Do You Hide Your Financial Success From Your Kids?

[marko]

My approach has always been to undercommit and overdeliver. You are better off stepping in to help when you choose versus promising things that become entitlements.
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+1 The quote of the week!

 

[CCdaCE]

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.

It's different as your kids age and as you reflect on your upbringing. I think my parents gave me a few tools, but, my grandparents gave me more on being frugal, saving, etc. as they were closer to the Depression era.

Ask yourself what $1000 meant to you as a 6 year old or as a 16 year old or after your first year on the job. I was a saver. My adolescent kids didn't have much idea on the value of money, until they get money to spend or save. Making money will be another eye opener for them. I started investing for them and they have no interest.

Each kid is unique in that some are happy with the simple things in life, some want more. They or I have never gone hungry, so, I assume that would put a different perspective in anyone's life to not let it happen again if it did once. My wife likes to travel. I like to fish. Both of these can take as little or as much money as you devote to them. My daughter is happy to read books and be with friends. My son likes to game and be with friends. Both pretty cheap. We ask them things like where they would go if it could be anywhere, and they don't have much ambition for travel. "lets drive to grandma's." Same as me. But, the wife drags me along on a few long trips, and I love it when I get there.

My parents never discussed money but I always saw them working very hard, looking back. But seldom at the time. They usually had one nice trip a year and other vacations were see family or long weekend type road trips. Finally after I was in my mid-teens they sold their business, bought their lake home, and their lifestyle became better from my perspective. At the time, I still didn't think much about what was going on in the grand scheme of things.

They paid 1/2 or more of my college. I worked summers to pay the rest. Took a few cheap (at that time) student loans. College, to me, was a "stamp of approval" or pedigree that you had a brain and I didn't try very hard if I wasn't interested, but made it through. I worked much harder at work than school and was promoted soon and often. I feel I have become successful after I figured out what everything meant - what matters, as far as hard work, teaching myself investing, etc.

They retired in their mid & late 50's, and are doing fine or probably great financially, it would appear. They still don't discuss finances but are very generous. My wife is generally shocked by them at Christmas.

So, back to the kids. Give them the tools you know, and learn new tools about what "rich" people do, not just the conspicuous consumers.

When, as a kid, when you were spending time with rich friends and poor friends, did you even pay attention or did it matter? In my case, no. It's only (for me) after you get to where you are in life and ask if it was enough, could I have done more, could I do more, etc.

Maybe too much of rant...but maybe you know where I'm coming from, if nothing else.

Money is freedom.

-CC

 

[Koolau]

I think it would be prudent to live in a neighborhood with good public schools. Going to a private school kinda makes it untenable to maintain the "we're not rich" theme. .

Interesting observation which is probably, generally true. However, in the early '00s, 3 kids totaled $6k/ year (that's total - not each). We were not even members of the church which had the school. The education (and love) they received was outstanding. Oddly, enough, we lived in the old "homestead" at the time. A quick look at the place and its location would have suggested a notch or two above a slum.

THEN when it became time for HS, we moved to an established upper middle class area in the new school district. THAT's when it would have been difficult to say "we're not rich" - though I still maintain that we were only comfortable.

Where we live now, I think starting private (parochial) school costs are around $12K EACH child - IF you are a church member. They go up - way up - from there - especially if it's one of the "name" schools. YMMV

 

[LV_Travel]

It's a crap shoot, but you can help your odds

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

+1 Grew up from upper middle to lower middle to lower class as parents fortunes went up and down dramatically through entrepreneurial efforts. As a result, have lots of childhood friends/acquaintances from different economic stratas. While it appears to have been a crap shoot those kids who had a strong family connection and learned a hard work ethic and delayed gratification mostly have turned into happy adults. While some form the same family for whatever reason have completely different outcomes despite the same upbringing. Those traits of self reliance, hard work and delayed gratification were much more important than the "class" they were raised in. In business, worked with hundreds of very wealthy people and in many cases knew their children, many were very humble hard working people that were mindful of the advantages they had in life and they were not only focused on their own success, but how they could make it a better world. Of course their were also plenty trust fund kids, whose parents were mostly absent throughout their life and many were drug addicts, alcoholics, committed suicide or dead as a result of their addictions. No one wants to talk about those kids. From the lower strata their was a much higher rate of failure in life due to bad influences that took over and destroyed their life. Communicating and teaching your children how to be good people will improve your odds no matter what zip code you live in. Then sometimes, no matter what you can do, kids get led astray.

 

[LV_Travel]

LBYM lifestyle - It is all relevant to what?

While we lived below our means, kids had an extravagant lifestyle compared to our childhoods. Thankfully, with the exception of a stretch at 16 for #1, which cleared up within a year, both are now fully launched, happy, independent and working towards their own FIRE goals while following a LBYM philosophy. They went to private school and had many friends whose parents lavished a luxurious lifestyle upon them, but many parents were rarely home and some of those kids really went down a bad path. Others are now outstanding young professionals Don't think where you live matters. A loving relationship with you, your spouse and your children does.

 

[troutnut1]

They have no clue...

Four adult children in their forties have no idea that we have any money. They just know we are frugal. One of my sons is day trading and playing with options and he does know we own some of a particular stock. He was trying to teach me about options so he asked how many shares we owned of it. Its a LOT so I told them they were all his mom’s and she didn’t want me talking about it. Two of the four went other directions in life after my first wife and I divorced and will get nothing. The two that are still in the will may find a way to change that. A good amount is being left to a long time dear friend that has agreed to handle everything without knowing we have much. She will be shocked. I think the two that are still in the will might alter their behavior a lot if that knew how much we have. But that isn’t what we want. We have a modest home and older vehicles so nothing is obvious to anyone.

 

[RetMD21]

WE hit lean fire with kids about the same age.We continued live relatively frugally except for flying for vacations. Since we kept working they didn't notice.When we occasionally didn't buy things like flashy cell phones we had a discussion about choice of how to spend vs ability to afford.

 

[P.S.]

I think it would be prudent to live in a neighborhood with good public schools. Going to a private school kinda makes it untenable to maintain the "we're not rich" theme.

I agree that it’s prudent to live in a neighborhood with good schools b/c it’s worth it for the kind of neighbors and community services you’ll get.

OTOH, if private school is the world your children know, and you LBYM, your children may consider you “poor.” But, as they have gotten older, this has provided opportunities for discussions on debt, net worth, and materialism/fulfillment/happiness. And regarding hiding, one can still enjoy luxuries even if one LBYM - eg. expensive lingerie, linens, etc.
Kids are smart though; they’ll figure out what they need to, to get where they want to go.

 

[Koolau]

One thing we noticed about all our kids. They all seemed to get smarter AND more perceptive once they reached about age 30. In short, they turned into adults. We would be willing to share a lot more info now than we would have when they were in their 20s - let alone when they were "children." YMMV

 

[BearD]

Me too. 2020 at 48. 49 now.

 

[bobbyr]

My approach has always been to undercommit and overdeliver.

When I worked in IT, that was our theme during Agile planning sessions...definitely a wise approach no matter where the application

 

[Chuckanut]

One thing we noticed about all our kids. They all seemed to get smarter AND more perceptive once they reached about age 30. In short, they turned into adults. We would be willing to share a lot more info now than we would have when they were in their 20s - let alone when they were "children." YMMV

As our children age, we parents somehow get a lot smarter......

"When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much he had learned in seven years." - attributed to Mark Twain

 

[ugeauxgirl]

As our children age, we parents somehow get a lot smarter......

"When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much he had learned in seven years." - attributed to Mark Twain

When does this happen? My 17 year old son seems to think I'm an idiot.

 

[Koolau]

When does this happen? My 17 year old son seems to think I'm an idiot.

I can only say "it happens in God's good time." I rejoiced when each of my kids began to rebel. It was tough to take, but it was a sign they were growing up and becoming their own person. I knew that each child MUST grow UP and AWAY from me - each in his/her own way. With our son, he left when he turned 18. We really didn't reconnect until he was perhaps 25 - we barely saw him. Slowly, we DID reconnect and we finally have a good relationship with him, his SO and their baby. Sometimes - it takes a lot of love and a lot of waiting. Literally, age 30 seemed the magic number for him. Let's hope your son learns sooner how smart (and especially loving and patient) his mom is. Aloha

 

[MichaelB]

When does this happen? My 17 year old son seems to think I'm an idiot.

Sadly, it’ll probably be a few more years, and they won’t be easy. Going away to college may help.

I rejoiced when each of my kids began to rebel. It was tough to take, but it was a sign they were growing up and becoming their own person.

My parents rejoiced - when I left home for college. I had a similar feeling with ours. Not so much rejoicing as just plain relief.

After my children grew up we grew closer once again and are now good friends. It’s been quite rewarding to see my children as adults and enjoy their company.

 

[albireo13]

From my experience, kids are alien creatures until about 25 when they morph into actual humans!

When they grow up is directly linked to when they are disconnected from the "bank of Mommy and Daddy"!