Spilling the Financial Beans to the Kids

[Culture]

Raised on another thread: At what age is it appropriate to let your kids know 1) how much you earn and 2) how much you are worth.

Obviously, this can vary greatly between family and kids. For us, we gave the basics at age 12-13 because we were ask. I still have nightmares about the stories where the kids kill their parents in order the receive their inheritance .

 

[Keim]

I'm 36, and my parents still haven't told me anything...

I suspect I'll be the same way. All my kids need to know is that we're comfortable, and they don't need to worry about us.

 

[bssc]

My dad was a government employee so we knew exactly how much he made, as well as everyone else's dad.

I never really thought about it until I started having to work.

 

[Coach]

I have no kids of my own, but my parents never told me this information. When they got quite old, we did go over where records were and what accounts they had, but that was it. Mom always said she planned to take it with her, so don't expect anything.

Coach

 

[HFWR]

Probably the early teen years would be a good time to talk about how much things cost; i.e. we pay x for the mortgage, y for utilities, z for cars, gas, and insurance. Plus we always save some every paycheck. No need to get much more involved than that. It might be worth discussing, in a generic way, what salaries the different professions can expect.

 

[aida2003]

I plan to teach my kids about money saving, etc., but we have no intention to tell them our salaries/net worth thing. Not sure it's a good idea.

 

[brewer12345]

Just curious, but why do most parents choose to keep their kids in the dark? Is it just the usual Merkin phobia about money, where you'd rather admit to owning inflatable livestock than show people your brokerage statement?

 

[OAG]

Never in this life. Having said that I think it is prudent and responsible to leave behind some document that is kept up to date and they know where to find it (in hard copy) outlining all assets and how to access them. Of course if you need financial help from them this does not apply but, my assumption is that we will not need financial help from the kids. We have wills and DD is the Executrix and she knows it. It may be the Christmas they never had, on the other hand.

 

[sarahsays]

I had a vague idea of what the house cost (they bought it when I was 11, though I wasn't really aware of the cost until 14-15).

It wasn't until they started doing major estate planning in the last year or so, that they've given me ballpark figures on their net worth (I'm now 24).

I think it would've helped me (and motivated me) if I had known more earlier on.

 

[CuppaJoe]

Never in this life. Having said that I think it is prudent and responsible to leave behind some document that is kept up to date and they know where to find it (in hard copy) outlining all assets. Of course if you need financial help from them this does not apply but, my assumption is that we will not need financial help from the kids.

Agreed! Well put.

I was going to post: If the child outlives the remaining parent, the child can then, and only then, if s/he is of age, see the closing number.

Brewer's question is interesting. I think, for me, a child is like any other stranger where money privacy is concerned, and should be kept in the dark about my finances; but I will mull that one over.

 

[REWahoo]

Just curious, but why do most parents choose to keep their kids in the dark? Is it just the usual Merkin phobia about money, where you'd rather admit to owning inflatable livestock than show people your brokerage statement?

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.

 

[Bestwifeever]

If you apply for college financial aid using the FAFSA and other forms you'll have to provide financial info and your kid might see it then.

I think it's really really hard for a kid to understand what those income/savings numbers even mean comparatively and how important/unimportant they are. Maybe enough to tell them you have enough to support the family lifestyle and to put some away for the future (if that's true ).

I do think it's essential for adult children to know where parental assets are and where parental income is coming from in case something happens to the parents, as well as nonfinancial info such as living wills (and regular wills and trusts!). A friend's parents passed away and he continued to get unexpected checks from their investments for years.

 

[Moemg]

I wrote a letter to my daughter with all my account information but not the amounts . It also includes everyting she needs to know if something happens to me . She knows I'm financially okay and that is all she needs to know for now. I'm always trained her to LBYM's and she is doing fine .

 

[figner]

My parents shared their income and some of their savings/net worth figures with me starting in the early teenage years. Mostly they discussed things as I asked questions, or when the subject came up regarding a major financial event. I remember them sharing the prices and down payments they made on houses when we moved when I was about 11. They took me along to negotiate for a new car. They also discussed college savings with me when I was deciding on schools. Overall they made a point of mentioning that they spent less than many families at similar income levels. They sure turned me into a good little LBYM-er.

 

[SteveR]

We did not know what our parents made during their working years. They paid cash for everything except the house and Dad was very reserved about what he had. Later on, he started sharing with us after he retired. I now run my mother's finances (small as they may be).

My kids never knew what I made and I never told them. They are in their mid to late 20's and since I no longer w*rk it is a moot point I guess. They don't know my networth and have never asked. My family does not ask beyond what the house cost. I don't ask my brother and we don't discuss finances. I don't ask my kids and they don't ask me. Much is just understood. If one needs help you just ask.

 

[Bestwifeever]

On the other, some kids (not mine ) can find out their parents' financial info another way:

http://online.wsj.com/public/article/SB117097694574302952-zZjZy55czkHaPy0h_cnjkA60Vsw_20070311.htm

From the sidebar:

'MOMMY, ARE WE RICH?'


Below, tips from wealth consultant Joline Godfrey and psychologist Dr. Lee Hausner on how to answer questions from your kids.
• If they ask: Is our family rich?

You can say: We are very fortunate and we have the means to do the things we like. That's why we are charitable and give money to people who don't have the things we have.
If they ask: How much are we worth?
You can say: While that's private information between your dad and me, we'd be happy to help you learn more about finances in a general way.
If they ask: Did dad sell his business for $200 million?
You can say: Dad did sell the company for a lot of money, but taxes will take half of that, we will spend some on education and family needs, and we will give the rest to charity. So that is not all our money.
If they ask: Will I inherit the family's money?
You can say: You will inherit some money to get all the education you need, and perhaps help buy a house and start a business. But you will have to work hard, have your own career and shop on your own dollar.

 

[brewer12345]

If they ask: Did dad sell his business for $200 million?
You can say: Haaaahahahahahaha!!!! You bet your sweet bippie he did! Why do you think we bought a Carribean island?

 

[Caoineag]

I never understood the fear regarding talking about money. The closest I came to understanding it was when my stepmother freaked at hearing my salary (nevermind that I went to college to make more than my father and her, I think she was just having a moment).

While you don't need to share your net worth, the salary issue is important for teaching children budgeting. The reason I am comfortable with budgets is because I learned that from my parents.

I do think this is also a generational thing. I know the salaries of all my friends and they know mine. But my father's and grandfather's generation can not say the same.

 

[podey]

I guess I had an idea of what my dad made when I was in high school. I probably knew his approximate net worth when I was in college. He still tries to hide it from me even though I let him know mine down to the penny.

 

[CuppaJoe]

If they ask: Did dad sell his business for $200 million?
You can say: Haaaahahahahahaha!!!! You bet your sweet bippie he did! Why do you think we bought a Carribean island?

And if they ask what my Google stock is worth, I refer them to the public library to look it up. Someone asked me that yesterday at the coffee shop. She looks homeless, didn't want anyone to see that she was reading a book about Warren Buffet.

 

[Nanita8140]

My daughter is 10 now and last year I sat her down for the "talk"...no not the birds and the bees(that's coming up soon though). Anyways, I sat her down with our pay stubs and our bills, bank accounts, etc. I told her about our budget and about living below our means and why and how much we save. She's never been a big spender as she grew up watching me be very thrifty. She started getting a weekly allowance for chores this year also. This past month she wrote a report on the importance of compounding interest and the affect of inflation on one's savings. She presented the report in front of her class.....the teacher was amazed and really proud....you can imagine how proud I am of her.

 

[cute fuzzy bunny]

I still have nightmares about the stories where the kids kill their parents in order the receive their inheritance .

I'm shooting to give my son many reasons to want to kill me, besides the inheritance. That way, I figure we both stand to feel a lot better about the whole thing.

 

[Bestwifeever]

I'm shooting to give my son many reasons to want to kill me, besides the inheritance. That way, I figure we both stand to feel a lot better about the whole thing.

Are you timing that for right before you're taken to the LTC facility?

 

[HFWR]

Too many kids, and many adults too, have no frame of reference. Kids don't know how much it takes to live, or retire, and many adults have no concept of saving/investing...

Loose lips sink ships...

 

[REWahoo]

Too many kids, and many adults too, have no frame of reference. Kids don't know how much it takes to live, or retire, and many adults have no concept of saving/investing...

Loose lips sink ships...

To my way of thinking there is a huge difference in discussing earnings and net worth with your kids vs. discussions of savings, investing, spending, budgeting, and LBYM. To do the first serves no good purpose; to not do the second is child abuse...