When
Scott Parker wanted his six offspring to know more about the value of
money, he decided to do something that many parents would consider
radical: show them exactly what he earned.
One
day, he stopped by his local Wells Fargo branch in Encinitas, Calif.,
and asked to withdraw his entire monthly salary in cash. In singles. It
took 24 hours for the tellers to round up that many bills, so he
returned the next day and took away the $100 stacks in a canvas bag.
His
oldest son, Daniel, who was 15 at the time, remembers the moment his
father walked into the house and dumped the $10,000 or so on a table.
“It looked like he had robbed a bank,” he said.
After
a pause to let it all sink in, Mr. Parker began peeling off bills. He
told them about taxes, set aside money for a tithe to their church and
made a big pile for the house payment. The singles piled up for soccer
and scouting and hamburger night. By the end, there wasn’t much left
over. “I was trying to make as big of an impact as I could, and I
definitely had their attention,” he said recently.
Your
children deserve to know what you make, too. It may sound improbable,
but you can begin to initiate them when they’re as young as 5 or 6,
building their knowledge slowly and giving them the real answer while
they’re still teenagers. Handle it right, and it will be one of the most
valuable lessons of their childhood.
Here’s
the bigger problem this helps to solve: Money is a source of mystery to
children. They sense its power, so they ask questions, lots of them,
over many years. Why isn’t our house as big as my cousin’s? Why can’t I
have a carnivorous plant terrarium? Why should I respect my teachers if
they earn only $60,000 per year? (Real question!) Are we poor? Why
didn’t you give money to the man who asked you for some? If my sister
can have Hello-Kitty-themed Beats by Dre headphones, why won’t you get me the Bluetooth-enabled Lego Mindstorms set? (It’s only $349, and it’s educational, Mom!)
We
adults, however, tend to do a miserable job of answering. We push our
children’s money questions aside, sometimes telling them that their
queries are impolite, or perhaps worrying that they will call out our
own financial hypocrisy and errors. Sometimes we respond defensively and
viscerally, barking back, “None of your business,” unintentionally
teaching our children that the topic is off limits despite its obvious
importance. Others want to protect their children from a topic many of
us find stressful or baffling: Can’t we keep them innocent of all of
this money stuff for just a little bit longer?
But
shielding children from the realities of everyday financial life makes
little sense anymore, given the responsibilities their generation will
face, starting with the outsize college tuitions they will encounter
while still in high school. “It’s dangerous, like not telling them about
how their bodies are going to change during puberty,” said Amanda Rose
Adams, a mother of two in Fort Collins, Colo. “That’s how kids come out
of college $100,000 in debt with an English degree.” Or not knowing how
and why to start saving right away for retirement, or how to pick a
health insurance plan.
This
does not mean that children are entitled to your tax returns the first
time they ask how much you earn. Financial transparency comes only with
readiness, as Joline Godfrey,
a family financial education consultant, puts it, and it takes a decade
or so to give them enough knowledge and context to make the information
meaningful and for you to feel safe sharing it.
Start
by using the same, simple line every time your child asks you a money
question: “Why do you ask?” Don’t say it with disapproval or
defensiveness; make it clear that you’re glad your child asked.
This
is a stalling tactic to give you time to think of an answer. (It also
works well with questions about sex and drugs.) Even better, it can
allow you to figure out exactly what is on your child’s mind. If two
parents are fighting about money and a child overhears, it’s natural to
wonder how much the family has or if it has enough. At that moment, it
can be easy to reassure a child that the family is fine — if that’s true
— and that the argument was merely about the best way to use what it
does have. Still, when it comes to your children’s financial initiation,
you don’t want to play defense, merely responding to their inquiries.
Instead, you want to build their awareness slowly of how to build a
household budget.
Start
with something that you spend money on regularly — anything, really.
Children as young as 6 or 7 can begin to understand the grocery bill.
They often tag along to the store or add to the wish list each week, so
it’s a great opportunity to introduce the idea of wants and needs as you
navigate the aisles. Some children even get in on the couponing,
collecting a portion of the savings from the parents.
This
is all part of helping them answer basic family budget questions: What
do we spend each month to cover the necessities, and what do we choose
to spend on things that we merely want? Our spending isn’t a secret in
the first place; children see plenty. But watching us whip out plastic
cards in the store or in front of the computer, completely out of
context, may give them the wrong impression entirely, which is why it’s
good to introduce them to all of the expenses before they are teenagers.
Some
parents start with even larger line items. Trisha Jones, a stay-at-home
mother in Norfolk, Va., sends her children, who are 6 and 8, to private
school. Each month, she has them sit with her while she pays the
tuition online, asking them to click the button. “We jokingly say that
it costs $92.50 to send them each to school every day,” she said, adding
that they know that the daily number is akin to a nice Lego set. “But
it’s a privilege to go to the school that they do, and we want them to
know that we are making sacrifices to send them there.”
Other
families focus on expenses that derive from the children’s
extracurricular interests. When the local ballet studio raised prices
just as her 12-year-old daughter was increasing her commitment to dance,
Rebecca Miller Goggins showed her the bills. A professional fund-raiser
who lives in Northampton, Mass., Ms. Goggins is used to being direct
about money and gave her daughter the option of having one fewer lesson
per week or cutting back elsewhere. Rather than reducing the number of
lessons, her daughter started babysitting more and contributing money
toward her pointe shoes.
Related Article: Kids And Money
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