Great article in the New York Times: Why You Should Tell Your Children How Much You Make, by Ron Lieber.
" 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."That might not be the exact method most people would use to get the message across, but I"m sure it was effective!
I've written a lot on this site about how my parents took pretty much the opposite approach-- my father earned the money and controlled how it was spent. He was very secretive about it-- money wasn't something that was to be discussed in specific terms about how much anyone had or made. All he ever said was that we couldn't afford this or that and that my mother should spend less on things like decorating and clothes. And yet, when the time came to spend money on things HE valued, like education and music, there was money to be spent. So while I generally knew that we were neither rich nor poor, but some in-between thing known sometimes as "middle-class" and sometimes as "very fortunate," there was a lot of doubt about finances. My mother's reaction to that was to think my father was a stingy hoarder who must surely have lots of money that he just didn't want to spend.
Honesty and openness is a much better policy, though in my case, it came too little and too late, and ultimately even when I thought my mother had a full understanding of the finances, she still made poor choices. One might say that her own childhood influenced her-- did her parents tell her how much money they made and had? Probably not, but if they had, they would have told her that they made very little, and had little or no savings for most of her life. That will teach a child a very different lesson than if their parents have the more middle-class and up finances of the people profiled in Lieber's article.
The article is excerpted from his new book, The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money. I don't have kids of my own, but I know some parents who could probably use this book!