? Studies show that a half a million dollars is what under-negotiations a first salary can cost someone by age 60. Why is this still going on despite policy changes, publicity, and overall greater awareness of the problem?
One thought is that women earn less because they do not negotiate salaries as effectively as their male counterparts, if at all. So why not? Let’s take a step back, and look at what happens as girls grow up, and what they learn about speaking up for themselves, and knowing and acknowledging their talents and skills.
Psychologist Carol Gilligan has shown that girls learn between the ages of 11 and 15 or 16 that it is dangerous to say how she actually feels, compared to younger girls who are more courageous. Conversations with older adolescents can be marked by the phrase “I don’t know” when a few years earlier, the girls were outspoken and confident.
Another psychologist, Mary Pipher, talks in her book Reviving Ophelia: Saving the Selves of Adolescent Girls about how girls who speak frankly are labeled negatively, and that girls are trained in society to be feminine, and to “achieve, but not too much.”
In my experience as a mother and a teacher, I remember my middle school daughter and her friends starting to say that it was not nice to “brag,” which really meant, avoid saying positive things about themselves. Later, in my financial education classes with high school girls, I saw the evolution of that idea. When asked if my students would ever try to negotiate a higher salary, one girl said she would not ask for more money if it could hurt the company or other people working there. Another girl said she would never speak up for herself; she would work hard and wait to be noticed.
And we see where that disposition leads. So how do we break this cycle for the next generation of women?
The answer is money confidence.
Money understanding is multi-faceted. There’s the knowledge that needs to be acquired, there are the skills that need to be developed, and then there are actions that need to be taken. For example, it’s not just enough to know that you should be earning what you’re worth, you actually have to negotiate the salary. In simple terms:
Money Understanding = Knowledge + Skills + Disposition.
Money confidence is believing in your ability to take care of yourself financially, and involves the ongoing learning and demonstration of the skills, mindset, and deeper understanding of how the critical financial pieces of your life fit together. These pieces include human capital, wealth management, and value creation.
In one recent high school girls financial education class of mine, we discussed the context of women and money, looking at issues around the gender wage gap, women and work, girls’ rising ambition levels, and the importance of income in the overall financial picture. We did a fantastic exercise around salary negotiation, so the girls could begin to understand — and experience — that critical process.
When we came back together for a debrief of the activity, the girls discussed the challenges of the process, and also the exultation when they had made a strong argument for a raise, and got it. We talked about what it would take for them to negotiate a higher salary in a real-life situation.
In the exercise, the girls have to make a case for why they should be paid more. During the debrief discussion, one student remarked that she could see how much confidence in herself would align with what she would be paid in the future.
The answer is obvious. Without confidence in your own worth, it can be difficult, or even impossible, to make a cogent argument on your own behalf, or even start the conversation for a higher salary.
Salary negotiations can be tricky. Part of the process is speaking up for your skills and contributions, defining that value in the workplace, and asking for more of the employer’s scarce resources for yourself. So, if you are someone who has grown up being taught not to “brag,” chances are explaining your skills and asking for recognition of your value, is not going to be something that comes easily to you.
While the gender wage gap is caused by a number of different factors, an unwillingness to negotiate is certainly one of them. Carnegie Mellon economics professor Linda Babcock suggests that men are four times as likely as women to negotiate their salary. When we look at the evolution of adolescent girls, it is easy to se2e where women’s reluctance in this area might come from. And once we know where a problem comes from, the solution becomes that much clearer.
For more information about conversation points and activities to teach your girl how to grow in confidence, articulate her worth, and negotiate a salary, go to www.financialnutrition.com/learn.