Should You Tell Your Kids How Much Money You Make?
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Some numbers are generally kept private. One’s weight, for example. Also, income. But in the new book The Opposite of Spoiled, published Tuesday, New York Times money columnist Ron Lieber argues that what a family makes should no longer be hush-hush. Instead, he argues, “teens curious enough to ask about the family income, ready to learn about the ways we spend it, and wanting the information for the right reasons, deserve an honest response. What we make and how we make it is so essential to our lives that it seems wrong on the most basic of levels to shroud it in mystery and silence.”
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In the book, which was excerpted in The New York Times, Lieber says the conversation can begin as young as 5 or 6, “building their knowledge slowly and giving them the real answer while they’re still teenagers.” Jayne Pearl, author of a series of Kids & Money guidebooks, says it’s easy to get a sense of when to start the questions. “It’s like talking about sex,” she says. “When kids start asking questions they are ready for the answers.”
The first step, though, is to figure out why they’re asking the questions in the first place. Lieber says questions about money might stem from a child’s concern about parental disagreements. “If two parents are fighting about money and a child overhears, it’s natural to wonder how much the family has or if it has enough,” he writes. But Pearl says it goes deeper than that. “They’re asking ‘Are we okay? Do we have enough?’ but also ‘Where do we stand compared to other people? Are we richer or poorer?’” she explains. “It’s important to say there are always people richer or poorer, and we are in the middle – but if you skew toward one end, it’s okay to say so.”
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You also need to keep in mind that kids don’t have the same perspective of money that you do, Pearl says. “When my son was eight years old, if I told him I made $1,000 a year he would think that was a lot of money,” Pearl says. “So before I told him anything about what I brought in, we looked at what it takes to run our household.”
Pearl says it’s important to start with what you spend before getting into what you make. “If the first impression is how expensive life is, then it will really stick with the kids when they learn you make enough to cover it,” she says. If you start by throwing a salary number at your kids, they could be so impressed that they stop listening before you get to “but this is what we spend.”
Lieber suggests starting with the grocery bill. “[Kids] often tag along to the store or add to the wish list each week, so it’s a great opportunity to introduce the idea of wants and needs as you navigate the aisles,” he writes. “This is all part of helping them answer basic family budget questions: What do we spend each month to cover the necessities, and what do we choose to spend on things that we merely want?”
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Once you’ve explained expenses and needs versus wants, you might start revealing hard numbers regarding how much is coming in, or you can approach it more generally. “I would guess that some large portion of parents would not be comfortable divulging hard numbers,” Pearl says. “When my son asked, I erred on the side of disclosure – after explaining that this was a private family matter that we didn’t talk about outside the family – but if parents can’t imagine giving a number, that’s okay. You can say, ‘we’re comfortable most of the time but we prepare for hard times,’ or ‘we could have a little more but we choose to work less so we can spend more time with you guys.’”
Look at the revelation as an opportunity, no matter how uncomfortable you are discussing finances, Lieber says. “For those of us who have at least a little bit more than what we need to scrape by, what we spend says a lot about what we stand for; how we determine value is a reflection of our values. How much do we save? Why does it fluctuate? Who has helped us, what do we give to people who have less, and why don’t we give more?” Lieber writes. “It’s impossible to answer these questions for children with conviction and clarity if they don’t know the size of the number at the beginning of the equation.”
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