Financially, how much do you share with your kids?

[Sum Dum Gai]

Some recent conversations with my daughter and a piece on NPR during my lunch break got me thinking about this. How much financial information do you share with your kids? How out of touch about money do you think they are?

So yesterday or the day before, I was catching up on that living on $17,580 thread right after dinner while the kids cleared the table. My oldest daughter walked in and read the title over my shoulder and said something like, "Wow, that's a lot of money." Oh to be 10 again. I explained that it was a very very small amount of money for a family to live on, and she immediately asks, "Dad, how much do you make?" I wasn't too comfortable answering that to be honest, although I decided to in order illustrate the income difference to her in real numbers. We'll see whether or not that backfires.

On the NPR piece, which was specifically about teaching finances to your kids and what they learn just from watching, one caller mentioned opening a checking account for her son when he was a junior in high school. The mother would deposit her pay checks into the account, and the son would write the checks to pay all the bills, buy groceries, etc., from it. She talked about how he learned to budget and what all goes into running a household. I can see the benefit, but I don't know if I'd be comfortable being that open about our finances with our kids.

Anyway, what do you guys think? How much do you share? How often do you talk about it, and at what age did you start? Do you think your kids value a buck, have an understanding of what it's worth, realize the importance of saving, understand your financial priorities, etc?

[CarolinaKat]

Wouldn't this all be age-relative?

[Wisconsin Beth]

My 3 year old found a quarter on the kitchen table last week and asked me for more coins so she could fix Cocoa and Daddy's feet. It was a really bittersweet moment because a. she wants to help the dog and daddy and b. she knows she needs more money and c. some wierdass mom thing about DH and I needing to watch our discussions around the kids...

[Sum Dum Gai]

Wouldn't this all be age-relative?

Sure, but my kids will be teenagers soon, and those with teenagers had kids the same age as mine at some point. So I think it'll be interesting to see the responses no matter what age the posters kids are. Except like toddlers I guess, I don't think you can really explain a budget to a one year old.

[Mrs. Dinero]

They (DS 11 and DD 8) have asked how much we make and I had to explain that it is rude to ask and that we make enough. That and they go to a small school and I would die if it was being discussed on the playground.
They shop with us occasionally and I will say that's too much (even though we have the $). I must have been saying it too much because one trip DD said $124! That's a lot of money. I told her she does not need to worry about the $.
I used ice skating lessons as an example. I said, "they are expensive and if we signed up for every sport we might have to take less/shorter vacations". You could see the wheels turning in her head. "You only get a certain amount of $. You need to make more or spend less".

[CarolinaKat]

May 19, 2011 15:44:17 GMT -5 Sum Dum Gai said:

Wouldn't this all be age-relative?

Sure, but my kids will be teenagers soon, and those with teenagers had kids the same age as mine at some point. So I think it'll be interesting to see the responses no matter what age the posters kids are. Except like toddlers I guess, I don't think you can really explain a budget to a one year old.

I was thinking more along the lines of posters with adult children and what THEY chose to share, so my brain was having a hard time connecting it to your 10yo. I look forward to the responses

[alabamagal]

We don't make it a point to say "this is what we make, this is what we can afford", but we try to teach our kids to be careful with their money. I don't think it works too well to sit down and "teach" them something, but little lessons along the way are great.

My 16 yr old son was doing a school project and he was talking about paying someone a little bit above minimum wage, like that would be great! So he asked how much I made an hour, when I told him, he said "WOW" but we are not rich. So just working on little steps.

The best thing to do is to have them get a job when they are old enough, then have them spend their own money on things. I have one child who is a saver and one who is a spender, even though brought up in the same house 2 years apart. Oh well.

[Savoir Faire-Demogague in NJ]

Parents should shield their kids from knowing how much income the parents earn. If a respectable amount of money is earned the kids could get lazy with helping with the household chores and responsibilities assigned to each family member.

Just my thoughts.

[thyme4change]

I struggle with the same questions. My kids are younger than yours and right now I'm trying to explain to them that money is relative. $100 is a lot of money to pay for a sandwich, but not a lot of money to buy a new car. We have been honest about the prices of the cars we have been test driving - but neither kid is up to asking how that stacks up in relationship to our income or assets.

I use to think that I would be honest with my kids, but now I'm afraid they will repeat the information. Although I'm not ashamed of our earnings, the number is high enough that it could come off pretty arrogantly if we go around telling a bunch of people.

[brdsl]

Before the internet became mainstream, my parents wanted to start putting the checkbook balances, checks, etc, on the computer. So, we bought a program, and I helped them use it.

It opened my eyes at a very young age, and basically made me save money...in fear of I would live paycheck to paycheck (much like they did). I remember worrying quite a bit about how we would make it to the next paycheck....

They didn't mean to do this, nor do I think they realize how much it made an impact on me.

I would tread lightly.

I would probably give them less, the household current financial situation, and more on examples and how to be successful.

[Mrs. Dinero]

DS said he was going to live in a big house and make a ton of money. He was pointing out people we know that are better off. I said, "That's great. The So and sos went to a lot of schooling and work a lot of hours". He then said, "Oh I want to live in a medium size house".

[thyme4change]

Watch the scene from Bill Cosby where Theo is going to move out, and Dad uses the monopoly money to make things realistic.

[Mrs. Dinero]

That's a great idea thyme!

[reader79]

I remember growing up knowing that we did not have enough. The electric would get cut off in the spring, and we would go without until my dad saved up enough to pay down the winter balance. He was self-employed, and my mom was a SAH with six children. It wasn't until my brother started PreK and she went back to work that it wasn't much of an issue.

Closer to high school I had a vague idea of what my mother made, as she was a teacher and salary info is public for them. They always made us earn money by working for my dad if we wanted extras though. For example, there was a waiting list for shoes, when your turn came up you could go with her to Payless and pick out a pair, or work for dad at $20/day to supplement the budget. I always wanted Nike's, but would only manage to hold out for two days ($40 extra,) then I would beg to go to the mall.

As an adult, I learned about their finances completely due to a frozen bank account after my sis defaulted on a co-signed car loan. Mom had to pay her bills using my checking account. It was an eye-opener.

[swamp]

My parents were really open about money, the were always honest and upfront about what they earned and what we could afford. When it came time for me to do the FAFSA for college, they handed me their tax returns and told me to fill it out.

My kids are 3 and 5, so we don't really discuss it, but i also plan on being open about finances.

[illinicheme]

My parents shared essentially no details while I was growing up. (Recently, at age 32, I did see my parents' entire balance sheet, as my dad and I were having a detailed discussion about investments.)

They managed to impart a lot of financial wisdom without giving us any detail. I wish I could remember exactly how they did it, but there was never a time that I remember not understanding how credit cards worked, etc. I think they mostly just said "no" a lot, to the point that I don't recall ever asking for much, because it was clear it wasn't going to happen. It got to the point of being surprised when my dad would splurge for something, like taking the family on a day-long horseback riding trip on one of our vacations (we still talk about that trip!)

Once we got older, my dad helped us set up IRAs (and later Roth IRAs) once we had earned income.

[Sum Dum Gai]

DS said he was going to live in a big house and make a ton of money. He was pointing out people we know that are better off. I said, "That's great. The So and sos went to a lot of schooling and work a lot of hours". He then said, "Oh I want to live in a medium size house".

This resonates a lot. I've posted a little about my SIL before, but basically she's always wanted the lifestyle that her parents had. My wife did too to a certain extent. That's fine, but her parents were making somewhere around a quarter million a year before they retired several years back and they bought their house near the beach decades earlier when it was well under $100k. Now it would take at LEAST half a million to buy the oldest crappiest house in their neighborhood. I don't think my SIL realizes to this day why she can't stay out of debt chasing that lifestyle, even though she makes less than I do. It's like her brain doesn't understand basic math, or she looks at it like, I work as much as my dad why can't I live like he did. The woman is a CPA, you'd think she would be better with money.

It's not that I want to push my kids to reach a pre-determined earning level, but I want them to understand before they leave our house how much income it takes to have various lifestyles, how much saving for retirement costs, etc. I don't want them to go out cluelessly trying to recreate our lifestyle, even if they can't afford it, because they don't know any better. Hopefully that leads to them making smart choices about how much to spend on college degrees, where to move, how much shelter to buy, etc.

[sheilaincali]

My parents were not open about money with us kids. We were told things in general terms if we asked. We knew that both my parents worked and that my dad owned his own business. When I was in high school it was still pretty small- only had like 25 employees. By the time it was at it's prime he had over 100 employees at 7 different plants in 4 different cities.
When we asked about FAFSA we were just told "that's not for you, you don't qualify" As each kid went off to college my parents just wrote a check to the school each semester for the full tuition.

With DS he has been along for all the bumps in the road- big jobs, job losses, relocations, etc. He doesn't know specifics but he understands that we have a budget and that we use common sense when we spend.

I spend a lot of time trying to teach DS (he is 13) common sense life lessons- and financial responsibility falls into that category.

[zibazinski]

It's a hard balancing act, being a good parent.

[Plain Old Petunia]

I have been pretty open with my kids about finances, how else can you teach them what you have learned? However, I have also explained numerous times that it is a private matter, for their knowledge, but not for anyone else. To date, I've not had a problem with them blabbing to others.

I have repeated ad nauseum that we budget so much for wants and that is it, so we have to make it count by choosing the wants we desire most.

[Deleted]

"Watch the scene from Bill Cosby where Theo is going to move out, and Dad uses the monopoly money to make things realistic."

I was going to mention that! I actually did it with my kids. I gave them each a *month's pay*, loosely based on what they said they wanted to do for a living. I used mine and family member's houses for comparison to figure out what kind of house they wanted. I asked what kind of car they wanted. Then we *paid their bills*. Needless to say, they were shocked to learn that what they thought was a lot of money, really wasn't, and how fast expenses add up.

I talk about money with them but I've never told them exactly how much I make. They talk too much for that.

[Deleted]

A monetary discussion with my parents consisted of me saying "Can I have $X for whatever?" Invariably Dad said yes and Mom said no, we can't afford it. You learn quick to ask Dad. Anyway, I ended up having no concept of what a normal salary was and really undersold myself in the workforce. I promote being open and emphasising that it is private family info.

[2girlsdad]

Good topic. When my DD's ask "how much do you make" or "how much are (we) you worth" I always answer the same ........
We have more than some but less than others. I think this sums it up perfectly for just about anyone not name Carlos Slim, Warren Buffett, or Bill Gates
To go further, I have shown them multiple paychecks to show them gross and net with all of the deductions.... health, dental, taxes, 401k, credit union, etc. I have shared with them what our mortgage costs in relation to these paychecks, too. I have discussed airfare and vacation costs, as well. We went to Italy last year for nearly 2 weeks and I've had to explain why we can't do this every year.
I have discussed college costs, what we've saved and what we expect them to cover. I've even discussed with them what various professions pay. My oldest wants to be a poet! I've told her she'd have to be VERY successful to go back to Italy on her own.

[moneymaven]

I highly value the lessons from my parents financially speaking. Every weekend, I would sit down with mom to write out the grocery list and clip coupons. She planned meals based on the weekly deals and we used coupons for everything.

Next, we paid the bills. It began with balancing the checkbook by adding in deposits, then I wrote the checks to each company, and mom reviewed my check writing skills and signed them. Balance the checkbook again. I saw how far (or how short) the money went. We applied postage, then ran our errands. Grocery shopping, post office, etc.

I had a real understanding of what it takes to run a household at a young age, and we did this for years. What I didn't see was what happened with the paycheck - 401k deposits, federal bonds purchased (dad works for DOD), savings deposits, etc.

Mom showed me those things as I got older (later teen years) so I could learn wise investing. She taught me about CD's, IRA's, etc. When I had my first real job with 401k benefits, I couldn't wait until I turned 21 to start contributing.

I plan to do this with my children - of course, DS is just 11 weeks old, so I have some time before he can even hold a pen. I will never forget the value she instilled in me about these things. I highly encourage everyone to be open in a way that benefits their children and their household.

[moneymaven]

I failed to add that both mom and dad were/are conservative spenders. Their home is paid for and they have virtually never had car loans or loans for anything other than the mortgage. They grew up with the understanding that if you didn't have money to buy something outright, then you couldn't afford it. They taught us the same.

Mom eventually taught me how to make loans work in my favor, such as 0% car loans, and investing the funds I would have paid cash for the car with, etc.

I need to go hug my parents. They're pretty amazing.

[Jake 48]

My boys, 23,24 talk money all the time with me. Oldest boy makes more than I do, pays attention to credit scores, interest rates, borrowing, long term savings/investing etc.. Youngest son is a saver, still has first communion money and has a good idea about money but not concerned like his brother, they both know my financial situation. Step daughter 23, is clueless, spends it as fast as she makes it and I have given up trying to explain/ guide her. She has always had someone there to wipe her arse because she gets by on her looks/ charm. someday she will wake up. she has no idea of my financial picture.

[azphx1972]

That's awesome, insmoneymaven. You were extremely fortunate to have your parents.

[Deleted]

I wish my family had been more open about money. Growing up, I was a pretty responsible saver, but I never learned about budgeting or the costs of running a household.

Between tuition and books, I emptied my savings (50% of anything I ever earned, first communion through high school graduation) my first semester at college. Spent the rest of my college years perpetually broke and unwilling to ask my folks for as much help as I really needed (no idea if they could have afforded to give it or not - we never talked about it, I just assumed I was asking for too much). Made some bad choices around credit cards and student loans. Spent the rest of my 20s in consumer debt and never really managed to get ahead until I joined WIRR. And even though I have paid off my consumer debt and finally advanced enough in my career to have a comfortable income, I'm still going to be paying student loans for most (all?) of my 30s.

I wish I knew how my folks managed to support our family of 4 on 1 income for most of my childhood. If they made bad choices, they did a pretty good job of hiding them from us kids.

[midjd]

My parents are both financial trainwrecks... I think it benefited me in some way since I became a voracious saver, but I was also pretty much on my own when it came to financial planning, retirement, wealth building, etc. I don't think I knew how much my mom made until a few years ago.

I do remember going with my mom at age 6-7 to cash her paycheck... I would be in awe at the stack of bills, and she would tell me that it was "spent already". It took me a while to get the concept of that, but it stuck with me as something to avoid.

[Regis]

When my kids were young and they asked how much I made, my standard answer was "Enough to take care of your needs." Now that they're 19, 17 and 15 I share much more.