Money matters are a dicey topic, especially in families. So many of us were taught not to talk it because it’s not polite, yet we need to learn how to manage it and we need to teach those skills to our kids. At the same time, kids aren’t always able to understand the whole picture of a family’s finances. Even when trying to teach our kids about the power of money, and managing it and saving it and investing it, when is the the right time to give them the low-down on what your specific family brings in and spends every month?
When money is a big issue in the house – when there are big expenses, or there are some budget issues causing some stress, kids get wind of it. Generally speaking, they can understand when a parent says they can or can’t afford this or that, and they pick up on the emotional impact the budget has in the house.
The younger ones
Our younger children, even if you start teaching them about money early on, likely cannot handle knowing the family income. You can talk generalities with younger kids, such as about how a portion of income goes to retirement funding or college funding and why, but talking hard numbers can skew their view. What is “a lot” of money to younger kids is very different to “a lot” of money to an adult! At younger ages, talk concepts, not details, and fill in specifics slowly over time.
The older ones
As kids get older, and especially into adolescence, they need to get a better handle on what things really cost. They need to know what it takes to keep the cable channels and how those amazing (and expensive!) soccer cleats fit into the family budget. They likely will have some discussion about these concepts of budgeting and expenses in school, and understanding from home can support and round out that information with your family’s financial values.
Still, it may not be quite right to give hard numbers to your child about the yearly salary, or other information. Your child, as they are learning this part of life management probably will mostly figure it out, but when numbers often sound bigger than they stretch in real life, some details can skew views.
Money sense without details
If you build your child’s understanding of money and family finances over time with general financial concepts and your family’s financial values, there will come a time when you can sit down and talk hard numbers with your child. When your child is ready for this will vary by child. Until then, you can give your child money sense without showing the family balance sheet.?