Most kids are, understandably, clueless about money.
But since our attitudes, behaviours, and general knowledge about money come directly from our parents, the responsibility for teaching naturally falls on mum’s and dad’s shoulders.
In her new book, “Make Your Kid a Money Genius (Even If You’re Not): A Parents’ Guide For Kids 3 to 23,” due for release February 7, personal finance expert Beth Kobliner says parents can start with what not to tell their kids.
“When it comes to money, I think there are some things that kids — particularly young kids — aren’t ready to process, and, frankly, don’t need to know,” she writes.
Below is Kobliner’s list of the seven things that you’re better off not sharing with your children.
1. How much you make
While Kobliner suggests not sharing the specifics of your salary with your kid — whether it’s $50,000 or $500,000 — you should certainly feel free to give them context, if asked.
“For instance, you can tell him that the median (meaning exactly in the middle) income in the United States for a family is about $65,000, then let him know where you stand in relation to that number,” Kobliner writes. You don’t want to keep your kid in the dark, but you also don’t want give them the perception that whatever their family earns is what everyone else is, or should be, earning too.
2. Which parent earns more
In a household where both parents work, Kobliner says you shouldn’t name a breadwinner.
“Putting dollar figures on what Mum and Dad earn can send the message, especially to young children, that one parent’s contribution is more important than the other’s,” Kobliner writes. Of course, as kids grow older they will eventually learn that a doctor or lawyer typically earns more than a teacher, for instance.
In households where one parent stays home to care for the kids, Kobliner says it’s important to let them know that this, too, is a full-time job despite earning no income.
“In general, regardless of the details,” Kobliner writes, “it’s best to display a unified front: We’re a team, we work together, and it doesn’t matter who earns what.”
3. How much you have saved for retirement
Retirement accounts are complicated, even for some adults. So suffice it to say your kid probably won’t understand why you’re saving a bunch of money that you can’t actually spend.
Kobliner shares about a personal experience: “When I was about 10, my neighbour Susan told me that her parents had a million dollars saved in their retirement accounts. My first instinct was to think she was a liar. After all, I didn’t know anyone who had a million dollars. Whether it was true or not, no good came from my knowing this information — or misinformation, as the case might have been.”
4. Who owes you money
Money is often the root of family dysfunction, Kobliner points out, but it’s best if you don’t involve the kids.
“Sure, you’re irritated that your loveable but irresponsible brother owes you $1,000 but is going to Aruba before paying you back as promised,” she writes. “But if you mention it around your child, he’ll not only hold it against his uncle but also remember it long after your brother has paid you back — an update you might be much less likely to mention.”
Still, she says, it’s a good idea to school your kids on the cautions of lending money to family members, just don’t use an example that’s too close to home.
5. How much you pay the babysitter
If you’ve hired a babysitter or nanny for your kids, consider keeping the terms of the deal confidential, Kobliner says.
It’s an incredibly important job and putting a price tag on it “gives your children an informational upper hand” that could undermine the caretaker’s authority.
6. How much you spent on a gift
For kids, gifts are often one-dimensional. They don’t think about the cost, but rather the excitement of giving and receiving, Kobliner explains. By mentioning the price of a gift, however high or low, you could be skewing their perception.
“First and foremost, the value of a gift is not always reflected in its price. After all, some of the best gifts, like making pizza with Dad or building a couch fort with Mum, are basically free,” Kobliner writes. But as your kid grows older, you’ll find opportunities to explain how it all works.
For example, she says, “The 10-year-old nephew of a friend was in tears at his birthday party when he noticed that he had gotten fewer presents than in previous years. His mum had to explain that now that he was older, the things he wanted cost more money. So a few of his relatives had pitched in to get him the pricey iPad he really wanted, rather than a bunch of smaller gifts.”
7. How much you worry about paying for college
Sending a kid to college is a point of pride for any parent, but finding a way to afford it can cause unending anxiety.
It’s best not to involve your kid in the conversation until they reach high school. Even then, she writes, “avoid overly negative talk … our rants and raves can be easily misinterpreted by our offspring, and they might conclude that college is a major burden that they don’t want you to have to shoulder.”
Ultimately, if college is a priority in your house, let them know that saving for it is, too, she says.