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Old 05-05-2008, 10:11 PM   #41
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My parents divorced when I was very young, and both remarried. One set did much better than the other but now both are FI. After I got married my mom became much more open about the finances, only spoke in generalities before then. That's probably because I FREAKED the one time I saw a savings account ATM slip that said something like $40k. Heck, that's a good chunk of money now, and this was the late 80's. Probably worth several million, and will probably leave most of it to PBS or the Sierra Club.
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Old 05-05-2008, 10:42 PM   #42
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My parents never told us kids how much they made or what their net worth was. Recently, I found out about my dad's net worth by accident and it is much much higher than I would have ever expected. He doesn't know that I know and I will keep pretending I know nothing until he is ready to open up about it. My MIL is quite open about her finances with me, but not with her own daughter. My wife is her only heir yet she doesn't know how much she would inherit! But I do and as promised to my MIL, I have never told my wife... Strange. But my MIL behaves like it's almost bad form for a beneficiary to know in advance what they will receive. Since I am not a beneficiary, it's OK for me to know...

If I had kids I would not tell them either what my income or net worth is. It's not their income, it's not their net worth, it's not their money so it's none of their business... That's how I see it at least.
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Old 05-05-2008, 10:55 PM   #43
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my parents had a house on the water and a boat behind it & always ate out. they had wonderful vacations, touring most of this country and some of europe. they loved cruises, especially after boating became difficult for the ol'man. they spent a lot of money and they made a lot of money. money wasn't an issue because it was something that was always worked for. they relied not so much on accounts but on their business. they never discussed with me accounts or amounts or retirement and mom would be shocked to learn that i'm not currently employed., regardless of my bank accounts. it did not matter how much money someone has; what mattered was that you could always earn more.

the ol'man never discussed with me accounts but he did try to get me to rejoin the family business when he knew his time was nearing an end. it was less important to him to give me money but more important to offer me the means to make my own.
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Old 05-05-2008, 10:59 PM   #44
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When I am older(20 now) and then when I get married, and then when we have kids, and then when they get old enough to ask those questions I will answer with full disclosure, as per ability to understand of course.

But as I will be a financial adviser, they will be raised with very good "money sense".
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Old 05-05-2008, 11:02 PM   #45
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I was raised in total freakin' financial ignorance in the 1960s & 70s. For those of you who think it's not a good idea to share the general family finances with the kids-- shame on you. I never felt comfortable about family money and I usually learned about issues via the "lightning bolt" method. When my father quit his job (bad work environment) I freaked out and had no sense of reassurance or comfort.

I never had an idea what my folks earned, how much we had, or how much we spent. College funding was never discussed because I went to a service academy. I learned budgeting & finances the hard way during college, and after college when I asked Dad about investments I was directed to the Business Week annual mutual fund rankings.

Spouse was ahead of me there. During the '80s & '90s we saved like crazy and put it into "good" Fidelity mutual funds. I didn't educate myself out of my blissful ignorance until well into the late 1990s through financial websites and books like Dominguez & Terhorsts.

I guess my parent's finances were OK. When my grandfather died (six years ago, or about a year short of Medicaid) my father disclaimed the small inheritance and passed it on to us kids. These days my father jokes about not eating as much in order to afford expensive prescription medications. At least I hope he's joking. It's hard to tell.

My father-in-law was a financial whiz in the '70s and '80s with rental real estate and individual stocks. Spouse learned a lot about saving, managing money, and rental real estate by watching him. But they never talked about money with their kids, either, and today we suspect that these children of the Depression have their portfolio 100% in fixed income and losing to inflation. Now that interest rates have started dropping (and their Treasuries are rolling over at lower APYs) we are not looking forward to the phone calls. Spouse feels impaled on the horns of a dilemma-- "If I don't send a check, they'll keep calling. If I do send a check, they'll never call me again-- until next year. Hmmm."

In typical Boomer fashion, we've totally overcompensated by teaching our kid about financial management as soon as she's shown the motivation. David Owens' "First National Bank of Dad" book rocks. She's had an allowance since before kindergarten, "Bank of Kid CDs" at age 7, a checking account at age 9, a semi-annual clothing budget at age 12, and a credit card at age 13. Now at age 15 it's all worked out great; she has an $8.50/hour part-time job and a Roth IRA. Next step is a gas budget.

Our Nords family finances have always been discussed in terms of whether something was in the budget or not, and as she started middle school we started talking about her own budget. A couple years ago she came into the room one day as I was working on the Quicken ER portfolio, looked over my shoulder, and said "Holy sh-crap, Dad, is that how much we have?!?" In my best Cosby imitation I pointed out that her mother and I had the money but she was broke. Then I talked about how it seems like a lot of money today but it has to last for 40 or 50 years.

We freely share the data on spouse's Reserve pay, my pension, our spending, and occasionally our stock-market performance. We go into great detail on what it costs to live at college, buy groceries, eat out, own a car, set up a first apartment, and buy a house. When she expresses fondness for a luxury item we say "Gosh, you better get a really good job and save up for that." Now that she's achieved both of those goals we help her research her purchases and see if they're really necessary for her lifestyle. She's decided that she doesn't need a monthly cell phone bill or a Palm Pilot until she's in college, and her savings are getting to the point of starting up a taxable brokerage account. But she's treated herself to some really good drafting equipment and school supplies.

We have the usual "In Case of Emergency" folder with all the financial info, account numbers, logins, and passwords. Spouse's brother, a CPA, is the guardian for another couple years. When our kid turns 18 she'll become our executrix. Spouse and I haven't decided yet if we're giving it all away or giving it all to our kid. Plenty of discussions but no decisions.

So for now we tell her that we're doing our best to spend all of our money, that we're planning to attend her 75th birthday party, and that we're not leaving any inheritance. She "knows" she's gonna have to make it on her own, and we wouldn't spoil that motivation for anything.
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Old 05-06-2008, 07:29 AM   #46
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My parents didn't teach us much about money, just that we didn't have much and that was why we couldn't do as much as some of the neighbors. Dad was a spender and in that manner taught me a healthy fear of debt. He's the one who ran up a credit card bill in the '60's and my mother went to work when I was about 13, it took them years to pay it off. I never knew how much the debt was, just that they were in a position that their credit limits were exhausted.

In high school Dad was the one who co-signed for a motorcycle loan that I paid off in a year, and another one for a larger bike when I got the community college AA degree. So it wasn't until after my divorce at age 33 that I became much more financially conservative, looking at starting over from scratch with a net worth of about $8K and a law enforcement career that would leave me eligible to retire in 15years. I wanted to be in a position so that I'd never have to work again if I didn't want to.

I didn't learn about my mother's finances in full until six months before she died, and then only because she was having trouble balancing her checkbook. I was surprised at how much she had accumulated. She was the financially conservative one and after Dad died there was little discussion about it, although I knew from her lifestyle that she felt that she didn't have much.

So, most of what I learned about handling money was from the School Of Hard Knocks.
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Old 05-06-2008, 07:40 AM   #47
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Based on the "we earned it and they tried to spend it" school of economics, we choose not to discuss our financial situation with our kids when they were growing up - other than in general terms. Now that they are adults, we do have a detailed "in case of emergency" letter for them when it's needed.
We didn't discuss our finances with our daughter when she was growing up either. But, after my husband died, I think one of the greatest fears that my daughter had was financial. So, I shared information with her. I think that helped some. I think that I will be more open with information with her now. Since, at some point in time, she will need to know more about my financial life.
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Old 05-06-2008, 08:23 AM   #48
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I would guess most people who read or post here who have children have been careful to educate them financially either overtly or by modeling LBYM behavior. Like Nords we also gave our children allowances, opened up kids' saver accounts at the bank, encouraged and enabled them to have summer jobs even in middle school (babysitting and caddying). When my kids hit high school age we gave them Personal Finance for Dummies and they read it cover to cover. They always knew if they did well in school that we would provide for the college that corresponded to that performance. They knew that many of their friends were a lot better off than we are (stupid us for buying the cheapest house in an affluent town before we had kids--smart Brewer for doing the opposite as described above!) and we discussed how we saved for vacations and why we didn't buy designer clothes and luxury cars, etc., as different situations arose. They majored in business and have been completely self-sufficient since being handed their bachelor's degrees. They are fiscally conservative and live well below their means.

But in our case we still chose not to share with them the details of our financial situation re income and assets when they were younger. They knew we obviously had enough for our family's lifestyle and we personally didn't feel a need to provide more info than that to them.
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Old 05-06-2008, 08:46 AM   #49
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I agree with some here that have said what they make is irrelevant when discussing finances with their children. Eventually it may come into play, but I would think a good place to start would be looking at the minimum wage, and showing them how an imaginary budget may or may not work based on that. Then going up in tiers, and discussing what they would most likely need to do education and career-wise to reach those tiers. Also try to help them imagine what they may have to sacrifice to get to those tiers and help them decide if it would be worth it to them. It's really about their choices. I think starting from the bottom, ie minimum wage, may be a real eye opener and possibly a good motivator.

Disclaimer: I have no kids and little life experience (turn 31 tomorrow), so my opinions are mostly theory, which doesn't always mesh well with practice :-)
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Old 05-06-2008, 09:17 AM   #50
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I think I grew up too poor for modesty. I remember the first time I got an idea of what our family made was when I was maybe 8 years old filing out a warranty card for some product I bought (ah, to be young again and believe that a warranty card would actually help register the warranty). I filled out the lowest bubble for annual income (poverty level), and my mother noticed and said no actually we are middle class not poor.

I went to a good suburban school and with financial aid an elite private college, so I was always surrounded with kids whose families had more than I did. My mom was very careful to note that many of those kids had trust funds which meant they didn't have to be as careful with their money as I did.

One thing that really stuck out in my financial education was my parents practice of matching financial savings. If I could save $10 toward some toy I wanted, my parents would often match the other $10 and I could get the $20 toy. This is how most of my childhood possessions were acquired. Christmastime was always a bit weird.. my parents couldn't afford the big gifts (e.g. camera or bicycle) so I would announce the big item I wanted and relatives would give checks towards that. Usually I ended up getting the big item with some combination of money from relatives, parents, and some of my own. This practice really helped with understanding how saving could get me much more than spending now.

On the one hand I wouldn't be FIREd in my 30s without that education in savings. On the other hand however I don't feel like I learned the emotional aspects of gifting and sharing as well as others, because I was always focussed on the goals rather than the satisfaction of simply sharing.
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Old 05-06-2008, 09:18 AM   #51
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When I was married, and had two-step kids and one of our own, we went through some pretty lean times, but the kids were all too young to have a good frame of reference. Talking about "we can't afford that" seemed to cause the kiddos much worry. Thus my recommendation to consider the age and maturity of the child...

Certainly, given the ignorance of finances we've all witnessed in "grown-ups", it's important to at least attempt to give the kids a frame of reference.
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Old 05-06-2008, 09:21 AM   #52
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I think it also depends on your experience as kids (even within a family). My parents didn't talk to us about money growing up (other than, yes/no when we asked to buy things). We got a measly allowance that we could supplement with additional chores.

As the oldest, I witnessed (or was more aware) of the leaner years early on in my parents' careers. My dad has always commented that even when I was little, I would save money for a bigger purchase that I valued more (or just saved more period). Even still, when I graduated college 3+ years ago, my parents wanted to give me money to take a big trip (around $2000), but they were afraid that if they gave it to me before I had planned the trip, I would put it into savings!

My sisters, who never really were aware of the leaner years, spent, spent, spent. For the most part, they still do. I really worry about my youngest sister. My parents have always spoiled her, she's never even had a summer job (she's a sophomore in college). They still pay her credit cards (whatever she charges). I fear that she's going to rack up debt as soon as she graduates. I don't know whether my parents would continue to bail her out or whether the money stops when she finishes school.

I think that if we had all been taught to budget, or at least seen the inner workings of the household finances, we might be on more even ground and my sisters might be in better financial shape for the future.
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Old 05-06-2008, 10:48 AM   #53
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Our (now adult) children know about what our annual income is, but not our assets or net worth. We have been deliberate about living LBYM in front of them and trying to lead by example. They regularly ask financial advice and we're pleased to see them being fairly frugal and overall making good financial choices. We keep a 3-ring binder with important documents regarding insurance policies, retirement accounts, location of wills, and personal notes about wise financial conduct with the inheritance should the worst happen to my wife and I.
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Old 05-06-2008, 11:04 AM   #54
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I don't understand all of the concerns over disclosure to kids. I think whether a kid is a spendthrift or a lazy bum has much more to do with how they were raised than how much money their parents have in the bank. I went to prep schools and saw that in action - if the parents worked hard, valued money, valued education, spent time with their kids, etc, then the kids learned those lessons and became productive. I have friends who will inherit tens of millions who work 80 hours a week at investment banks (and will continue to do so until they die) because they were raised to be ambitious and take pride in their work. On the other hand, there are kids who saw their parents blow money away, never work, be lazy, etc, and they are bums whether they have a trust fund or not. You can be unemployed and still sit around and do nothing all day.

My parents always shared with me how much they made and how they invested family funds. I appreciated it when it started and appreciate it very much now - because it motivated me to learn as much as I could about financial markets to put what they told me in context. I never looked at the family money as an excuse not to work. It was always presented as a safety net in case anyone in the family had educational opportunities or health care concerns.

Do you think you'll be qualified to manage your own finances at 70 years old? 80 years old? 90 years old? I've seen MANY older folks be taken advantage of. Nobody thinks it can happen to them or their parents until it does. My parents took over their own parents finances last year after a near-miss. My parents have told me that in their 70s they want to phase all responsibility for managing the money over to my brother and I so they don't have to worry about it. Is this just an issue of trust, and most people don't trust their kids?

And what about estate taxes? What if the estate tax limit is lowered to a million dollars (as many think it will be)? Whenever you die, your heirs will have to write a massive check to the Government. You can say - hey, I won't care, I'll be dead - but I think that's a cop-out...would you really rather the Gov have that money than your kids and other family members who loved you in life and will keep your memory alive? Don't most people retire early in large part to spend more time with their kids/grandkids? I think there's an element of destructive blue collar mentality in play here...the same mentality that told kids they have to move out at 18/21 and pay their own rent on their own place (to make some landlord rich), rather than live at home and save money and be around their family (which happens in every other country in the world).
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Old 05-06-2008, 11:40 AM   #55
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... Don't most people retire early in large part to spend more time with their kids/grandkids? I think there's an element of destructive blue collar mentality in play here...the same mentality that told kids they have to move out at 18/21 and pay their own rent on their own place (to make some landlord rich), rather than live at home and save money and be around their family (which happens in every other country in the world).

Has there been a poll on this topic, "do most people retire early to spend more time with family"?

Let the class wars begin again. I'm stepping out of range. End of rant.
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Old 05-06-2008, 01:55 PM   #56
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Do you think you'll be qualified to manage your own finances at 70 years old? 80 years old? 90 years old? I've seen MANY older folks be taken advantage of.

70's is not that old . This is the second post I've seen infering that 70's is old . My Mom is 91 and still sharp . She manages her own finances fine and she drove until her mid eighties . If we all plan on living until late 90's ,twenty years is a long time not driving or managing our finances . I for one am not giving up my independence until it is time and I seriously doubt it will be in my 70's.
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Old 05-06-2008, 01:57 PM   #57
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Hey, 70 is the new 50!
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Old 05-06-2008, 02:33 PM   #58
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70's is not that old . This is the second post I've seen infering that 70's is old . My Mom is 91 and still sharp . She manages her own finances fine and she drove until her mid eighties . If we all plan on living until late 90's ,twenty years is a long time not driving or managing our finances . I for one am not giving up my independence until it is time and I seriously doubt it will be in my 70's.
I hope that we all are still sharp and living well in our 90s. Unfortunately, according to this article in the NY Times, "9 of 10 people who live into their 80s will wind up unable to take care of themselves, either because of frailty or dementia."

I'm not sure it's that high, or that it will continue to be that high, but I think it's worth considering that you might be unable to take care of your finances as early as your 80s.
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Old 05-06-2008, 04:15 PM   #59
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BS I am almost 70, lots of wear and tear, but I can still find my way home, remember my kids names, even their addresses, and I have not ran into a flea market, yet. But I am leaving for Florida next month so maybe I will get the flea market yet.
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Old 05-06-2008, 04:19 PM   #60
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