Do You Hide Your Financial Success From Your Kids?

[Midpack]

I agree with those who’ve said they spend to the extent their kids feel as safe and secure as possible, but they don’t need to know you could afford better homes, cars, etc. - as long as you make sure they’re in good schools.

I suspect this is preaching to the choir for the OP so FWIW.

The examples you set are much more important than what you tell them anyway IME. I’ve known parents who say one thing and do another with their kids and then wonder why the kids don’t listen to what they’re told.

My parents put a high priority on grades and doing well in school.

Both our parents were careful with their money, and we saw that everyday - and they definitely didn’t let us think we could have whatever we wanted (even though we know now they could’ve easily afforded much more). They didn’t waste things either, ever.

They taught us personal finance all our years growing up. We had allowances (do parents even do that anymore), and it meant something - if we wanted something non essential we had to save for it ourselves. DW and I really avoided debt most of our adult lives. Last car we financed was 1982. We paid off our (modest) home 30 year loan in 15 years. All because that’s what our parents ingrained in us.

They made us do chores all our years growing up, even though they could’ve hired the work out.

My Dad fixed things whenever possible, instead of throwing things out and buying new - and he had me at his side teaching me every time. I still take great pride in figuring out how to fix things around the house (it’s much easier now with YouTube). My tools are among my most prized possessions.

I could go on and on, but kids are smart and they follow your consistent example much more than what you say...

 

[DrRoy]

We have not told our sons the details, but they know I have saved a lot, RE'd at 57, we travel extensively, remodel the house, etc.

 

[retire48in2018]

Our children participated with us becoming debt free, and then in a debt free scream to DR back in 2002. We became transparent with the bad decisions that we made previously, and the change that we made later.

As we changed our lifestyle to LBYM, they recognized it. They are both now LBYM, daughter more than son...But it is a life long lesson.

We share when we hit major $ milestones, and they are happy with us. Daughter is mapping our her plan to save and retire early - before she even began working! She converted her boyfriend (now married).

It was a little uncomfortable the beginning - but it was in the light of education and how things work out. Not in the sense of bragging or precocious, etc.

They regularly seek out our counsel and want to LBYM, and do FIRE. They'll beat us, as we were NORMAL for the 1st 10 years of working!

 

[ugeauxgirl]

Our children participated with us becoming debt free, and then in a debt free scream to DR back in 2002. We became transparent with the bad decisions that we made previously, and the change that we made later.

As we changed our lifestyle to LBYM, they recognized it. They are both now LBYM, daughter more than son...But it is a life long lesson.

We share when we hit major $ milestones, and they are happy with us. Daughter is mapping our her plan to save and retire early - before she even began working! She converted her boyfriend (now married).

It was a little uncomfortable the beginning - but it was in the light of education and how things work out. Not in the sense of bragging or precocious, etc.

They regularly seek out our counsel and want to LBYM, and do FIRE. They'll beat us, as we were NORMAL for the 1st 10 years of working!

That's awesome! When they were little I made my kids listen to Dave Ramsey podcasts in the car (captive audience). We had the most interesting discussions about debit, how credit cards work, etc

 

[target2019]

As young children the kids were aware that we did not have more than the local average income. This meant they did without in some cases.

When they developed in their first jobs and saw how difficult things could be, they asked for advice. I used those opportunities to reveal more and more of our details. Over the next 5-10 years we grew closer, and each of us knows the entire financial story.

 

[Hermit]

The kids' school environment was very important to us. We selected a public grade school where we liked the principal and teachers. When they got to middle school age, we no longer had that option. In the first parent/teacher meeting, the teachers made it quite clear that parents were not welcome in "their" school. We moved our daughter to a private school and they remained in private schools through high school. This was quite a change for the kids, but I think they learned a lot from it. In today's education environment I would make sure I had some agreement with the education provided by the public schools and have the resources to go elsewhere if not. Private school certainly lets your children know that your family has money, but our kids still drove an old, beater car and had parents who were careful with their money and we did not do fancy vacations or own boats, etc.

 

[StillFiguringItOut]

interesting word, submit. I have to say it was one my life's small pleasures to snub the whole fafsa thing. It's none of their business.

 

[Car-Guy]

First generation wealth here too... I worked since I was in my early teens and was never embarrassed of having a few extra bucks... I didn't wave a flag either, unless you consider living in a nice house or driving expensive cars is waving a flag. If so, too bad... I raised my family the same way. I live "within my means" but certainly not below it. I did make an extra effort to teach/explain/impress upon my DD, when she was in her teens, what it takes to live like we do....

 

[ugeauxgirl]

We moved our oldest son to a private school after he had some issues at the public school. It was not his idea and he wasn't happy about it. In one of the conversations he said he was going to hate it because his classmates were going to be a bunch of rich jerks. I laughed and said, "honey, you know we ARE the rich people, right?". He glared at me and said, "But we don't ACT rich." I thought he was exaggerating till I ended up in the car line behind a Maserati.

 

[timbervest]

We lived in a middle class suburban neighborhood - simple house and decent utility cars. We took vacations when the kids were growing up and had opportunities to stay at nice hotels, ate out regularly, etc. They wanted for nothing important and although they saw some friends had bigger fancier houses they never really demonstrated a material or acquisitive streak. The first big impression they got that we were better off than most was coming out of private college with no student debt which made an important impression when they talked to their friends and they are eternally grateful. When they were older I did talk with them about paying yourself first, saving for the future, and using debt responsibly and it seems to have gotten through. Now that they are grown one is very successful by their own efforts (wants to be able to provide for their family what they got) and the other lives modestly LBYM and is happy and self motivated. We are generous and gift them now and then but there is no expectation or feeling of quid pro quo. They know we have resources but the prospect of any inheritance does not seem to have impacted their life plans (of course I HAVE told them that I plan to live to be 100!). Just luck of the draw I guess

 

[tb001]

I agree with those who’ve said they spend to the extent their kids feel as safe and secure as possible, but they don’t need to know you could afford better homes, cars, etc. - as long as you make sure they’re in good schools.

I suspect this is preaching to the choir for the OP so FWIW.

The examples you set are much more important than what you tell them anyway IME. I’ve known parents who say one thing and do another with their kids and then wonder why the kids don’t listen to what they’re told.

My parents put a high priority on grades and doing well in school.

Both our parents were careful with their money, and we saw that everyday - and they definitely didn’t let us think we could have whatever we wanted (even though we know now they could’ve easily afforded much more). They didn’t waste things either, ever.

They taught us personal finance all our years growing up. We had allowances (do parents even do that anymore), and it meant something - if we wanted something non essential we had to save for it ourselves. DW and I really avoided debt most of our adult lives. Last car we financed was 1982. We paid off our (modest) home 30 year loan in 15 years. All because that’s what our parents ingrained in us.

They made us do chores all our years growing up, even though they could’ve hired the work out.

My Dad fixed things whenever possible, instead of throwing things out and buying new - and he had me at his side teaching me every time. I still take great pride in figuring out how to fix things around the house (it’s much easier now with YouTube). My tools are among my most prized possessions.

I could go on and on, but kids are smart and they follow your consistent example much more than what you say...

We’re in the same boat as the OP, but bought the big house in the nice neighborhood. Our kids are 5 and 3, so it’s still TBD on how it will impact them. But we follow much of MidPack’s advice.

I fix everything I can, we have nice, running cars, but aren’t buying the crazy sports cars many of our neighbors have, etc. We spend our money on quality things for the home, but not on lots of junk. They don’t have all of the crazy toys etc...

Right now they go to a private school that attracts a lot of kids from diverse but mostly middle class backgrounds. Most are going there because their local schools aren’t great. Next year they’ll transition to the local public schools.

We talk a lot about the value of money and the cost of things and the trade offs involved. I comparison shop like crazy and we buy a lot of things used.

We’ll see what the teenage years bring. When I see some of the teenagers in our neighborhood it worries me, but there are others here who are amazing human beings.

 

[Markola]

I think you should live the way you want, and educate your kids to understand what's going on. IMHO many parents don't give their children enough credit for intelligence, so they make up scenarios that the young ones see through easily. Just be honest and straightforward about what you're doing and why.

Seems wise. Bill Gates’ father was a highly successful Seattle attorney and Warren Buffett’s father was a four term congressman and business person, so I’m not sure there’s a clear correlation to find between parents’ finances and their kids’ “drive.”

 

[twaddle]

Android phones work well, I've never had an apple product, but have used them at work.

I tried logic. Functionality, price/performance, Apple's anti-competitive behavior, and the way they lock you into various "ecosystems."

Peer pressure > logic. Somewhat age-dependent equation.

 

[Surewhitey]

We didn't hide it, but we didn't talk much about it either. There were only a couple of times she probably really picked up on it. We rewarded her with a car at graduation, then we paid cash for first 2 years of college, then gave her a budget to get married. The biggest was probably when she mentioned to us that living without credit had hurt her & hubby in getting a home loan...we rewarded them for being debt free with loaning them a home loan with no closing cost, of course. Not that we're oober wealthy, but we're comfortable...

We're all learning and recently she mentioned opening a SEP 401k (she heard that I opened one) for her hubby's side-gig...we're all better for learning from each other.

 

[travelover]

Kids? Heck, I still haven't told my wife. She thinks I'm laid off.

 

[Yoheadden]

Lots of good advice here.
If I may add my 2cents
Enjoy what you have worked so hard for, but always remember to LBYMs.
More families, especially successful ones should talk about money. Not account balances, but basic money principles. Start them with an allowance if they do chores. This way they are “earning it”. Open a savings account when they are old enough to learn about savings and compounding. Try to find examples about how other families aren’t as fortunate either through movies, the news or even volunteering. Teach them that you have to set money aside and to pay yourself first because one day, it will give them choices. Teach them about interest and that you want it to work for you and not against. There are always teachable moments.
Just the idea that you are asking about this, says you are already on the right path.
Good Luck

 

[Badger]

I agree with those who’ve said they spend to the extent their kids feel as safe and secure as possible, but they don’t need to know you could afford better homes, cars, etc. - as long as you make sure they’re in good schools.

I suspect this is preaching to the choir for the OP so FWIW.

The examples you set are much more important than what you tell them anyway IME. I’ve known parents who say one thing and do another with their kids and then wonder why the kids don’t listen to what they’re told.

My parents put a high priority on grades and doing well in school.

Both our parents were careful with their money, and we saw that everyday - and they definitely didn’t let us think we could have whatever we wanted (even though we know now they could’ve easily afforded much more). They didn’t waste things either, ever.

They taught us personal finance all our years growing up. We had allowances (do parents even do that anymore), and it meant something - if we wanted something non essential we had to save for it ourselves. DW and I really avoided debt most of our adult lives. Last car we financed was 1982. We paid off our (modest) home 30 year loan in 15 years. All because that’s what our parents ingrained in us.

They made us do chores all our years growing up, even though they could’ve hired the work out.

My Dad fixed things whenever possible, instead of throwing things out and buying new - and he had me at his side teaching me every time. I still take great pride in figuring out how to fix things around the house (it’s much easier now with YouTube). My tools are among my most prized possessions.

I could go on and on, but kids are smart and they follow your consistent example much more than what you say...

+1 That sounds like the home I grew up in. I didn't have the chance to teach a child of my own. When my wife and i married she had 2 children (18 and 25 - on his own). Now they are in their 50s. I care for them both but my wife and I agree that our finances are not any of their business. We do, however, substantially gift to them with the understanding we may not always be able to continue.



Cheers1

 

[Exchme]

Our kids are well launched and hard working. We've told them that our retirement analysis showed we are more than OK and would have to really try hard to spend all the money.

But money is a funny thing, you can poison a young person with it into believing their own efforts don't matter. So we give them a few thousand $ now and then for special occasions in their lives, but it's never life changing money.

As we age and it becomes more clear how much extra we have, we will probably have to increase gifts, so it will get more difficult to do the balancing act.

 

[brett]

Years ago, when I got my first paper route my grandfather made me an offer.

For every dollar that I put in the bank he would give me 25 cents. So, for a number of years he would ask for my bank book over the Xmas season. He paid up on the incremental each year for four or five years.

One of the factors why I, we, have always lived below our means.

 

[novaman]

I hid my wealth from my kids, all the way until the youngest of the 3 went off to college. They always thought we did OK, but were shocked to discover that mom and dad were quite wealthy because we never showed it. When my kids were growing up whenever they asked me how much I made I always said, "a dollar- a dollar a day" So that became the running joke for many years.

I finally revealed our wealth because the kids were shocked and concerned when the youngest went off to college and we suddenly announced that Dad (I) was thinking about retiring (I was 51) and we were starting to do a lot of expensive traveling.

One funny story that happened in around 2003 exemplifies how well we hid our wealth from our kids.

One day my oldest son who was around 13 at the time quips at the dinner table, "Dad, I think you blew it in your decision to become a dentist."

"How so?" I reply.

"Well dad, just look at you. Look at how hard you work and how little you have to show for it." He goes on,

"My friend Billy, he has all the newest gaming consoles- Xbox, Nintendo, Playstation, he has them all, and all I have is a Nintendo, and its not even the latest one. And Billy gets to play them on this HUGE flat screen TV (mind you this was 2003 when large flat screen TV's were very expensive) and all we have is this old small TV."

"And Billy's mom gets to drive a brand new Hummer while mom just drives a minivan... and Billy's parents just put a fancy Jacuzzi tub in their backyard while we have nothing."

"No dad, you blew it when you became a dentist. When I grow up, I want to be like Billy's dad. I'm going to be.... a MORTGAGE BROKER !!!"

I chuckled when my son said all this, but I was beaming on the inside because I knew that I was doing it right.

To follow up on the story, fast forward to 2009 or so, and Billy's parent's went through some really tough times, ultimately declaring bankruptcy. I know this because Billy and his family were patients of mine and I was served with Bankruptcy papers to discharge their debt.


All my kids understand the importance of LBYM now and I think how we raised them has something to do with this.

 

[novaman]

Enjoyed your post, rodi. How'd you handle FAFSA, the kid's car and stuff like iphones if I can ask?

I hate apple products, but apparently kids need them to function.

I was tough on my kids- refused to get them the latest phones, and it came back to bite me.

In 2013 my youngest was a freshman in high school. She is very shy, and at that time she was trying to figure out where she could fit in. It was a difficult and awkward time for her.

She had joined the field hockey team and was thriving. We were thrilled because our daughter was meeting people and making friends, and hopefully breaking out of her shell. Well, one day we pick her up after school and she was in tears. We asked her what was the matter and she told us that the Field Hockey coach had planned a last minute party to celebrate their season, and everything had been done quickly, at the last minute, and all via group messaging on their smart phones. Well, my daughter was the ONLY girl on the team who did not have a smart phone (we refused to get her one because we thought it was unnecessary at her age), so she was the only one to not get the message, and ended missing the party because she didn't know about it until after the fact.

We felt so horrible. We went and bought her the latest iPhone that evening.

 

[brett]

Seems to me there is a difference between 'hiding' and not providing details.

We have never 'hidden' our financial situation from our children...consciously or otherwise. They have never asked specific questions about our net worth or financial resources-perhaps attributable to how they were raised.

We have not hidden anything but neither have we bragged or openly discussed it with them. The extent it is they know they were well provided for and we are financially secure. Isn't that enough?

 

[twaddle]

The extent it is they know they were well provided for and we are financially secure. Isn't that enough?

I'm sure that helps. Thinking back to when I was a kid, I think I was also influenced by my perception of my parents success as well as their chosen fields.

Honestly, I think ER kids are a bit of a real-time social experiment.

 

[bclover]

my kids went through stages. My youngest 21, is fully into the cell phone entitlement stage.

my kids did get an inkling early on mainly because of the vacations we took, you realize that your friends are not going to Europe in their teens.

But do they know the numbers? no. do they realize they are not living in the 'hood and go to better schools, yes.

we didn't buy them new cars but they did get the old hand me down ones. It is a balancing act.

 

[marko]

An interesting story here: Years ago, a friend and I were chatting. He suddenly asked: "What would you call having a lot of money? How much?"
I said something like "$50 or $100 million"

He went on to say that his ex-father in-law died a bit earlier and everyone was shocked to find that the old man left over $500Million!! Cash! Nobody knew! "We knew he had a good amount of money but nobody knew it was that level!"

IMO the adult kids (all in their 40's) weren't paying attention as this guy was quite well known and had owned/sold a very successful business.