Monday, February 02, 2015

Telling Children About How Much Money You Make

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!


1 comment:

Anonymous said...

The household I grew up in was very similar to yours-- Dad called the shots, didn't talk about what he earned (although he enjoyed talking about his investments, especially the big winners), and Mom thought he was a miser. His way was to gloss over the numbers and focus on the message, the main one being you have to save as aggressively as you can. I don't blame him, his youth was chock full of rainy days. After my siblings and I graduated and started working full time, he never once asked how much we made or what we were spending, so I think his financial reticence was his idea of proper behavior. My siblings and I have never shared financial details with each other either.

Mom's way was much more open and balanced. She saved but only up to her budget plan, and she didn't either overspend or underspend relative to her plan. She doesn't ask our incomes directly, but I think she's curious and has her ways to figure it out. I'm pretty sure she and her siblings all know what each member of our generation is earning. On the other hand by her way money itself isn't shared, only information.

Now as for which way is better, I'm not so sure. When you tell your kids all of the details, what are the consequences? Do they get to vote on family budget decisions? What if they tell their friends (real life or otherwise)? And if you have an above-average income and your kids ask their friends from less-well-off families, how does your openness reflect back on you? And what if your kids have friends whose parents work where you do? I guess that depends on how open you are with respect to salary with your co-workers, but where I work this is strictly taboo. Would kids understand if you ask them to keep it as a family secret? How do you justify that?

I don't have kids either, but I don't see the need to burden them with information (along with all of the associated "don't tells") until they start working full time. By then they will understand the unspoken rules, and hopefully they will be mature enough to at least listen to any advice you offer. Some parents feel the need to justify their financial decisions to even small children, but I'm a believer in "my house my rules" or as Dad used to say "this is not a democracy". I certainly would not share details of financial stress with my kids.