After a short hiatus, Ask The Readers is back! Chime in in the Comments section. I’ll feature my favorite answers next week.
When I was a child, my parents guarded the financial details of their lives like the feds guard gold in Fort Knox. I asked my mother this once:
How much money does dad make?
I remember my mother getting angry and saying something like:
That is none of your business! Don’t ask again!!
I didn’t understand my mother’s reaction. Was she embarrassed?
Eventually, I snuck down to the secret file cabinet in the basement and looked at my dad’s paycheck stub. I was surprised by how much my dad made and still didn’t quite understand why my mother was so protective of the information.
My mother’s behavior wasn’t unusual though. Most folks guard their numbers like a deep family secret. And I don’t think that they should.
My Kids, Money And Net Worth
A couple of years ago, I decided to tell Older Daughter what our net worth was. She was 9 at the time which may seem too young, but she is an old soul in a young body. I knew that she could handle the information. And more than that:
- I want her to know that it’s OK to have money and not spend it. We have the means to buy pretty much anything we want, but we don’t. I hope this helps teach her the importance of saving.
- I want her to know what wealth looks like. When I was young, I thought that wealthy people lived in mansions and drove fancy cars. Some do, but most don’t.
- I want her to know our financial situation from a young age. I’d rather have OD grow up with all of this in mind. Now that she knows our net worth, our behavior will reinforce these lessons.
- I want her to know about money in general. Part of the reason I asked my mother about income was that I had no idea what people earned or how much stuff cost. What was a good job? How much do houses cost? Cars?
When I told OD, I could tell immediately that she grasped the significance of it. Her eyes nearly popped out of her head:
Dad, we’re millionaires?!!!!
I explained to her that we weren’t normal. I had a good job, but also worked very hard to save up the nest egg. I told her how fortunate I was to no longer have to work at my age. I think it sunk in.
However, I was worried too. Would this revelation quickly be followed up by this:
If we have money, why can’t I have this or this and this?
So far, this hasn’t happened.
Younger Daughter (YD) is different. We recently had this conversation:
- YD: Dad, why don’t we have a bigger house?
- Me: Bigger houses cost more money.
- YD: What, like $40?
Telling YD about our net worth would serve no purpose at the moment. YD could not care less about money and hasn’t wrapped her mind around it yet. It doesn’t help that she’s afraid of small round things including coins. Side note: Imagine the look on relatives’ faces when we have to tell them not to buy YD any clothing with buttons because she fears them!
Money Is The Beginning, Not The End
In American society, we worship money and those who have it. There are TV shows that tour wealthy peoples’ homes. Magazines publish lists of billionaires. Warren Buffett is worshipped for his billions, not for his generosity.
I don’t like any of it.
Money should be the starting point of a good life, not a goal. And we’d all be better off if we talked about money openly. We could then help each other out and move on to better things. This is one of the reasons I’ve posted my financials from the start. While money is critical to achieving early retirement, it’s up to you to figure out how to live a worthwhile life.
What About You?
- Are you open about money?
- Do your children know your net worth? How about your friends and family?
- If you have money, do you worry that if others knew, they’d ask you for it?
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I don’t get into the details so much, but both my kids know that we officially crossed over into 7 figures early last year and the importance of being savers/investors rather than consumers. More importantly (to me) is that my 25 year old just got married, has been maxing out a 403(b) since graduating college and has no debt, and my college sophomore already has a Roth IRA and is also avoiding debt like a plague. My kids seeing my wife and in our late 40s able to save half our income and have the freedom to do whatever we want, but continue to plan, save and talk out loud about money and investing seems to have way more of an impact than simply telling them about it. For example, my daughter bought, sanded and stained most of the furniture in her home after watching me and her mother do it and my son just helped me build and stain a deck chair from scratch.
JRobi recently posted…Weekly Retrospective….
Teach me your secrets! It sounds like your children are doing very, very well. Nice job.
I will tell you what NOT to do.
– Here hold the vacuum
– Carry that over there 1000 times
– Hold this while i work
– Stand there and watch me until i need you
– Here be my errand boy and get me that tool
– Lets go to home depot 50 times a day
– It HAS to be this specific certain way
I love my father, He did try to teach in his own way. But the perfectionist in him could not STAND IT when letting someone else do the final work. I joke about it to this day but i’m not sure he really understands. When i could finally make my niche (computer hardware/programming) it was infinitely satisfying to actually build and own it myself. Even more to have my dad realize he only knew a fraction of it.
I really think it would have been more beneficial to explain,
– lets go get this tool, this is why we are using this tool.
– I’m going to let you do this piece, if you want, but remember when its done you have to stare at it every day make it count and make it right.
– We have to carry these things up/down because otherwise it would have cost 100x to pay someone else to do it.
– Not yelling when just because your tall and big you know how to carry big akward objects. Explain why it makes sense..
– Cleaning up early and often is a pain in the ass and nobody likes to do it but if you wait until the end its ridiculously more work.
I picked up a lot of skills by watching. But have very little inclination to do most of these things myself to be perfectly honest. And i know why. It was the worst most boring chore i was forced to do repeatedly and couldn’t actually own any of it.
I hit send too soon. The reason i posted that was because when it came to networth and financial responsibility I received zero teaching whatsoever. But the same principals apply. Explain it not dictate it. Was very secretive with money until i was much much older.
I also came to a very different philosophy than he did with saving/investing. But my second brother soaked it in like a sponge (until he saw the light when college debt piled up). And my third brother is just a disaster YOLO leech lol.
I love the “explain it” part. I’d ask my parents Why all of the time and the answer from my dad at least was always the same: “Because I said so.” I HATE that *&^%ing phrase. If I ever catch myself saying to my own children, I’m going to punch myself in the nuts.
I’m sorry that he was so rigid. Sometimes, I catch myself doing the same thing. I am amazed by what happens when you empower kids. They usually exceed my expectations.
The money secrecy thing doesn’t do anyone any good. I’m glad you and second brother have your act together despite it. Maybe 3rd brother will come to his senses some day. In the meantime, guard your bank account!
I lucked up, to be honest. That, or I just stayed out of the way of their natural progression. They’re both way better than anything I was capable of producing with my genetics or leadership. Sorry. I got nothing on this front…
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YD: Dad, why don’t we have a bigger house?
Me: Bigger houses cost more money.
YD: What, like $40?
Hahaha, you got to love kids!
We explained to our 4,5 year old that she has money in the bank/invested and that this was several thousand euro’s. She laughed and moved on. Let’s try this again in a couple of years 😉
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“Let’s try this again in a couple of years.”
Yep!
I hoped Younger Daughter would have learned something by now, but nope. She doesn’t want anything, so she doesn’t value money. There’s nothing to work with at the moment! 🙂
I’m fairly open with my personal money details to those I know. I don’t publish my income or net worth because I’m not sure doing so would add much value and I know that there are some risks.
I’m pretty sure I’d share the details to anybody that had a valid reason to want to know and have done so in the past.
My oldest is four and still too young to understand the significance of a net worth number. I’d be happy to share the details with him as soon as he’s ready to grasp it. He may be ready before long. He’s already self-discovered the concept of FIRE when I explained how banks pay interest for holding your money and he asked if I can add his piggy bank money to the real bank so I don’t have to go to work anymore.
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“he asked if I can add his piggy bank money to the real bank so I don’t have to go to work anymore.”
Oh wow, that is awesome.
“I want her to know what wealth looks like.” – You took the words right out of my mouth! I, too, will also do this with the little Personal Pan Pizza Guy 🙂
Currently, my parents know what our net worth is. I usually tell them to ask for their guidance, and follow up with, “How were you doing at our ages? Is there anything we could be doing differently?”. I’ve also told selective friends certain parts of our net worth to maybe give them helpful hints on certain things when the time comes for them. Kind of to plant the seed really and give them a safe outlet to speak about money if they ever need it. I actually had one of my best friends last week tell me he was using my strategy for saving up for a large purchase on a particular item from a conversation we had a few years back.
How cool is that that you have someone to bounce ideas off of? What valuable nuggets have your parents given you?
And I love the Personal Pan Pizza Guy name!
You’re right…I’m very lucky to have parents to bounce ideas off of, and not just in money. Some of the good one’s that come to mind are teaching me what stocks and bonds are, eliminating the mortgage in our situation, and continually saving (inside and outside of a 401k), but not to the point where you don’t live life.
I’m open about my money with close friends, if I’m geeking about something or if they ask. I’m not married and my parents are my beneficiaries, so I tell them everything. No little people in my life, so that hasn’t come up. With more casual friends and coworkers, I let the discussion unfold and see how it goes… I happen to be in a relatively high paying job and that can sometimes trigger jealousy or friction, so it can be a delicate balance.
“I happen to be in a relatively high paying job and that can sometimes trigger jealousy or friction, so it can be a delicate balance.”
I struggle with this too. I had a high paying job, but I worked pretty damn hard to get it. However, I’ve had folks in my life gloss over that part: “You’re lucky!” I am, but because I was born in a decent place. The rest was hard work!
I told our 6-year-old son how much we’re worth and it doesn’t really make sense to him yet. I also told him the money is invested and we can’t really get it out yet. So now he just asks how much money I have in my pocket when he sees something he likes. 🙂
“So now he just asks how much money I have in my pocket when he sees something he likes.”
Haha! At least he’s not asking for cars yet and then asking how much you have in the bank account!
My kids are too young right now (4 and 2), so maybe when the oldest is like 9 or 10 we’ll tell him how much we’re worth. We do plan to get him involved early with financial decisions.
My parents were pretty open with my brother and me when it comes to household finances growing up, we were often involved in financial decisions. This open discussion with money continues today as we are all quite open with discussing salaries, net worth, investments, etc.
You have a very well adjusted family. Nice.
well, we’re kid-free but very open about most everything. our friends don’t know what we have but know that i have these money skills that go a little deeper than the basics. they know they can ask for help with anything where they might want to know about tax advantage account rules or investment options. knowing this i think they have some idea that we’re doing well, as they know our house is paid off and we’re debt free. they know better than to ask for dough.
freddy smidlap recently posted…We’re Not Maxing Out our Roths in 2018. Don’t Call the Retirement Police!
“They know better than to ask for dough.”
Haha, how do you instill that?
there’s a big freakin’ sign in the dining room that says “don’t even bother asking for dough, but we’ll share all our food and booze with you.”
freddy smidlap recently posted…We’re Not Maxing Out our Roths in 2018. Don’t Call the Retirement Police!
I love it! And please direct me to a picture of that sign!
That’s awesome! We’re very open with our daughter about money and she definitely gets it. Similar to your daughter, she’s an old soul as well. She just turned 8 and I haven’t shared our net worth with her yet, but I’ll probably be doing that soon.
Fingers crossed she’s also like your daughter in that she doesn’t start asking us to buy her all kinds of stuff! 🙂
— Jim
Jim @ Route To Retire recently posted…Working Toward FIRE is Not About Sacrifice
“Fingers crossed she’s also like your daughter in that she doesn’t start asking us to buy her all kinds of stuff!”
I know, right? 🙂
I have no children but the people who know me can see my networth at the end of each month on my blog. I find transparency keeps me more accountable to myself.
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Our three kids know when we make, have seen our budget and net worth spreadsheets. We often talk about money in our house. As teenagers, they freely talk about money with their peers. They share when each other what they make at their part-time jobs, I wonder at what point that stops? We talk about money with family and friends, not sure we have shared all the numbers, but many know were are consumer debt-free.
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“As teenagers, they freely talk about money with their peers. They share when each other what they make at their part-time jobs, I wonder at what point that stops?”
That’s pretty neat. I don’t remember doing the same when I was a kid. Maybe it’s because we were all making minimum wage! 🙂
I remember when my father (a firefighter & landlord) told me how much he and my mother earned, what their assets were worth, and where that puts them in relation to other Americans. I think it was precipiated by my mother’s unreasonable expectations of my ability to get financial aid – if there’s so much availalbe, I should certainly qualify for loads of scholarships, but recieved none from my college and I could only find a few small dollar amount ones, highly competitive ones, or need based ones that I didn’t qualify for. I appreciated being told the truth (including that they’d met with some financial advisor who’d already told them my sister and I wouldn’t qualify for need based aid because three nearly paid off homes in the Boston area are pretty valuable and salaries here don’t suck). I wish my mom had been more in touch with financial realities – it’s only come to her attention in the last few years that she did not grow up in a middle class family since her father was a well compensated anesthesiologist – but I appreciate that my father (and also my grandfather) modeled prudent spending and decision making that provided the family with security.
“I wish my mom had been more in touch with financial realities – it’s only come to her attention in the last few years that she did not grow up in a middle class family since her father was a well compensated anesthesiologist – but I appreciate that my father (and also my grandfather) modeled prudent spending and decision making that provided the family with security.”
I think it’s fascinating how people perceive themselves. According to this, you need $7,500,000 to feel rich: http://www.peopleiwanttopunchinthethroat.com/2011/03/millionaires-who-dont-feel-rich-wah.html
I’m glad you had some positive money role models in your life.
My favorite role model was my maternal grandmother. She wasn’t the nicest person, but got pissed at us is she saw us wasting money.
Our daughters are still entirely too young to understand the concept of money, but I have no reservations at all about sharing our financial details with my son, who is 15. Much like the veil of secrecy surrounding compensation in the workplace, I flat out don’t understand why people have so many reservations about sharing their finances within their own family. It directly affects everyone in the home, why not take the opportunity to teach everyone who is old enough to process the information?
“…why not take the opportunity to teach everyone who is old enough to process the information?”
Exactly.
Our kids are 8 (girl) and 4 (boy), so not too much sharing on the money front just yet. Our 8 year old knows that she will have to help pay for her own car and buys her own popcorn at the movie bc it’s so expensive. I want to get more in depth with both kids about saving and spending. I don’t think I will have any problem talking about our income and net worth in a couple of years. When we paid off our house 2 years ago, I wanted our daughter to know the significance of it so I included her in “helping” me make the final payment. The next weekend my sister was talking about buying a house, my then 6 year old says “my mom and dad just paid for ours, so they could buy you a house.” Oy! We are really trying to practice stealth wealth, so we had a talk with her to keep that information to herself. It’s ok that my family knows, I share a lot of info with my mom mainly to make sure they are ok. However, we don’t want our “neighbors” to know, as we live in a very small town (LCOL). We do not share our income with our friends as our closest friends only make 25% of what we make. I don’t want them to feel like we are bragging or anything. I don’t think they would ask for money, but I don’t want any discomfort either. I think it will be a major eye opener when we quit the workforce in 5-7 years for all of our friends and family.
That story about the daughter is hilarious! Or maybe not at the time or even now, but that’s a good one. 🙂
“I think it will be a major eye opener when we quit the workforce in 5-7 years for all of our friends and family.”
My experience, for reasons I don’t grasp, is that no one cared. It surprised (and disappointed) me a little. I was hoping it would be a conversation starter that would lead to me helping others. Nope. Maybe they’re all just too afraid to ask.
In any case, I can see why you’d want to keep it quiet in a small town. We live near Boulder and my net worth is a joke to many who live there, so no big deal!
I have a 3 year old, precocious son. We have a give/save/spend bank, and when he gets money we take each opportunity to talk about the purposes of that money, and where we want to put it. (He is, to our chagrin, a big fan of the “spend” bank) Then my father drops a $100 bill in his birthday card, a surprise to us. What to do with that! While we let him pick where to put that, we are counting on a 3-year-old’s memory to allow us to spread it out.
Outside of being a taboo, I can imagine waiting to tell my son about our earnings / net worth because he not only needs to comprehend the money topics, but also has to be able to resist talking about it pointlessly with his peers as he either observes their conspicuous consumption or is challenged by them to match it. I absolutely see bringing the full picture into view as he begins to think of his career choices.
“but also has to be able to resist talking about it pointlessly with his peers as he either observes their conspicuous consumption or is challenged by them to match it.”
Yep, it would be weird if the kids started blabbing about stuff adults don’t even talk about.
I told OD that we’re doing pretty well and while I don’t like to keep secrets, telling others about our worth may be perceived as bragging, so she shouldn’t discuss it.
My mother-in-law, bless her, in her mental decline before she passed away, opined that we could sell our house for at least 10 grand. Big number for a kid or an old lady.
Sad! I hope she went in peace.
Money should be the starting point of a good life, not a goal.
Love that quote ! Thanks for sharing this article and I try my best to show my children that we live sensibly and have frugal habits which allow us to be where we are at. My son is now 19 and has a very well paying job, it has been hard trying to guide him to save his money but I should be able to get there. As for my daughter who is 17, I want her to know why I question every purchase….rather than have her worried I will get upset if Mom buys her something. Know the difference between wants and needs is my goal with her.
“I want her to know why I question every purchase….rather than have her worried I will get upset if Mom buys her something. Know the difference between wants and needs is my goal with her.”
It sounds like you’ve found a good balance! Kudos to you for instilling solid values!
My wife and I (current net worth, not including primary residence, $2.4M) overheard our older son telling his friend, “Yeah, I don’t like to tell people how rich we are because then they look at me differently.” It immediately brought to mind a scene from Last Man Standing where the middle daughter, failing to understand her father’s insistence that she get a job, cries out in a panic, “Dad, are we poor now?!” His answer: “You are. Your mother and I are doing quite well, however.”
When the opportunity arose, I clarified the difference between his mother’s and my achievements, and his lack thereof. I don’t care so much that my kids know my net worth as I do that they not mistakenly think they will get there without hard work and counter-cultural choices. People thrive in productivity, so our kids know they will have nothing if they don’t work, save, and invest themselves. There is no entitlement or faux-achievement being promoted in our house.
Tim! It sounds like you’re doing it correctly and that quote is hilarious.
“I don’t care so much that my kids know my net worth as I do that they not mistakenly think they will get there without hard work and counter-cultural choices.”
This one can be hard. All of the hard work that made us our money was done before our kids could form memories. Now, they see me on the computer all day or riding my bike. I try to remind them about 50x per day that ‘mom and I worked very hard to get where we are today.’ Hopefully, it sticks!
I remember that joke from Last Man Standing. It was hilarious and too true. I’m glad it’s coming back to television.
I never really talked about how much I made to my kids when they were old enough to understand. What I did do was talk about interest, dividends, how credit cards worked and how not to pay interest on said cards. My kids had asked how much I made per hour or how much my pay checks were but it was centered around them wanting me to pay for some type of game or console they wanted.
Now with the oldest at 29 and youngest at 19 they pretty much know because two of them work as pharmacy technicians and know the general wage of pharmacists.
My parents never talked about their wages or how much they made, My memories of their financial situation was them gathering around the kitchen table every other Sunday to pay bills, which usually ended up in a bit of yelling. I do know they used credit cards for everything and always paid them in full because they didn’t want to pay any interest. It would have been nice to explain that to us kids though at the time because it looked like everything was purchased with a magic plastic card. Habits which I learned the hard way in the early years.
My dad worked for the Government and had a decent pension, continuing health insurance and a military pension too. When he passed away earlier this year my brother, sister and I were finally able to see a little of what goes on behind the curtain. He really didn’t save for retirement because of the pensions to fall back on and he was bringing in almost $10k a month from them. But he definitely could have planned better for his second wife and how to pass on his assets. He was still reluctant to talk about money even when he knew he was terminal and still had the mental faculties to deal with it.
Magic plastic card! Our youngest one thinks it’s magic too:
Me: That’s too much money.
Kid: No dad, just use the credit card.
The bill paying exercise is a pretty good one. Maybe I’ll incorporate that…
I told my daughter as well about my net worth (around age 11).
I have been trying to teach her some of the premises of finance as well as financial independence at an early age so she too may have a head start on an important concept.
One of the other things I try to instill in her is the fact that outward appearances typically have little to do with real wealth. A lot of people who look rich are highly leveraged with credit. She got that concept almost right away.
Your post is 100% spot on. It is funny but I just told my dear wife earlier this year that I can’t for the life of me understand why talking with friends and families about money is such taboo. It makes no sense. We all have friends that openly share the most intimate details of their sex lives but talk about personal finances… no way! It is a funny world we live in 🙂
We have since decided to start sharing our plans with $$ details with friends. After all, why are we all trying to figure this FIRE thing separately when clearly we can accomplish much more by working together?
We have told our three sons (ages 23, 22 and 16) about our financial situation and actually used our Millionaire Interview (we were #65) to do so in great detail so that they would have some appreciation of not only our net worth but also how we got to this spot. We believe appreciating the journey is extremely important. You have to understand and “Love the Process” in order to succeed.
Great blog!! Many Thanks!!
It’s dated now…but when my kids were little, and I would say “we don’t have the money for that”, the response would be….”well, just write a check!”.
Don’t underestimate the differences between kids. Some get it early, others (seem to) never get it.
My youngest looked around one time, and said “Dad, we have some really neat airplanes!”.
I told him, “son, *we* ain’t got &%*!. *I* have some nice stuff. *YOU* have to get out and earn it.” That was at age 10, he’s still trying to figure out that *he* has to make it on his own…..
Teach your child as a child about everything in life. From there, they are more aware.