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Old 08-14-2009, 03:09 PM   #21
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Oh yeah, I also made sure she knew where to find my letter of instruction with info on all of my accounts for my brother to read in case something ever happened to me.

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Old 08-14-2009, 03:19 PM   #22
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My daughter has a rough idea of what I am worth . I also send her a letter every other year detailing where everything is and how to access it if something should happen to me.

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Old 08-14-2009, 05:47 PM   #23
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We are fairly open with our kids on financial matters. If they ask, we usually give direct answers. They are teenagers and internet savvy, so they could look up things online anyways. For example, home prices in the area, salaries of various professions and careers.

They have some very wealthy friends and see the differences and similarities. I think they have figured out that they are not getting their own Escalade at age 16.

My standard financial advice to them goes like this, "When you are older, if you have any questions about insurance, investing, getting a loan, or buying a house, come talk to me before you do anything."

As for possible embarrassing moments, whenever I drove by a Hummer, I would always say "There goes an Idiot. There's no reason to ever buy one of those clunkers." Well, one day a my son was at a friend's house when that friend's dad came home in a Hummer. My son said to the dad, "So you're one of those Idiots."
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Old 08-14-2009, 06:54 PM   #24
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No kids, but I can answer as a former kid myself. Assuming I've grown up.

My mom was always the money person, and became the sole breadwinner after my parents' divorce. There were no "deadbeat dad" (i.e. enforced child support) laws in those days.
She never did discuss money until we didn't have very much. Then she talked about it constantly, either because of stress or to drive home the point that any extras I wanted would have to be earned myself, or both.
So I learned about money and the lack thereof beyond "the basics" when I was 14. I was the math ace and the one who added and doublechecked her handwritten budget columns. I counted up her tips.
We figured out how much we could spend on groceries after bills were paid. This may sound like a weird way for a mother and daughter to spend time together. It was something we w*rked on as a team.

This type of budget management (in good times) could be a positive thing to share with your kids.
I have carried those money management lessons forward all my life.
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
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Old 08-14-2009, 07:20 PM   #25
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I've always been open with our kids (22 and 25) about the finances. They know what our income is and they know approximately what the expenses are. I keep a list for the month tucked in the checkbook that's used for all the automatic bill withdrawls and it's out in the open on my desk. They know we are concentrating on Emergency Savings right now because DH's job has been insecure for about a year.

They had allowances and weekly chores until high school graduation. One son worked in HS, the other didn't work until summers in college. As they turned 18 they each got a checking account and savings account and I turned over their custodial savings accounts. I've tried to be fair and practical in teaching them about money.

I hope that the most important thing they learned was to avoid debt or keep it to a minimum if possible. The older son had a car loan from a dealer but it bugged him so much he paid it off in 15 months. Then instead of making car payments he started a Roth IRA. The other son borrowed from us for a car and he will have it paid back by the end of the summer. It weighs on him that he owes us.

They know we are not wealthy but that with no mortgage we are more secure than many other folks. Neither one has credit card debt and they each are well in control of their expenses.

My Dad told me about how he was able to retire at 59.5. When he got succesful he kept the same house and cars and invested the extra income. When he retired he never touched his principal, probably still hasn't and he's now 83.

I'm the executor for his will so he showed me where he keeps his papers and showed me his statements. He said he was sorry he wasn't leaving more for my sister and I, but I was actually quite surprised at what he has to work with. He didn't graduate from high school, does not write or spell well and his career was in roofing sales. He was just very good at what he did and was always a LBYM kind of guy.

That's probably the most important message LBYM!

And forget about what other people have, it's just not important.
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Old 08-14-2009, 08:01 PM   #26
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My parents were two of the most thrifty people you could ever meet. They married in 1935 and my mother never worked at a regular job after that as she was busy giving birth to me a year later and became your typical stay at home mom of yesteryear. Dad worked his buns off at the shop in the same profession for 47 years. Had a house paid for and about $300k saved up for their later years. They were so afraid of going in a nursing home and having to turn over all their assets. This really bothered them and so they had the house titled in the names of the three kids and started transferring the assets to each of us, $10k every year until it was gone. They just lived on SS and saved a lot of that also. They had a nice retirement but never did a damn thing such as traveling. They were happy, as they thought that's the way it should be, they achieved success and now they were going to kick back and watch the world go by. We kids never had a clue as to what they were worth until they started to transfer the house deed and the annual "gifts". We all had to promise them that we would remain faithful to our wives and husband and that our marriages were on solid ground. It would have killed them if one of split up and some of their assets wound up in the hands of "you know who".
They were really of the old school and the salt of the earth. God rest their souls.
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Old 08-14-2009, 09:14 PM   #27
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Nords said:
I used a line from the Cosby show: "Your mother and I have some money but we have to make it last for the rest of our lives. You, however, are poor."

I love it! Classic Cosby!

When our oldest daughter turned 16, she got this funny idea that we should buy her a car. We lived in a rural area and had an extra vehicle available for her to use sometimes, but a run down '86 Jeep just didn't have the "cool factor" a 16 year old princess deserves.

She probably had seen a bank statement or paycheck stub and knew Dad was fairly well paid. I explained to her the difference between things she had a right to and everyting else. "We will feed you, give you shelter and basic clothing. Sports cars, expensive fashion clothing, etc. are optional items for which you will have to labor. I suggest you look for jobs babysitting, house cleaning or whatever to finance such luxuries."

It must have made an impression because today she is a hard working, frugal wife and mother and she makes her two boys work around the house for their fun money. Our youngest daughter followed suit.

Today, they don't know our exact numbers, but they know where to get the information should DW and I both die in an accident. I'm convinced that our little chat 12 years ago has prevented any chance of an entitlement attitude.
"There is no dignity quite so impressive, and no independence quite so important, as living within your means." Calvin Coolidge
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Old 08-14-2009, 10:14 PM   #28
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Loved the cosby comment.

Continue to tell kids we have money for basics and they do not need to worry but throw a cosby like "breakdown" when money is spent on impulses. 14 year old recently lobbied for a phone a few times and now understands it's not going to happen. We do talk about saving for their college expenses. We do talk about priorities and choices so they get the concept that the resource is limited. I do hope they see the lack of anxiety about covering the basics. We do discuss family choices about vacations vs toys and give them a vote.
I highjacked a rainbow and crashed into a pot of gold - Bon Jovi
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Old 08-15-2009, 01:13 AM   #29
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The OP was talking about me. No, I am not richie rich. In no way a 4% WR on my portfolio could match our income when we were both working. But since we never spent all of it, early retirement came more easily. We never spent more than we made but our expenses in the last 6 years have been erratic, due to splurges for travels and home improvements as I suddenly realized that I would not be able to take it with me. It varied greater than 2.5 to 1 from year to year! We've got to be careful here, and must get back to the old LBYM mode until we are out of this economic quagmire. Easy, easy...

Regardless of the size of your portfolio, if you FIRE'd, the fact that you are not working when you "should" raises a flag already. And your children surely would wonder, as they compare themselves to the neighbors or their friends.

My children, besides their age of 20 and 23, are not as financially mature as I would like to see them. I don't want them to act snobbish, or thinking that they would be entitled to more. I will tell them when the time is right. We have only told them that we should not have to worry about necessities, but the lack of work income means that big ticket items must be carefully rationed, and that a lot of reserve must be maintained. They know next to nothing about investing, and have little interest despite my attempts to educate. Perhaps I did not know the right approach, although I preach to them constantly about the LBYM's philosophy. My son does show an LBYM attitude, but my daughter really got me worried the way she spends the money she makes.

About myself growing up, I knew my parents were LBYM'ers when I was older than 10. I didn't know then how much money they had nor their exact income, only that they had some savings, but not so much that they could stop work. I also knew that they recovered from a personal black swan event before I was born. Their frugal way helped again with a second black swan event, this time when I was in my late teens. They recovered once more, but were not able to reach the earlier economic status.

Only when we were all in our 40s and established, and my parents already retired, that they told us about their assets. At that point, all of us children had the same level of assets or more. I was not surprised when I learned, as I was able to picture it from their more modest income level. I also have been doing their taxes since then. After my father passed away, my mother had my brother as a joint account holder in some accounts, me in another, in case our access is needed. I hope to be able to trust my kids similarly in 20 years.
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
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Old 08-15-2009, 01:34 AM   #30
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Until I turned 17, my total knowledge of our family's finances were:
1. We have enough for all the things we need and some of the things we want.
2. There is a budget and all purchases must fit within it.
3. Buying quality items and making them last is something we do.

When I turned 17, we filled out the Federal Application for Student Financial Aid and I, for the first time in my life, saw what my parent's income was. It did not make my head spin.

It did make me realize that you could have a comfortable, charitable middle-class life, with pleasurable extras (riding lessons, piano lessons, a year as an exchange student, family vacations, help with college) on one salary by prioritizing and sticking to a budget.

As an adult, I still don't know my parent's income or total financial picture, except that they've been diligent about savings and will be fine in their retirement. My dad retired "early" last year at age 59.
They are beginning to discuss where their money is, when the house will be paid off, etc. with me because my brother and I are co-executors of the will.

So I guess... my parents didn't keep our finances a secret, but what they talked about was how to budget, how to shop frugally, how to find quality items and care for them. They didn't talk about how much Dad made, or what the house was worth. When we talked about money, it was about the nuts-and-bolts of how to deal with it, not how much would one day, maybe, be theirs or mine. It was a very practical way to transfer knowledge and skills without exploding my teenage head.
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Old 08-15-2009, 04:54 AM   #31
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I've given my kids (22 and 18) a general idea of our income, but I have done so because we have been so fortunate, and I do not want them to automatically expect that they will also be so fortunate. I also want them to know that the only reason we have some of the things we have, and can do some of the things we do is because of that such good fortune. Even with the good fortune we enjoy, the kids have sometimes wondered why we don't have more "things" and "go on fancier vacations to more exotic places" like most of their friends. I explain to them that while I don't know the particulars of "so-and-so's" dad's salary, I do know that for them to be able to do the things they do, they would have to be spending just about everything or incurring debt to be able to do them.

The kids also know that we want to retire early and enjoy our lives a little more. I have not gone into a lot of detail about it, but I have been trying to begin their education about preparing for a rainy day and investing for the future. They have a general picture of what we have but they have been informed that what we have is for our retirement.

When I was in my teens, I knew what my folks had, and I was proud of them for being able to save that much on dad's salary and the little income from the farm we had. My sister on the other hand could not understand why they were driving a used Volkswagen bus instead of a caddy. We were both brought up the same way. Unfortunately her attitude about money never changed and she is today broke and bankrupt.

Once a year, I go thru a file with my dad that outlines what they have and where they have it, just in case. Above noted sister no longer has a clue about their assets. I will be the same with my kids in due time. If they are responsible with their own assets they will know details. If not, they won't.

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Old 08-15-2009, 06:06 AM   #32
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I think when she gets a Ferrari for her 16th birthday she'll have an idea already. Oh wait, that was an MTV show. I mean, when I give her a handful of bus tickets, she'll have a good idea what we're worth.

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Old 08-15-2009, 12:21 PM   #33
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Since I avoided the whole issue by not having children I can't address what to tell them first hand. When I was growing up I knew we were middle class and how much the family home cost when purchased, but I had no idea if it was still being paid off or more than a rough idea of my dad's salary.

How are people dealing with the subject of "great expectations?"

A few years ago my sister (5 years younger, now early 50s) went back to school to get a degree and had to take out about $20K in student loans to make that happen while she was working and with two minor children at home. A while back I was talking to my mother and she told me that since she'd had a CD mature she paid off the student loan so that when I act as her executor I can deduct that from my sister's share of the estate.

I appreciate that she was trying to be fair, but I told her that her money is her money and she can do with it what she wants (though I'd prefer she not give it to some televangelist but that wasn't likely anyway). If she wants to leave all her money to the local humane society (she's sure not the type to spend it on riotous living) or make some big gifts to charities while she's alive that's fine with me. My folks did their part putting me through school and making a couple of small loans (and I signed a note and paid them a moderate interest and I'd recommend that when people loan money to their kids/relatives) when I was getting set up on my own, so I don't expect her to hoard her money just to leave it to me and my sister.

But I see people who do seem to feel driven to deny themselves to pass on an inheritance, and there are people who seem to feel entitled to inherit their parent's money even to the point of making it clear that the parents ought to not be "squandering their inheritence" on themselves.

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Old 08-15-2009, 03:08 PM   #34
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I knew quite a few kids of rich parents (>10 Mil.), it seems to me that those who had a good idea of their parents net worth, had less issues with money than those who were basically clueless. So I think openness is the best policy.

Even if you choose to keep your kids in the dark about the details of your financial situation. I think it is very important that parents let their adult children their financial situation in some detail, or at the very least a place where they can easily and quickly locate an list of statements in the event of their death or incapacitation. None of us are immune to a sudden accident or incapacitation or dementia and there plenty of sharks in the world, just waiting to devour our hard earned savings. The situation with my grandfather is instructive.

My grandfather was very financially savvy man and carefully set up a trust to minimize estate taxes. The Adventist Church was select edto be the executors. He lived to the ripe old age of 96, and was very fortunate to still be mentally sharp up until the end.
After his death my grandmother in her 90s developed Alzheimers, and died several years latter. During that time one of the church's trust officer left the church, befriended my grandmother, and proceeded to loot the estate. In the later legal proceeding we documented her paying off his mortgage for 350K, and making a $100,000 donation to a "charity", his family had set up. In all roughly $500,000 was certainly stolen.

My grandfather had told my mom and her step sister that "they would be taken care off", but they never really had any specifics inf on the amounts. My grandfather and I were very close, so he was comfortable with me helping him out with Quicken. Judging from what I saw in Quicken, a year or so before his death the estate was $3+ million, although 1/2 of that was in rental properties in LA. The total disbursement from the estate spread among twenty odd heirs with my mom and my aunt with the largest share was less than million. So the gap between what I thought the estate was worth and what we accounted for by expenses and theft was well over a million. The church and we settled on amount roughly splitting the difference between what their former employee stole. So without an accurate financial picture of my grandparents finances before death and Alzheimer's we will never know how much the family actually lost much less be able to prove in court.

Nor do I think our situation is particularly unique. Probate is pretty mysterious process to most of us. (Ok maybe not Martha) . Many of us have financial advisers, brokers, CPA, lawyers etc. who have some access to our financial records. We could also be the victim of identy theft shortly after our death (there are hackers who specialize in going after sick and elder) Most of also have enough money they were worth ripping off.

Even if your intention is to leave a million dollars to the humane society, I think it is worth your kids know that is your wishes early on, because otherwise their will always be some suspicious among your kids that nice lady at the humane society wasn't just being nice to mom out of the goodness of her heart.

Personally, I every time I hear the story of 90 year old dies leaving an estate worth X millions, much to the shock of her kids/relatives, donates 2 million to such and such charity. I always wonder did she really die with an estate of X+Y millions with Y finding its ways into other peoples hands.
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Old 08-15-2009, 03:24 PM   #35
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Our 13 year old grand daughter ask us the other day. 'If you all don't work, where do you get your money?' Her mother answered, 'Remember saving for a rainy day? Well that rainy day is Retirement.' That answer seemed to suit her just fine. I don't really think either our daughter or son know how much we have, but they know they should not have to worry about us. Interesting, DW's father passed away a couple of months ago. When they started looking at his bank accounts, they found he had over $200,000. All four siblings had the same reaction "Who uh thunk!" Once more they knew he did not like for anything, just no one ever bothered to as how well off. As for you kids, my guess is, unless you make a big deal of it, they will never ask. I will bet they will be more concerned if they get what ever it is they ask for next and not worry where you get the money to give it to them.
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Old 08-15-2009, 04:40 PM   #36
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I don't consider myself "wealthy" compared to many of my peers. I plan to give my 26 year old son(my only child) copies of all my investment statements soon. He appears totally disinterested in anything I have. He is finished with college and launched on what I presume is a fairly lucrative career(engineering and MBA degrees), and as he is temporarily employed abroad(London), is somewhat removed from my day to day life where discussions relating to my estate planning might occur as a natural conversational sequence. We mostly discuss what we are reading, movies, plays, travel, restaurants, cooking, etc. as they are certainly more felicitous topics. He has given me investment books to read but is openly averse to giving me any advice relating to my estate or money management. Just tells me to read more, make my own decisions, and quickly changes the subject.
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Old 08-16-2009, 08:22 AM   #37
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Originally Posted by NW-Bound View Post
The OP was talking about me. No, I am not richie rich.
I admit it, you are the "other poster" I referenced in my OP. Not trying to imply you are overly rich or anything! Just wealthy enough to do what you want to do.
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Old 08-16-2009, 10:31 AM   #38
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It Depends... Details Are Likely Not Necessary

There are some very good ideas in this thread. My wife and I don't have children but we both have loads of nieces and nephews. And we have the situations we experienced as children.

From my vantage point I think discussing money, how to make money (work, investment, rental property, etc.), and how to use your money wisely are all good discussions particularly when the child is young. Give them a copy of The Richest Man In Babylon - that book is good even for children. When the appropriate time comes make sure the children understand borrowing (and loaning) money. Make sure they understand there is more to life than money. Even as the children become adults I don't think discussing details is necessary. You know your children very well but money (particulary large sums of money) can sometimes cause people to do strange things. So I think keeping it somewhat vague like the quote below makes sense for most situations. Give them a copy of The Wealthy Barber when they graduate from high school or college.

Originally Posted by Urchina View Post
1. We have enough for all the things we need and some of the things we want.
2. There is a budget and all purchases must fit within it.
3. Buying quality items and making them last is something we do.
I'll add that it is very important for adult children to know sufficient details about your finances so they can access the necessary information for emergency situations. Even then, a simple list of account numbers, contact information, etc. is all that's needed. Keep it in a safe place and let them know where to find a copy.
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Old 08-16-2009, 03:09 PM   #39
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I've advised both of our adult kids that they will split the "left overs" 50/50 but not to expect much as Mom and I plan on living a long time and are in excellent health.

DW may have tipped her hand and gave them a hint at the current amount (a few years ago) because she thinks that we are rich and will never be able to spend it all. Gotta' love that gal!
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Old 08-16-2009, 03:41 PM   #40
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We are pretty straight forward with our kids. We don't share the specific numbers with them but they know what my pension is, house values are common knowledge and they understand how hard we saved. We also talk all the time about the importance of the FI component of FIRE. DS (now 35) has finally fully realized the LBYM outlook. DD (23) is just out of college and starting teaching. She is about as mature as I was at her age but I hope she will follow the typical female trajectory and mature more rapidly that DS and I did over the next few years. Both of them seem to have a healthy respect for the need to save and the value of financial independence. I suspect they hope Mr Market works out in such a manner that we will leave enough of an estate to smooth out any late life bad luck financial bumps they may encounter but if DS' actions to date are an indicator - they are not relying on such a bail out.

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