This Week In Your Wallet: The Kids and Money Edition
Over the weekend, Ron Lieber who writes the Your Money column for The New York Times penned a provocative piece titled: Why You Should Tell Your Children How Much You Make. It’s actually an excerpt of his new (and needed) book, The Opposite of Spoiled. In it, he lays out examples of families who did this (they range from a father who pulled a month’s salary out of the bank and dumped it on the kitchen table to a mom who broke down her kid’s private school tuition into a day rate “akin to a nice Lego set,” to help the children understand and appreciate it).
The story lit up the Internet garnering more than 600 reader comments over the weekend. The Today show turned the subject into a poll – asking whether you think this is the right or wrong call. Roughly 70% said it should be off limits, with 30% saying it teaches the value of the dollar. Almost 700 people weighed in.
It is no doubt a tough subject, as is money overall. That’s one reason I’ve been collaborating with the folks at Time for Kids and the PWC Charitable Foundation to launch Your $, a monthly magazine for school children in 4th, 5th, and 6th grades. You can read more about our efforts here. If your children receive Time for Kids in their classrooms, they may bring a copy of Your $ home sometime soon. If not, and you’re interested, you can find the magazine, free, here.
For the record, I haven’t told my own children how much I earn, though I have through the years shared how much various things – from groceries to college – cost. I’ve also focused on priorities, explaining that just because we have the money for something doesn’t mean we choose to spend our resources in that way. But I was also curious about how Lieber addressed the topic in the household he shares with his wife, fellow NYT reporter Jodi Kantor and author of The Obamas. Here’s our conversation:
I’d love to hear from you how you addressed these issues yourself.
I guess it’s easy for me to mouth off about telling your kids how much money you make when I haven’t had to do it myself yet! I have one child, a 9 year-old daughter, and she hasn’t asked about our household income. If she does, I’ll tell her that she doesn’t get to find out until she knows enough math to do calculations around the number. Once she is more math-able, we’ll make sure she understands all of the components of our budget and gets used to thinking about whether we’re spending our money well. That will take a few years. And maybe then, at age 14 or 15, if she’s proven herself ready and trustworthy with other private information, we’ll tell her.
What financial conversations have you had so far, and in hindsight, would you do anything differently?
She has asked about what our apartment cost. We replied by telling her how much money we had to borrow in order to pay for it, just to make it clear that most people can’t buy a home in New York City outright. She also knows that it will take 30 years to pay for it. I think we got that part just about right; we didn’t lie, we gave her a sense of the numbers involved and we emphasized how long it takes and how diligent you have to be to really own something that is so expensive. It takes decades to pay for college too, but we’re doing this in advance. When she asks about it, we tell her what portion we’ve saved so far of the cost for a college like the one that my wife and I went to.
I didn’t do as well when she asked recently how much we pay her babysitter. I hemmed and hawed and told her I didn’t remember exactly, which was true since I hadn’t done this year’s tax forms yet. But it didn’t feel good to evade the question. Anyway, the right answer would have been this: You should ask your babysitter. It’s up to her whether to tell you, and it wouldn’t be fair of me to disclose that kind of information about someone to somebody else.
And what in your own personal history shaped your views on kids and money?
I’ve been shaped by so many things. My parents’ divorce and our subsequent change in financial circumstances. Applying for financial aid in college and going in every year to beg for more money. The moment freshman year when they separated us into two packs and sent all the financial aid kids off to a meeting in a stuffy conference room. The first time I saw a compound interest chart at age 22 and understood the value of saving money over long periods of time.
There’s one other big one too: I’ve run into plenty of generous families over the years. Some were worth billions or close to it and threw lavish parties and invited every kid in school, and others had much less but opened their doors each holiday season with trays of baked pasta and insanely comfortable 1970s furniture in a small living room. Nobody has the market cornered on hospitality or graciousness, and no family has a monopoly on fun. That’s something I want my daughter to learn, and I’m trying hard to show her that it’s true.
An update on the 52-Week Savings Challenge
Finally, for all of you who are on our 52-Week Savings Challenge, a reminder. It’s week 5. This week you’ll put away $5, which brings your total to $15. And if you’re looking for inspiration:
- Schedule your automatic transfers for the next four weeks, just like you did at the start of the challenge.
- Blab to your friends. If you share your goals with friends and family, you’re more likely to keep them — if only for the fact that it’s embarrassing to fail in front of others. But it’s also helpful to have a support system in place. Just like with a fitness goal, it’s easier to stick with your workout regime when you have a personal trainer or buddy to work out with you. So consider sharing the fact that you’re on the savings challenge with a friend — if that friend wants to join you, it’s not too late! — and committing to checking in with one another. There is definitely power in numbers!
