Kids have a knack for zeroing in on things you don’t want to talk about.
For instance: money.
Not “How much does that cost?” or “Is there such thing as a $US1,000 bill?” but rather the bigger, touchier questions, like “Are we rich?”
In his book “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money,” New York Times personal finance columnist (and father) Ron Lieber explains how to answer some of the more sensitive financial questions kids tend to ask.
Q: Are we rich?
A: Why don’t you tell me what it means to be rich?
Instead of hemming and hawing, Lieber recommends asking open-ended questions to narrow in on your child’s definition of rich (which, he writes, children usually perceive as a big house and lots of stuff).
If you don’t want to give a straight “yes” or “no,” steer the conversation to the conclusion that we don’t know much about our neighbours’ money, and that being rich isn’t as important as having other qualities, like kindness and creativity.
Q: How much money do you make?
A: Let’s start by talking about how we use the money I make.
“The best way to handle this is to explain that we may indeed want to share our salaries by the time they’re in high school, but they first need to learn a lot more about what it actually costs to pay for the things that the family has and does,” he writes. “After all, it’s not the income number that’s important here as much as the context.”
That’s because what might seem like the most honest, straightforward answer — a plain old number — won’t mean much of anything to a kid who’s never seen anything bigger than a $US50 bill, Lieber writes.
He recommends involving them in your family finances, whether that’s sitting with you as you pay your monthly bills or discussing how much it costs to do things like go to summer camp or take piano lessons.
If the kids are bored by this, that’s fine — it just means they aren’t ready to learn it yet. If they aren’t bored, they can start learning about other costs, like the price of your rent or mortgage and your taxes. By high school, when they have a better idea of how much money it costs to live, they will have more context for your earnings.
Ultimately, Lieber notes, there’s a very simple reason to be upfront about how much money you make with your kids: If they really want to know, they will make it their business to find out.
Q: Why does Katie’s family have a bigger house than we do?
A: I don’t know — there are lots of reasons they might have a bigger house than we do.
When it comes to any variation of “Why does someone else have more or less than we do?” Lieber recommends admitting the disparity, but explaining that it’s OK. “The way I like to frame it is that it’s true that some people have more than everyone else and some people have less than everyone else, and it can be for lots of different reasons,” Lieber tells Business Insider.
“Sometimes they get money because their family gives to them, or they have chosen a certain job,” he says. “Some people choose jobs because it’s important to make a lot of money, and some people choose jobs that make them the happiest — and there are jobs that pay a lot of money that can make you really happy.”
Q: Why can’t you have a job that makes more money, so we can take a summer vacation, too?
A: This is the job I chose, and if I chose a different one, I’d be unhappy — and grumpy.
“This type of curiosity is genuine, but it feels awfully aggressive,” Lieber writes. “While we owe our kids answers to even the most obnoxious questions, it’s perfectly fine to gather some thoughts first and wait until we feel calmer.”
He shares the insight of Joline Godfrey, CEO and founder of Independent Means, an education company that helps wealthy families broach the topic of money in a more productive way.
“The default is owning your own choices, as opposed to talking about someone else’s choices,” Godfrey tells Lieber. “‘I could have made different life choice, but I’d really be a grump as a parent because I wouldn’t be doing something that is important to me. I’m a much more loving person because I have integrity and am true to myself, which doesn’t mean that somebody else who makes different choices is not.'”
Q: Why don’t you send me to private school?
A: We decided that money would be better used for …
Although parents typically respond with “It’s too expensive” or “We can’t afford it,” Lieber explains that these are two very different answers: One might be true (you might not be able to afford it, although it’s hard to be sure if you haven’t explored all of your options for things like financial aid), and one is a value judgement that allows parents to further explain how they make choices.
He writes that since kids don’t have power over these kinds of decisions, the next best thing is knowledge — and that’s something we can share, whether it’s an explanation of where we think that money is better spent or why we think private school isn’t the right choice for our family.
And the answer for any question at all …
Why do you ask?
This is Lieber’s go-to answer for any money question.
The simple response does two things: It buys parents a minute to collect their thoughts instead of spitting out a reflexive “yes,” “no,” or “none of your business,” and it gets to the root of why your child is asking in the first place.
Younger children especially might not need a solid answer, or they might be looking for an entirely different conversation based on something they overheard at school that day.