NEW YORK (2/10/15)--You should be upfront with your children about how much money you make.
That's the argument The New York Times
"Your Money" columnist Ron Lieber makes in his new book "The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money," recently excerpted in the Times
Lieber argues that your children will have a pretty good idea of your family's financial situation anyway--the value of your home is a Google search away, for example. Avoiding the topic can make money seem mysterious and off-limits for conversation, Lieber argues, potentially hobbling children's ability to make good financial decisions as adults.
He doesn't recommend sharing your income with your children until they're mature enough to comprehend what it means, to find the information meaningful, and to exercise discretion--most likely when they're teenagers.
And, after all, if they apply for college financial aid a few years later, they'll find out anyway. The FAFSA (Free Application for Federal Student Aid) requires the family's income, assets, and signatures from both applicant and parents.
But regardless of whether you agree that children should be privy to the family's financial information, preparing your child for eventual financial independence is a good idea.
Lieber has some easy ways to introduce common money concepts to your children:
Find out why they want to know. When children ask about money, say "Why do you ask?" This both gives you time to think of a good answer, and helps provide insight into what's on the child's mind, especially if the child is asking out of anxiety about any money problems the family is experiencing;
Start with simple expenses. Children as young as kindergarten-age can begin to understand simple financial concepts. At the grocery store, start introducing concepts like wants vs. needs, and enlist the kids' help in looking for deals and savings. Consider giving them a portion of any savings from coupons they find;
Explain why you spend your money. They see you using your credit card or making purchases online. Use this as an opportunity to both explain financial necessities--your mortgage payment and utilities--and the values that guide your wants, such as the family vacation; and
Involve them in the family budget. Making them part of the decision-making process can instill financial responsibility and investment in the family's financial well-being. Plus, children can become accountability partners. For instance, give them the option of skipping a weekly meal out and spending the money some other way they might find more meaningful.
Staff at your credit union also can help you familiarize your kids with money concepts and financial services.