spending

When Your Kids Ask How Much Money You Make

Take advantage of the potentially awkward question about income to teach your children the ins and outs of the family budget.

Coming from your children, "How much do you make?" is the kind of awkward question that makes parents squirm. Your first inclination may be to blurt out a top-of-the-head answer, such as "That's none of your business." You don't feel comfortable sharing the information, and you're naturally worried—not without reason—that your kids may let it slip to their friends, if only in innocent conversation. You're entitled to your privacy, and you can't be blamed for not wanting your affairs broadcast around the neighborhood.

But don't panic. Kids aren't looking for an accounting of every dollar and decimal point. It's likely that what they really want is a general idea of how you're doing or where you stand relative to other families. Plus, you're probably more self-conscious about the subject than they are. As with questions about sex, kids often pose questions about money out of innocent curiosity and youthful naivete. If you don't raise an eyebrow, neither will they.

How to Respond

In fact, when you get a question like this, it's often a good strategy to answer with one of your own: "What makes you ask?" Maybe they're worried because they've seen a news report on homeless families. Perhaps they're curious about the new car you just bought. Or maybe they just want to know if now's a good time to ask for the bike (or cell phone or videogame) they have their eye on.

You can tailor your answer to their age and their response. With young children who are seeking reassurance, for example, you could say, "We have enough money to buy the things we need and also save some of it." If they're a bit older and curious about the new car, you could tell them how you shopped for it and fit it into your budget. If they want you to buy them that new bike, you could tell them whether you think it's a reasonable request.

Put Things in Perspective

Remember that no matter how much you make, whether it's $50,000 or $150,000, it will sound like an enormous sum because children of all ages have trouble putting money into perspective. As your kids get older, you may choose to be more forthright about how much you earn. But it will make more sense to your children, and be more comfortable for you, if you put your income in the context of your expenses.

Teenagers need to know, for example, that after taxes and other deductions, your take-home pay is a lot less than your actual salary. They need to know that you have to cover certain fixed expenses, such as the mortgage and car insurance, before you buy a new flat-screen TV. Before they even start applying to college, they need to know how much you can afford to pay and how much they'll be responsible for.

A Lesson from Oprah

In the years I've been writing about kids and money, I've encountered parents who have handled this touchy subject in a number of ways. I once appeared on "The Oprah Winfrey Show" to give advice to a family whose two teenagers were in dire need of fiscal discipline. To show the kids how the family's income was parceled out, they were given a stack of play money representing their dad's monthly take-home pay plus a stack of the family's actual bills. Then we all sat around the kitchen table as the kids "paid" the bills. When all the bills were covered, Mom gathered up the $500 or so remaining on the table. "That's for groceries," she told the wide-eyed kids.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
How to Calculate the Break-Even Age for Taking Social Security
social security

How to Calculate the Break-Even Age for Taking Social Security

When it comes to maximizing your Social Security benefits, there are many elements to consider. One factor that can be especially enlightening is your…
August 30, 2021
Spend Without Worry in Retirement
Financial Planning

Spend Without Worry in Retirement

Fears of running out of money prevent many retirees from tapping the nest egg they’ve worked a lifetime to save. With these strategies, you can genera…
August 30, 2021

Recommended

17 Free or Cheap Things to Do With Your Kids During the COVID-19 Pandemic
Raising Money-Smart Kids

17 Free or Cheap Things to Do With Your Kids During the COVID-19 Pandemic

We’ve got lots of kid-friendly activities to do at home that will keep your family safe and your finances sound.
September 8, 2021
Complain and Be Heard
Smart Buying

Complain and Be Heard

Getting our money back for the extended warranty and gap insurance we didn't want took patience and persistence.
August 31, 2021
10 Things to Know About Hurricane Insurance Claims
Becoming a Homeowner

10 Things to Know About Hurricane Insurance Claims

Know what's covered, what isn't, and how to make the most of your policy if you need to file a claim.
August 30, 2021
19 Things You Can't Return to Amazon
Amazon Prime

19 Things You Can't Return to Amazon

Before tossing these items into your virtual shopping cart, be sure to read Amazon's return policy first.
August 16, 2021