“You mean we pay for the internet?!,” said my 11-year-old.
“Ummm, yes….we do!” I replied.
“But, I always see signs for free wi-fi.”
and on went our conversation about how the wi-fi is “free”…because someone had to pay for it and then offer it for free.
This conversation I had last year with one of my boys is the reason why my husband and I try to be fairly transparent with our kids about finances. It is not our intention to let our boys walk around with rose-colored glasses and have no concept about our costs of living, vacations, sports activities and more.
Lifeis Expensive!
Life isn’t cheap and we want our kids to know that BEFORE they walk out the door for college. It is very normal for me to open the mail and leave a stack of bills on the kitchen counter before they make it to the office. I might hear a comment from one of the kids, “Our electric bill was $160?”
It opens up a conversation about the reality of life. Simple conversations about how:
- lights they leave on in their bedrooms add to the electric bill
- the super long showers they take add to the water bill
- the fire we had in our gas fireplace adds to our gas bill….. and the list goes on
Nickel and Diming | What’s a Priority
We try to give the boys an understanding of why we do what we do. A perfect example of this is when we go out to eat. It’s very normal for us to all order water. We used to get complaints from the kids, until we took a look at it financially:
5 drinks x $2 each = $10
$10 x 4 meals out per month = $40/month. Just. for. drinks.
This makes sense to our kids. There are a lot of other things we can do with that $40 that are more beneficial to our family. The dollar spent here and dollar spent there add up. Keeping track of this helps them understand how quickly $20 cash in your wallet can be spent.
Their Money
I have shared in the past that our kids are old enough to be making money on their own. When they bring money home from lawn mowing, babysitting,umping baseball games or even doing chores, we stress the Tithe/Save/Spend rule.
It’s what we do with our finances and feel that if the kids start out at a young age doing this, it will become a habit to give away 10% and to save a percentage.
As the kids divide up their money into different envelopes, they quickly see that the amount that gets placed in the “spend” envelope is not actually that much!
Real Life Application |Why we Share Our Finances with Our kids
Chances areyour kids willnot learn this direct applicationin school. Take a recent bank statement (or credit card statement if more applicable), and either create a spreadsheet that isolates all ofyour family’smonthly expenses or make of copy of the monthly statement and mark over any items that you may not want your kids to see (e.g., incoming deposits, your bi-weekly/monthly salary, etc.)… remember, theobjective is to give them a glimpse of adult life expenses. Explain to them what each expense is, and let them see the corresponding amount. This not only gives them a sense of how much things cost andhow many things cost, but is alsoa good opportunity to explain what a mortgage is, what insurance is and why it is necessary, and other things like utilities (gas, electric, water, sewer, garbage, mortgage, health insurance, etc.)…. things they may not have known to actually cost money.
Depending on the age of the child, this can lead to further discussions about costs as it relates to stages of life. It is important to explain thatthe monthly expenses you discuss with them,may not(should not)apply as soon as they are out on their own. Help them understand from the start that expenses shouldbe proportionate(less than) the amount of money they earn and that the ability to pay for things usually (but not always)expands over time. Unfortunately, a lot of young adults do not grasp this reality, and immediately expect to have the same lifestyle as their parents (not realizing that their parents’ lifestyle evolved through an accumulation of life experiences/years).
The objective of the exercise is justtoinitiate a discussion with your child about somebasic, real-life examples to help further their understanding (and hopefully appreciation) of the costs of living.
FAQs
Financial knowledge is power
Should you share your salary with your kids? ›
While discussing salaries can be helpful, it's not enough to just tell your kids how much you make. In other words, divulging this one number doesn't give them much context around what that really means in the bigger picture of the family's financial situation.
Should you tell your kids about your wealth? ›
Experts agree that it is important to talk to your children about money and wealth, at least in generalities. You do not need to show them bank and financial statements.
Should parents support their kids financially? ›
Isabel Barrow, the director of financial planning at Edelman Financial Engines, advises clients to agree on a deal: Parents will offer some financial support to their children, if their kids are also making decisions that support their own financial future in other ways, such as contributing 10% of their salary to a ...
Should parents talk to their kids about money? ›
Learn about money together.
It's a great excuse to spend some time together! So go ahead and open up about the family finances, but keep it simple. Start the conversation, be honest, and teach and lead by example. Someday, your money-smart kids will be proud to follow in your big financial footsteps.
Why keep your income private? ›
If you start telling people how much you make, you're inevitably going to make people feel bad if they make less than you. And when you make people feel bad about their financial situation, you will no longer get their love and support. Some people will inevitability get envious of your higher income.
Is it okay to share salary with family? ›
To elaborate and put context on my stance, you can reveal your salary to other people. However, I would advise that you reveal it only to people who need to know about it. These people would be your spouse/partner, HR, boss, the tax department, your bank, and government agencies.
Should you tell adult children your net worth? ›
Actually, there are several reasons why your children need to know details about your finances. And sharing this information with them sooner rather than later will help all of you be better prepared for any issues that arise as you age that can force your children to get involved with your money matters.
Should I tell my adult children how much money I have? ›
There's no doubt that talking about your money can be uncomfortable, especially with your adult children. How much you choose to tell them is ultimately up to you. But a well-thought-out conversation can prepare your kids for the future, and give you some peace of mind.
Should you tell your kids you can't afford something? ›
Be honest and calm when talking about money
When a person buys something they cannot afford, they risk going into debt. Try not to 'talk down' to your child. Avoid dismissive or insulting phrases like: "Money doesn't grow on trees" or.
A rule of thumb when it comes to lending a hand to adult children is to make sure the added expense doesn't impede your ability to meet your own financial goals. Of course, every situation is different. But it really comes down to whether you have the resources available to support your kids' goals as well as your own.
Are parents financially responsible for adult children? ›
It is well established, both normatively and legally, that a parent is responsible for the care and maintenance of their children.
What is an enabling mother? ›
An enabling parent might let their child avoid all uncomfortable situations, speak for them rather than letting them speak for themselves, intervene to prevent them from experiencing disappointment, or protect them from the natural consequences of their actions.
What is the 50 30 20 rule? ›
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
Should you tell kids about finances? ›
“Talking about money can't be relegated to a one-time conversation,” advises Lynne Somerman, a money coach and founder of The Wiser Miser. “It needs to be part of the day-in, day-out conversation. As money topics come up and your kids are around, talk about them as openly as you feel comfortable.”
Should parents give pocket money or not? ›
Even children need money. They might not be buying their own food or paying their own bills, but pocket money can be a great tool to help children learn how to manage their own money. By giving children a fixed amount on a regular basis, you can help them learn how to budget and teach them good savings habits.
Should you tell your children how much money you have? ›
While there is no exact age to reveal, as a parent you will have to gauge your child's maturity to reveal the specific of your fortune, from an early age families should attempt to deliver consistent communication regarding how fortunate one is to be financially stable.
Are you supposed to share your salary? ›
When you and another employee have a conversation or communication about your pay, it is unlawful for your employer to punish or retaliate against you in any way for having that conversation.
Should you keep your salary private? ›
Keep It Secret, Keep It Safe
When companies have different employees on the same job and one of them is paid differently, many unfairness issues surface. "It can happen in any 'open shop' that differentiates pay for any reason [such as seniority or performance]," says Dauphinais.
Should I share my expected salary? ›
Experts generally say to avoid stating your salary expectations first. State a number too low and you could shortchange yourself in the future. State one too high — without additional interviews to back up that number — and HR might move on to another candidate expecting lower pay.
