There comes a time when your kids will become curious about the family finances.
It might start in high school when they begin earning and spending their own money. It will ramp up when they start weighing what kind of postsecondary education – and eventually, work – they want to pursue.
So don’t be surprised when they ask: “How much money do you make, anyway?”
While our natural inclination might be to avoid answering, we shouldn’t. Being open about our finances – especially details like this – has incredible benefits for our children.
Canadians are generally reluctant to talk about the state of their personal finances. Questions about how much we earn, how much we have in savings versus debt, or how much our house or car costs are considered at worst crass and at best topics that should be kept private.
But the taboo nature surrounding money conversations means that we are missing out on the opportunity to learn from other people. It can also lead us to feel isolated in our money worries or leave us with the impression that everyone else is doing better than we are.
As parents, we have the opportunity to change this. By being open with our kids about money we can remove the stigma and set them up to be more financially literate adults. They will be more willing to ask questions and seek out advice when they need it.
When asked the “how much do you make” question, take some time to think before answering. Your response needs to be age-appropriate. Young kids don’t need an actual number, but rather can be told that you earn enough to pay for things the family needs. That’s enough information to reassure a young child.
By the time they are in high school, you can be more open with your kids. Don’t just tell them your salary amount – explain why you chose the job you have and what you like and don’t like about it. Work is about more than just money and it’s important for our kids to understand that it can also be fulfilling.
Keep the conversation going by divulging your expenses and how much things cost. This is what is going to give your kids context.
Your income might sound like a lot of money to a kid making minimum wage, but by sharing the size of your mortgage payments and grocery bills, you start to give your kids valuable insight into how much life costs – and how much income you need to support it. Keep the conversation positive and factual to avoid overwhelming them with too much information or burdening them with any worries you might have.
Although earning a good income is an important part of being a financially stable adult, how you manage your money is equally important. Giving kids the basic information about how you save and invest will help them see that even if you aren’t making a ton of money, you can still build a financially secure life for yourself and your family.
And if you have had difficulty saving or investing, be open about that too. It’s okay – it’s all a valuable learning opportunity for your kids.
One way to make it real for teenagers is to talk about their education savings. I’ve been very open with my kids about how much is in their Registered Education Savings Plan.
I’ve shown them the account and how it’s invested, and we’ve talked about how much it will cost to go away to university. Since this is a financial matter that affects them directly, it’s been a great opportunity to talk about saving, investing and planning for the future.
By revealing personal information about your finances, you are sending your kids the message that we should be talking about money more often. It’s neither shameful nor boastful to talk with them about how you are doing financially – it’s just factual.
Anita Bruinsma is a Toronto-based financial coach and a parent of two teenage boys. You can find her at Clarity Personal Finance.
