A few years back, I was at a party when one of my daughter’s friends came up to me, pointed at her mother across the room and said “isn’t my mom’s dress pretty? It cost $200!” Coming from a 7-year-old, this was adorable. But at what age is it not so cute anymore?
If you’ve read any of my previous blog posts, you know that I am a big proponent of talking to kids about money often and early. The earlier kids learn good money habits, the more likely those habits will become lifelong behaviors. However, that also means that the more you make money a comfortable topic of conversation with your kids, the more likely you will get some pretty loaded questions such as “how much money do you make?” or “how much money does our family have?”
I have spoken with many parents over the years who are unsure whether or not it’s appropriate to tell their kids how much they make, and if so, at what age. There isn’t a clear-cut answer to this because, as with most questions I get, it really depends on the child and your personal feelings around money. There’s a very fine line between giving kids enough information to make smart choices and giving them too much information that could lead to awkward situations.
It can be helpful for kids to know how much you make
There is an advantage to being open with your kids about your salary. This level of information can provide a much clearer picture for how much money it takes to live a certain lifestyle. I have talked with many people who expressed frustration that their parents never fully prepared them for how much money it takes to be an adult and reach specific adult milestones such as buying a car, putting a down payment on a house, or even paying for daycare.
As your kids head off to college and start to formulate a mental picture for what career they want to pursue or what they want their life to look like, it can be helpful to arm them with the knowledge that certain careers may or may not be able to support all of their long-term goals, let alone luxuries such as traveling, living in a major city, or sending kids to private school.
Millennials were raised with the mantra that you can be anything you want to be and do anything you want to do. While that’s technically true, blindly pursuing a career without any perspective for what that job’s average salary can afford could leave your kids blindsided later in life.
Knowing your salary is not enough
While discussing salaries can be helpful, it’s not enough to just tell your kids how much you make. In other words, divulging this one number doesn’t give them much context around what that really means in the bigger picture of the family’s financial situation. If you are going to have this conversation with your kids, it would be even more valuable to also have a conversation around net worth and how that differs from salary. It could also lead into a valuable conversation around expenses and how much of the family income goes toward things like taxes, housing, utilities, food, etc.
Another thing to keep in mind is if you are part of a dual-income household, you might want to consider talking about the family’s income as a whole rather than breaking it down into individual salaries. The last thing you want to do is create a false impression that one parent’s job is more important or more valuable than the other’s and potentially disrupt the balance of authority.
If you’re going to tell them, what’s the right age?
There is no right or wrong answer to this. Every kid matures at his or her own speed and every family has its own assortment of personal information that isn’t anyone else’s business. However, if you feel comfortable sharing your household income with your kids, it’s important to set clear boundaries around this unique piece of information and why it’s so private.
In my opinion, late teens or early 20s is an ideal age range to begin having these conversations, especially if your child is heading off to college or beginning to think about their first job. The important thing to stress is that income should not be used to compare your family situation to anyone else’s. There are many factors that go into one’s financial success or lack thereof, and income is only one piece of the personal finance puzzle.
Why you might want to hold off on giving kids your exact number
We all know that kids talk. If you are at all concerned that your child is unable to keep something like this private, then he or she probably isn’t ready for such a mature topic of conversation. On the one hand, knowing your salary can create feelings of entitlement if they interpret it as a very high level of income, while on the other hand, it could potentially lead to stress or anxiety if they are worried about being able to afford things that the family needs.
Another reason to avoid getting too specific with numbers is that kids already have enough reasons to compare themselves to their peers thanks to social media. Adding this extra layer of complexity and point of differentiation has the potential to add more fuel to their already growing level of angst.
As an alternative to giving out your precise salary, it’s still a great idea to have frequent conversations with kids around how much things costs and what average salaries look like for a variety of different career options.
Is there another option?
It doesn’t have to be black and white. If you aren’t sure if you want to get that specific with your kids, it’s also ok to give a range or a general ballpark of your income just to put things in perspective for them. For example, “our family brings in somewhere around X and Y,” or maybe you say, “we are right around the average for people who live in this area.”
Whether you decide to tell your kids the specifics or not, it’s important to continuously encourage an open dialogue with your kids around money. We need to remove the stigma around it and create a safe space for questions so our kids can approach adulthood armed with the information they need to make the best decisions possible.
