Should Your Kids Know How Much You Make?

February 12, 2015

Should Your Kids Know How Much You Make?

Having been a kid that came from nothing, people always ask me about having kids that come from something. Simply, the big question amongst people that have wealth is, "How do you avoid your kids becoming spoiled brats?"

I have always felt that the answer comes in two parts:

  1. Don't try to make your kids believe that you don't have what you have.
  2. Make them understand that the most important thing about having what you have is to pay it forward.

A lot of parents make the mistake of telling their kids, "You should be so grateful and thankful for what you have." The reality is that kids don't care. Your kids are going to have all kinds of pressures as they grow up, regardless of your financial situation.

You're better off showing your kids the responsibilities you undertake with your success.

Below is an article that includes an interview with Nancy Koehn. Nancy is a Harvard professor and I met her when I attended an executive development conference. She provides some key insight into how we can best keep our kids informed about money. 

Money- control it, spend it, use it wisely. Have those conversations with your kids. Participate with them.

-Brandon
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by Amanda McGowan | WGBH News

How much should parents talk to their kids about money?

It doesn't take a close reading of Emily Post's Etiquette handbook to know that there are three topics that should never be discussed in polite company: religion, politics, and money.

But maybe that old adage could use some rethinking, says Harvard historian Nancy Koehn, especially when it comes to inculcating smarter spending habits in children.

"My take on this from a larger-picture perspective is there is a great power to thoughtfully entrusting information, thoughtfully, carefully, diligently...to people who depend on you, and that includes kids," Koehn said.

She points to a recent piece in the New York Times which describes a man who withdrew his entire month's salary in $1 bills from the bank, came home, dumped it on the table, and asked his children to gather around as he divvied out the household's expenses for the month: bills, taxes, church donations, ballet lessons, and everything else.

They quickly got the message: budgeting is often all about trade-offs, which helped them make concrete sense of why, for example, eating take out from restaurants more meant there was less money in the budget for family vacations to Disneyland.

"They could see there wasn't very much left and they could understand it," Koehn explained.

In this day and age, Koehn says, learning about the basics of personal finance is more important than ever.

"Think about what these kids are going to face when they older, in terms of what the economy will look like, what entitlements will look like, what college debt will look like," she said. "There is every reason in the world to begin to equip our young people with the skills they need."

That isn't to say that children should be privy to all of their parents' financial woes, especially if it will make them fearful or stressed. But in general, Koehn says, children are a lot more capable of processing information about finances—and learning from it—than they're usually given credit (pardon the pun.)

"Children of all ages are braver and smarter and more sensitive than I think we often assume," Koehn said.

To hear more from historian Nancy Koehn, tune in to Boston Public Radio above.

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This article originally appeared on WGBHnews.org here.




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