Do You Hide Your Financial Success From Your Kids?

[capitalhockey]

We have hit lean FIRE target thanks to good salaries and living below our means over the last 20 years. So we are technically FI but will work another 10 years for RE (also hit fat FIRE target). We are financially comfortable but chose to live in a modest house and drive old reliable cars....nothing flashy compared to what we could afford. From the outside, we live more like a blue collar family than a white collar family.

Our kids are under 5 years old now but my wife and I have talked about how we want to raise our kids. Both of us did not come from much but worked very hard to become professionals in our fields. Our parents did not give us any financial support because they could barely put food on the table. That gave us a hunger to study hard in school and succeed professionally. We want our kids to have the same motivation in life. We could obviously provide much more to them than what we have growing up but don't want to spoil them.

1) Will living in big house and having nice cars dilute their motivations in life? We are hesitant to live in high end neighborhoods since they will be surrounded by families/kids with high mean lifestyles.

2) Do we continue to fringe blue collar living conditions (basic needs are met with occasional nice things) to create environment why they are hungry to excel?

Looking to hear from folks who are in the same situation and how they raised their kids. We are a first generation of wealth and don't know how to use our financial means the right way without harming our kids.

 

[braumeister]

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.

 

[capitalhockey]

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.

My fear is that the past 20 years of frugal living that resulted in our wealth will be lost on our kids since they were not born yet or still very young. If we moved to nice homes and new cars in the near future, that will be the formative years for our kids and the experience they will mainly remembered.

We can try to explain how we live below our means to achieve our financial goals but it will be like telling a story that they could not see.

 

[38Chevy454]

I think your kids will learn from your example and teachings a lot more than from their friends. The understanding of your kids will take time, just as we all learn and develop over time. You have the biggest effect on your kids.

It's also OK to enjoy some of your success, having a nicer house and newer cars. There will always be people with more. Some of that more is real, some is image. Just live your life how you want.

 

[marko]

Looking to hear from folks who are in the same situation and how they raised their kids. We are a first generation of wealth and don't know how to use our financial means the right way without harming our kids.

No kids here but grew up surrounded by a lot of trust-fund kiddies.

My take is that it's a crap shoot. Some of my classmates are now responsible bankers, lawyers, doctors --or just genuinely good people.

Some are dead (or should be) from drugs, booze and dangerous living.

Seems to me that is the case across all income levels. Some kids do well, others fall off the tracks. So, maybe it's not what they're surrounded by but how they're 'instructed' along the way. Just my two cents but I don't think depriving yourselves will change who those kids are.

Some of the wealthiest kids I knew growing up are the nicest, most decent people, others are complete losers and you can see that even between siblings so go figure

 

[Sgare]

Stay where you are. I can't think of anything good from moving into a high end neighborhood. Sometimes those kids are the worst. They have too much time and money to blow. They will have nice drugs and booze to share with your kids. Think of the cars they will be given at 16 for your kids to see and want.

 

[Bamaman]

My parents were raised in the Depression, and any father who had a job was better off than many.
My sister & I were raised very middle class, but our parents were driving older cars. We both got out of college when tuition was $192.50 a semester and started life with little.
We raised our daughter upper middle class in nice, large homes and living where public schools were of good quality. Thankfully we've always lived in ultra low COL areas.
Now we're raising our granddaughter just like her Mom.

As you get even more financially secure, there's nothing wrong with stepping up a little from time to time. Like get a nicer car. Or go on nice vacations. What's nice about starting out in life is that you've always got something better to look forward to.

 

[twaddle]

I *tried* to hide it. It's a little hard to hide that you're retired early, though. I think she suspects.

And she recently applied to college. Both of us need to fill out some financial aid paperwork. I resisted. Tried to explain that there was zero chance she'd be eligible for need-based aid, but she was advised to submit. I asked her not to peek, but ....

I'm hoping it's not a big deal. She's already showing herself to be at bit of an entrepreneur, so maybe it'll be an incentive to pull off a similar ER?

 

[pacergal]

We were able to buy into an area considered a wealthy suburb, 30+ years ago, during a more depressed housing time. But it is a 1960s style Ranch. We always lived below our means, our kids recognized we didn't drive the fancy cars or live in the McMansions that were so prevalent with their friends, or go on super expensive vacations each school break.

They benefitted from being in a top notch school district, always one of the top 5 in the state, a very safe neighborhood, and enjoyed occasional tag alongs on trips with friends .

Today, they are well adjusted, fairly good with finances. We don't share dollar amounts, but they know we are doing OK and will likely have an inheritance.

As long as you and your DW live and raise your kids in the lifestyle you are comfortable with, I think they will do fine. I would not live a frugal lifestyle just because you think you need to in order to have you kids appreciate struggle or money.

 

[twaddle]

Oh, yeah, private schools are a dead giveaway, but they don't figure it out until/unless they transition to a public school. Then they're embarrassed.

 

[RetireBy90]

I think the principals voiced are mostly sound. Your kids will learn from watching you more than you realize. Just wait till they are grown and talk about how parents told them this or that. My boys do just that.

My advice would be to continue to enjoy the fruit of your labor but live below your means and share with those in need from your wealth and your time. If you take your kids along to an opportunity to help others they will learn to give and also learn how good they have it.

 

[Montecfo]

Largely we have hidden it. Not on purpose but just due to lifestyle.

Even so, we have a very nice house and a very nice neighborhood. It's just that when some of our friends took out funny money mortgages then moved to what they hoped would be an even nicer neighborhood, we thought that was a bad plan. And it was.

Most conspicuously we are frugal in terms of daily living, but always travelled a lot. Our peers tended to spend more on daily life and cars and little for travel or saving. Hiring everything done and not prioritizing teaching kids basic skills or work ethic.

We also did not hand out money to our son. He got jobs and worked, which is making a value statement all by itself.

You can do these things even when you live more extravagantly. It is just harder since your actions speak also.

Then again after a lifetime of living frugally, it is very hard for most of us to start spending extravagantly, so maybe this is not going to be the problem you're thinking.

But see the "blow that dough" thread.

 

[Golden sunsets]

We were able to buy into an area considered a wealthy suburb, 30+ years ago, during a more depressed housing time. But it is a 1960s style Ranch. We always lived below our means, our kids recognized we didn't drive the fancy cars or live in the McMansions that were so prevalent with their friends, or go on super expensive vacations each school break.

They benefitted from being in a top notch school district, always one of the top 5 in the state, a very safe neighborhood, and enjoyed occasional tag alongs on trips with friends .

Today, they are well adjusted, fairly good with finances. We don't share dollar amounts, but they know we are doing OK and will likely have an inheritance.

As long as you and your DW live and raise your kids in the lifestyle you are comfortable with, I think they will do fine. I would not live a frugal lifestyle just because you think you need to in order to have you kids appreciate struggle or money.

I agree with pacergal. Our kids benefited from the better school district with a more rigorous education program, and generally higher level of excellence of the attendees. DD and DS have turned out well and now in their mid 30's, are high achieving adults who are not entitled.

 

[rodi]

I've struggled with this some. We live in an upper middle class neighborhood - the house I grew up in. My dad was the classic millionaire next door prototype... so I grew up with a lot less frills than my peers. (No car at age 16, just a good bicycle and a bus pass). When he was ready to downsize after my mom passed, we bought from him to take advantage of the generational transfer of prop 13 taxes. (A California thing.) But he charged us full market value for the house! The kids know all this.

They also know that savings are a priority and that we live within our means. They know I retired younger than their peers parents. They know that they can do 4 years at a state level school on my dime *IF THEY GET THE GRADES*... No free ride without the grades. Older son wasn't ready for school, maturity wise... Add covid to the mix and he flunked out and is now living at home. He got a job, and we charge rent. So while he knows we can afford to support him - he knows we *won't* unless he is on a good path. Younger son is a senior in HS and a straight A student. Just got his first college acceptance and will probaby launch without boomeranging home.

The kids know our house is paid off, we have rental income, and somehow we have enough to travel (in non-covid times). They don't know the exact figure - but they know we're well off. They also know that I am frugal and make choices based on cost/value - like the HDHP with HSA vs a cadillac plan. They have use of a beater truck which I pay for gas and insurance... (paid for as part of the rent.)

 

[brett]

We do not hide it. But neither do we tell them. They have no idea beyond knowing that we are financially secure. They know we have edu funds for our grandchildren and the first cut off our estate goes toward the post secondary edu costs of grandchildren. That is as far as it goes.


There is really no reason whatsoever for them to know any details of our finances. Nor have they inquired. My son was seemed surprised once. We told him that we would help him to buy a condo. He seemed surprised when we told him the amount however he decided, very wisely, not to buy. We do not hide it but they probably have some notion given where we have lived in the past and the amount of travel that we do.

 

[Exchme]

On the question of moving, there is not point in extra consumption for the sake of it, but other factors can come into play.

We moved from our fringe blue collar neighborhood when it turned into mostly rentals, wasn't safe from all the dogs running loose and lots of car burglaries, some home burglaries, etc. Schools that used to be excellent were deteriorating So we got out before the property values fell.

 

[twaddle]

Younger son is a senior in HS and a straight A student. Just got his first college acceptance and will probaby launch without boomeranging home.

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.

 

[Gremlin]

This.

No kids here but grew up surrounded by a lot of trust-fund kiddies.

My take is that it's a crap shoot. Some of my classmates are now responsible bankers, lawyers, doctors --or just genuinely good people.

Some are dead (or should be) from drugs, booze and dangerous living.

Seems to me that is the case across all income levels. Some kids do well, others fall off the tracks. So, maybe it's not what they're surrounded by but how they're 'instructed' along the way. Just my two cents but I don't think depriving yourselves will change who those kids are.

Some of the wealthiest kids I knew growing up are the nicest, most decent people, others are complete losers and you can see that even between siblings so go figure

 

[socca]

... There is really no reason whatsoever for them to know any details of our finances. Nor have they inquired. ...

This is the way I was raised. My parents never discussed their personal finances with me, either before or after they divorced. I was well into my 40s before they started sharing a few details. I never would have thought to ask for financial help, not knowing what spare funds were available. This is in contrast to one of my step-brothers, who badgered his father continually for financial support rather than earn a living. He's still begging as he approaches 'retirement' age.

 

[ugeauxgirl]

We had no intention of telling our kids, but our oldest son overhead us talking about our net worth at age 11. (He was in another room- he has incredible hearing).

We had to have a discussion with him- yes, we (your dad and I) are millionaires, you can't tell anyone about our finances, what the money was for, why we aren't going to buy a Ferrari, etc.

It was the most amazing conversation ever. For days he came back to us with questions. He has never asked us for money or brought it up again ever.

We told the younger one (now 13) a few months ago. He didn't ask a single question, and hasn't mentioned it since. I made it clear to both of them that my dad received an inheritance at 70. If they want to enjoy money while they're young, they'll have to earn it themselves. We have money saved for college- they'll get the remainder as a gift when they graduate. No graduation, no money.

 

[mpeirce]

I *tried* to hide it. It's a little hard to hide that you're retired early, though. I think she suspects.

We didn't hide anything. We also lived below our means for many years, certainly while the kids were growing up and even the youngest observed plenty of that lifestyle. They all knew we were doing "well" but they turned out just fine, so I guess it didn't wreck them .

And she recently applied to college. Both of us need to fill out some financial aid paperwork. I resisted. Tried to explain that there was zero chance she'd be eligible for need-based aid, but she was advised to submit.

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.

 

[twaddle]

I don't want to drag this too far into the FAFSA weeds, but my concern was that schools might not consider her for merit scholarships if we didn't do the paperwork. Turns out she did get several offers that included scholarships/aid, but I still can't say for sure if FAFSA helped.

 

[rodi]

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.

While they were below 18 I bought inexpensive androids or paid 1/2 if the cost of better androids. Older son just bought an outrageously expensive i-phone and got quite an earful about what a waste of money it was from his parents But it was his money and he's 20.

FAFSA... Filled it out. Older son was offered loans. Younger son is in the college acceptance process and financial aid hasn't been offered yet. If he gets anything it will be merit based but we have 529s so it's ok if he doesn't.

I pay for gas and insurance on the beater truck that we own but they use. It is part is the deal since we're charge older son rent.

 

[Rambler]

My son has always been the one we worry about financially. He tends toward lazy, so we’ve not told him anything, other than the fact that we are retired. My daughter has always been more of a go getter, and we took her aside one day and gave her some basics so she’d know what she needed to know in case of our early demise (we’re still pretty young at 59). She hasn’t mentioned it since, but sometimes her attitude is a little off-putting...like she doesnt feel like she needs to save because she sees an eventual inheritance. So, telling her as much as we did may have been a mistake. I would not share much with the younger kids, and even with the adult children, caution is advised.

 

[Sunset]

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.

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