What Should Your Kids Know About Your Finances?
Communication between you and your kids about your finances is very important. Keeping your finances “hush-hush” may do more harm than good. Your kids deserve to know the truth, but maybe not the whole truth! When it comes to money, I think there are some things that kids—particularly young ones —aren’t ready to process and frankly, don’t need to know. So what do you tell and what don’t you tell your kids?
DO tell your kids:
Where your money comes fromAllowing your kids to understand where money comes from helps them to understand the importance of work. I’m sure your children would love for you to stay at home with them every day, but telling them where the money comes from teaches them that you go to work to earn money and pay for things you need.
How much stuff costsI’m almost positive that your kids have no idea how much your phone bill, car insurance, or mortgage may be and they don’t need to. But they should know how much a carton of eggs or a gallon of milk costs. By telling your kids how much things are, they likely will take better care of their belongings and understand how much money must be spent on every day essentials.
That not all families have the same amount of moneyThere are some kids out there that realize this very early on when they see a difference in the neighbor’s bike, clothing, and bedroom compared to their own. Based on when you think the right time is, you may want to talk to your children about the difference in incomes that families may have—and how that difference means that some families may not have as much as others do.
DON'T tell your kids:
How much you make/who earns whatYour family may be living paycheck to paycheck or you may be living quite comfortable, but your earnings are something that you should be keeping to yourself. Kids can confuse your earnings/bigger salary with a bigger contribution to the family which often isn’t the case. The last thing you want is your kids flaunting your earnings on the playground at school, so this may be one of the things you keep “hush-hush”.
How much you pay your babysitterAllowing your kids to know how much you pay the sitter gives them an “informational upper hand” that could potentially undermine the caretaker’s authority. No sitter ever wants to hear the words, “You have to do _____, because my parent(s) pay you $___!” When hiring a babysitter or nanny, keep the terms of the deal confidential as the kids don't need to know.
If someone owes you money/how much you owe someoneYour kids may wonder where your money may go or where it comes from at times and it’s okay to tell them, but be wise in your words. You may be upset because a family member owes you money and has chosen not to pay you back by the agreed time. If you need to vent be sure to do this quietly and far from your kids' receptive ears.
The last thing you want is your kids misunderstanding financial situations and incorrectly speaking to friends or relatives about them. Money is often the root of family dysfunction so it’s best if you don’t involve the kids.Some of these may resonate with you, while others may not. Either way, start teaching your kids early about finances while leaving out some of the unnecessary details.
For more tips, check out "How to help your child establish good credit."
Written by Darby Eilefson, Intern with LSS Financial Counseling.