Sunday Conversation #8 – Kids and Money Matters Edition

Welcome to Sunday Conversation #8! If you would like to participate in next week’s Sunday Conversation, simply ask your question in the comments section of today’s post and I will respond next Sunday. Remember, any subject is on the table (but keep it family-friendly).

Elliott of 21st Century Dad writes, “What are your thoughts on disclosing details to your children about having financial difficulties? While growing up, my parents had their own business so cashflow was always suspect. They did their best to insulate us from their money woes, but they weren’t very good at hiding the stress they were under. Despite these difficulties, they did managed to scrape together money (or debt) for school-related expenses, the occasional persuasively worded request, birthday gifts, and Christmas gifts.

What’s your take on this?”

Elliott, yours was the lone question this week, but one worthy of an entire post dedicated to its response.  When I was growing up, money was a taboo subject between parents and kids, and I think for the most part it should stay that way while kids are small.  I don’t particularly like the idea of sharing money woes with kids because it adds to the stress they already feel from the normal pressures of growing up – academics, fitting in, peer pressure, etc.  However, I do believe in talking about general personal finance concepts at an early age and instilling a healthy fear of large debts, overspending, etc.  My daughter has known about credit cards and their potential danger since she was five or six years old.

As kids grow older I think it is fair to clue them in on some aspects of your financial situation, but only in general terms.  I think is perfectly fine for teenagers to know you are working to pay off debt, or to save up for a down payment on a new home, etc.  Sharing these details with them will make the “no’s” to life’s wants more easy to accept because there is at least some tangible justification behind them (although “because I said so” is the official, universal parental justification for responding to any request – no explanation required).  I’m not sure I would share specific details with my kids such as my exact salary, or the exact amount of debt we owed, or the amount of our mortgage.  Stick to general terms.

Even though we may not intend to share the stress of money problems with our kids, children are intuitive and will eventually pick up on the strained relationship between parents.  This is just another reason to avoid debt, and work towards debt freedom if you are in debt.  It’s often quoted that money fights are one of the leading causes of divorce.  And many of those fights happen between couples deep in debt and struggling to make ends meet.  If you can’t get motivated to get out of debt for your own financial peace, at least do it for the peacefulness it brings to the rest of your household.

I’m interested to hear how readers feel about Elliott’s question?  Do you share money woes with your kids?

Comments

  1. I don’t share money woes with my children, their 6 months and 19 months so they don’t understand haha ;)

    But I do have an adult friend who told me about how her Mother shared with her. Every time we talk about the subject, she many times will say she hated the fact that she knew her Mother was barely breaking even, couldn’t afford health insurance, etc. She says this caused her to grow up a little bit faster then what she should have. Bearing the financial stress her Mother was in at a young age. She is in debt up to her knees, despite all what her Mother shared with her.

    I say there comes a limit to how much you disclose. I want my children to be knowledgeable about finances and know about debt but not stress that were about to lose the house (were not thats just an example). My father took care of the finances and really never shared what was going on etc. To a point that put myself at a disadvantage, I did not know what I was doing when I put myself in debt and now I’m trying to get out.

  2. I liked how my Mom eventually let me watch her pay the bills, budget, shop, etc. I never knew the exact totals of anything, but I learned how to clip coupons, comparison shop and otherwise figure out where the money goes. She also did a good job of explaining what to do to avoid the debt my parents were in, so I didn’t fall into the same traps. Thankfully, it all stuck, and I consider myself pretty “money smart.” In fact, I often show her blog posts about new ideas, or encourage her to start her own savings. In a way, she taught me a lot, now it’s my turn to use my new found knowledge to help her out!

    Anyhow, I do have a question this week. :) I ended up hanging out with some friends on the fourth, and one of the wives in the group mentioned lasik surgery. She continued on to say that she can only get it after her baby is born, her husband comes back from an upcoming deployment, and they get a handle on their credit cards. When she mentioned credit cards, I couldn’t really believe it. I suppose I just have been affected by the money taboo, but it was really unexpected to hear and made me feel rather awkward. (Not to mention I was just meeting most of these people for the first time, and somewhat admiring the house they had. That I knew there was a mortgage for, which I definitely wasn’t jealous of.)

    My question, then, is this: Has anyone ever said something about their financial situation that just made you uncomfortable? I was rather shocked that she would so openly admit to having trouble with credit cards, but I suppose that’s the norm in America today, huh?

    I did admit the other day to having a personal loan, but was also surprised to find out the person I was talking to had one as well. (Plus a new car loan, ouch.) It’s just leading me to see everything in a new light, and that I’m rather happy with what my husband and I have because it’s ours and we don’t owe anyone anything for it. :)

  3. Children tend to be poor at keeping secrets. I tell things to children with the expectation that all of their friends (and friends’ parents) will learn (some version of) what I have said.

  4. We have talked a little bit about money with our kids. They’re five, four and eight months old so their financial education is only just beginning. We talk about how we don’t have enough money to buy something, or how we’re saving money to buy something. I would like to start giving them an allowance, but up til now the budget has been too tight to do that. On the other hand, would €8 a month make that much of a difference? Surely not.

    @Foxie- Personally hearing that somebody has a credit card balance wouldn’t make me uncomfortable, but I suppose it’s because I’m extraordinarily open about my own financial situation. I’m sure I make others uncomfortable! On the other hand I have a friend who has told me that she wasn’t able to pay their bills yet was still spending lots of money on ‘stuff’ and that made me ill at ease.

  5. Such a tough question and I see why it deserved an entire post. I like the idea of sharing all those things with your kids but the comments on additional stress is key. The other comment on the kids not being able to keep secrets is also very interesting.

    From a man’s perspective, I always try to think what the regal, renaissance man would do – sometimes to my detriment. I believe the financial hardship would not be discussed with kids. Even if they asked, you don’t have to lie, but you can leave out the gory details and let them know it will be alright…because it will…

  6. @Kevin: I tend to agree with you. I personally think it is a parent’s job to make kids think it will always “be alright,” at least up to a certain age. Kids should feel as safe, secure and happy as possible. Besides, there are plenty of things to worry about as adults, so it’s not like they won’t have opportunities.

    @Lisa: Sounds like you’ve created the same monster we have – LOL! My daughter frequently points out a cheaper alternative while shopping, or asks me, “Dad, is it frugal to buy that new Wii game?”

  7. We don’t share financial woes with our children. We do share aspects of our budget with them by allowing them to help with the aspects of our finances. When the bills rrive for the week I often have my daughter record the ammounts due, etc.

    I have a topic that I would like for you consider posting about for your Sunday Conversation. I searched your blog and using your google search box but didn’t find what I was looking for.

    What advice can you give regarding making money through blogging? What are some of the main ways that a person could earn money through thier blog?

  8. I do not share my financial woes with my kids EVER. I keep it to myself. I grew up with parents who argued constantly over the lack of money and I can tell you that it’s extremely damaging to a child’s senses of stability, security, trust and guilt. I am usually very general in my discussions with my college aged kids regarding the situation I have found myself in with high interest mortgage loans. They don’t know, for example, that these debts have financially devastated my partner and myself. They don’t know either that we’re about to lose a quarter mil on a very bad/dumb/stupid investment. My kids have been used to seeing money whenever it’s needed because we’ve spent everything and not saved anything. Now that they are older, they know about the dangers of credit cards, car dealerships and general consumer debt. They have seen us pay cash for everything for years. They have never seen us pull out a credit card to pay for meals or clothing or anything else for that matter. I have made a point over the past year of teaching my kids the value of a dollar, something I was never taught myself. My kids know how to grocery shop, how to cook, how to be frugal with respect to home utility bills, how to be organized with respect to paying bills and staying on top of important paperwork. At least they will be leaving home with a much better financial acumen than I ever hoped to have at their age. In the meantime, I continue to teach them the lessons I have learned through the school of hard knocks.

  9. We share with them in very general terms… But they know that when we say we don’t have the money for this or that… we really don’t. They are helping us save for our vacation! =) We just put every dime we come across in a huge jar! It’ll take a few years… and they will gt impatient (as will I ) but they will see first hand that you have to save for those extras! Oh, yeah I have one of those ‘monsters’ too! We were playing house one day and my 3 yr old was my ‘mommy’ ! lol Anyway, I started ‘begging’ ‘Mommy can we plleeeeeaase go eat at McDonalds’ . She looked at me with a serious look on her face! “you know we dont have neough for that.. do you want ice cream?’ rofl!!! She’s 3! and already sounding just like me!!!

  10. what a good topic of discussion. for me, growing up i think i was in tune enough to know that we were on the “poorer” side of things because of what my friends had that i didn’t. but we were also fortunate enough to have the everyday essentials and some of the things we wanted!

    i’ve got a question for next week! with Christmas approaching (ok…so it’s 5 1/2 months away, haha) and my husband and i on a VERY strict budget with very little to spend…how would you approach buying gifts for immediate family members (9 in all…4 parents, 2 young siblings (4 and 10), 3 siblings 19 years old) without appearing cheap? is it worth it to take some of what we would send to credit cards in order to buy gifts? I don’t think we’ll be able to afford more than $25 per person! (and 6 of the 9 also have birthdays in December!…) This is the first year we’ve been so strapped for cash (I lost my job) and I’m not sure how to approach this! Any advice would be appreciated.

  11. When I was a kid, my parents are terrible when it comes to sharing their money woes on us. They would tell us straightforward to out face “we don’t have money kid, so screw that new toy you’re dreaming”.*laughs*

    I’ll make sure I dont do this to my kid but I do agree to educate them about the dangers of using too much credit cards but also how to manage their money early.

  12. I believe in letting the children in on what is going on in the household. I am out of work right now and while I do not get into specifics, I let me kids know we have to be careful with our expenditures. If you let them know a little they are less likely to ask for non-essential things and appreciate the things you do buy them.

  13. My husband’s ex-wife must complain about money quite a bit, and it makes me very sad when my step-daughters say, “we are broken.” I say that we already have what we need, and try to teach them to take care of what they have.

    Regarding Christmas, I think that less is more. Look back on your own childhood. Do you remember every Christmas and what you received? What stands out for me is the Fisher Price Christmas when all 4 of us receive the house, school, farm, garage. I also remember a Barbie head that I could put make-up on. Finally, I remember a Cinderella watch for First Communion with changeable pink, white, and blue bands. 3 presents stick out from 18 Christmases and special occasions.

  14. I do have a question…

    My MIL wants to buy a car. She plans to pay cash but she’s also on a very fixed, limited budget as she is retired with no retirement plan.

    And she wants to pay cash for a NEW car!!! I have tried to talk her out of it, and think I’m making headway, but she continues to resist. She’s afraid of a “junker” and seems thrilled with the idea of a brand new car. *sigh*

    I KNOW it’s a bad idea and we’re trying really hard to make sure she does the right thing. What are some concrete arguments and reassurances we can give her?

  15. Our kids are 9 and 2, and for most of the older one’s life we’ve been completely debt free. We teach our kids as often as possible the benefits of being sensible with money. Our older son has seen an amortization table and learned how painful paying interest is, and why we send additional $ to the principal each month. I take him grocery shopping and have him do the math in his head to figure out how much X% off is, and how to stock up on already-needed items which are extremely low priced. I have him check the unit pricing on items and help me select which ones are the better deal. On luxury items like a Nintendo DS, he had to pay for 1/2 of the item with saved-up money of his own. We explain how we put money into a Christmas account to help budget for holiday expenditures, and then have him help us make those purchases for needy families.

    I think that divulging too much negative information about personal finances can be harmful to young children. High school aged kids, depending on their own emotional makeup, can probably handle more of this stressful info. But there’s never too young of an age for teaching wise saving and spending habits. It helps to verbalize directly to the child what you are doing, and why, so that they can more fully understand the total picture. “Mama is going to wait until this item is on sale next week to buy it, because it’s a want and not a need, and she can use the money she’s saving for another purchase.”

  16. Whereas I think that it is not necessary to share with your children your financial woes, I think it is important to remember that the children WILL MODEL your financial activity. Growing up, my parents inherited a huge amount of money. My mom didn’t have to work, my father worked from home, and we had a huge house, several cars, and could afford whatever we wanted. After their divorce, my mom got sick, and the story changed immensely. Even so, no one had ever taught us that money was to be respected and that it is never guarenteed. I am 28 and still struggling with the attitudes my parents raised me with and the realities I have had to face.

  17. My son is only 2, so this isn’t an issue for me yet. However, when he is old enough, yes, I would share them with him. I would make sure to do it in such a way as not to worry him or burden him, but to use it as an opportunity to educate him.

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