Money Talks With Your Kids
How to handle tough questions from your kids.
Your child asks how much money you make. Is it appropriate to give a 10-year-old an honest answer? What about a 17-year-old?
It’s generally not a good idea to provide a dollar figure to a child who is 10 or under, experts say. For one thing, she may be indiscreet with the information. Additionally, it’s the rare fifth grader who “has the perspective to truly know the difference between $50,000 a year and $500,000 a year,” says Nicole Francis, a New York City–based certified financial planner. What she may really be requesting is reassurance that her future needs will be met (particularly if someone in her life has recently undergone financial hardship). Explain to her that she has nothing to worry about and that your family is comfortable enough to afford the necessities of life.
This approach also works with teens. But if you feel comfortable sharing more specific information with them, sometimes it helps to do so. A 17-year-old in particular may have real concerns about college and what your family can afford, says Brad Klontz, Psy.D., a certified financial planner and clinical psychologist based in Kauai, Hawaii, and a coauthor of Mind Over Money ($10, amazon.com). Either tell her your salary or give a range so she knows whether her ambitions match your budget.
You are having financial problems and can’t afford your child’s beloved horseback-riding lessons next year. Should you level with her?
Again, you don’t need to give kids specific figures, but you should be honest, says Stephen Betchen, a marriage and family therapist in Cherry Hill, New Jersey, and the author of Magnetic Partners ($19, amazon.com). “Gently saying no to something a child under 10 desires teaches her a valuable lesson that she’ll need as an adult in this tough world: You can’t always get what you want,” he says. For a child 11 or older, you can say, “Some people who make more money than we do can afford these lessons, but we can’t right now.” Chances are, she’s already accustomed to the idea that different families make different decisions about cars, vacations, and food, so she should have the resilience to deal with the news.
Be careful, though, about being too emotionally revealing with your children. They should never become the sounding board for your own money worries. “One major reason kids grow up to feel shame about money is that their parents shared all their financial anxieties,” says Klontz. So even if you are experiencing a major financial setback, like a job loss or a foreclosure, process your grief and frustration with other adults, then approach your children with a problem-solving mind-set: “Hey, kids, we’re moving to this really cool apartment!” Francis agrees: “By using this strategy, you can be transparent while also demonstrating an important lesson—that there are so many ways to have fun and enjoy life on little to no money at all.”