Do you talk openly about money with your kids? I consider myself an open book when it comes to money. If someone compliments me on my shirt, I am likely to tell them where I purchased it and how much I paid.
Last week my son asked me how much we make. It caught me off guard. Unsure how to respond, I answered with a question. Why do you want to know? I felt as uncomfortable responding to this simple question, as with recent inquires related to 5th-grade health class. Why is this? Why don’t we talk more openly about this with our kids?
I never knew what my parents made growing up– I doubt I ever asked. Looking back, they both had solid incomes but absolutely fell into the trap of using credit to provide what they could not afford. As an adult, I now know my mother worked side jobs to pay for expensive ballet classes and sports camps for me. Would the teenage me have passed on the newest style of jeans or thought twice about going on senior spring break, had they been more open about finances? Probably not.
I never did give my son a straight answer to his question. I asked him why he wanted to know, and we eventually moved on to other topics. It has bothered me all week that I skirted around the question. My main concern was that he would discuss it out of context with his friends over a late-night gaming session or in a competitive way. Maybe he will be less careful with money or not worry about breaking or losing things—knowing we can easily afford to replace them.
The actual number on our combined salary is just an arbitrary number if not in the context of all the things that make up our financial picture. As a financial advisor, I meet with people who earn $75,000 a year, live within their means, and have great savings habits. These savers can have a higher net worth than others who earn 3x that and finance a lifestyle they cannot afford.
What if I used this as an opportunity to discuss the importance of savings? We could have had a conversation on the national range of household incomes or the importance that people not value themselves or others according to how much money they have. What if I told him how much we save towards retirement from every paycheck or how much we give to charity each year? He wanted numbers and looking back I should have started there. The key to money conversations is to turn them into valuable lessons. Having a discussion on needs vs wants or savings goals would have been much more valuable to him than an exact dollar amount on our tax return. Did he want to know our salary or our take-home pay? We could have had a great discussion on taxation or tax-deferred savings. The key here is to learn from my mistake. When kids ask uncomfortable money questions, we can use it as a way to teach them about finances and show some transparency.
In the end, I plan to talk to my son more about our entire household budget. When he is mature enough to understand that number, I will share it with him. I do not want to perpetuate the notion that money is not something to be talked about openly. No matter what number I tell him, it will probably seem like more than enough to afford the $50 Xbox gift card he slipped into my amazon cart—and in the end that is probably why he was asking.
Any opinions are those of Melissa Fradenburg and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.