The following is a guest post from a friend of mine, blogger and freelance writer, Kristi Muse. Take it away Kristi!
As a child, I never knew how much my parents earned. I was 100% in the dark financially. I was 10 years old before I understood that water was not, in fact, a free amenity.
I vividly remember being flabbergasted that you had to pay a bill for water use. I knew literally nothing about which bills cost what or how long my parents had to work to earn X amount of dollars. If I asked, I was told, “That is none of your business. Please do not ask again.”
We never went without as a family, but we were not upper class by any means. I grew up just knowing that they worked hard for their money, and they did not like to see it wasted. I’m not sure why my parents decided that they didn’t want my siblings and me knowing how much they earned. They were probably just trying to protect us from having to worry about things outside of our control.
Not only was I completely shielded from my parents’ budget, but I also never had a steady “income” as a child or teenager to learn how to budget with. My parents never gave us an allowance. They expected us to work extra jobs outside of our normal chore list if we wanted to earn money from them. Also, they always told us that they did not want us to work in high school unless it was a summer job, as school needed to be our primary focus. I was sixteen years old when I opened my first bank account as a way to save money for books and other college expenses.
I know that my parents never meant to do me a disservice by keeping me away from the finances. Due to their decision, though, I became a financially illiterate adult. I had no real concept of the value of a dollar, and I knew nothing about saving. I am ashamed to admit that, until last year, I had never even filed my own taxes. My dad always took care of it for me through high school and college. Then I got married, and my husband always took care of it after that. I only helped this past year, because I insisted on learning how to do so.
100% Income Honesty
I have immense respect for my parents. They did what they thought was best, but my husband and I have chosen a much different way to raise our kids.
I want them to know that their daddy had to work one hour for that toy, three days for their monthly piano lessons, and a two weeks for the mortgage payment. I want them to know down to the dollar what our family budget is and why it is set that way. I want them to appreciate and understand how hard and how long we have to work for each and every thing that comes in or goes out of our household. We want them to have a concrete example of the value of a dollar.
Along with making sure our budget is open and honest with our kids, there are three things that we are going to insist on as they learn to become financially stable and independent adults:
I believe that earning a weekly allowance is important. Before they have their first real job, it gives them daily, weekly, monthly, and annual exposure to what earning and saving money looks like. It is so important to teach kids from a young age to handle finances responsibly. We want our four year old to see that earning $5.00 a week, and saving half, means that they she will have $130 to spend and $130 in her savings account by the end of the year.
- Savings Accounts and Investment Options
Both kids have their own savings accounts that we will be depositing money in as they grow. Each birthday, Christmas, graduation, etc. if they are given money, we want them to deposit at least half into savings. Half of each week’s allowance will be going into their savings account as well. As they get older and have their first jobs, we will discuss different investment options with them, encouraging them to buy stock, open an IRA, and learning how to maximize their money’s worth.
- Tax Knowledge
We want our kids to leave home knowing how to file their taxes. When they turn 16, we plan on having them sit down with us to watch how our family taxes are filed and how their own taxes from their after-school jobs are filed.
We want our kids to be financially savvy adults by the time they are out on their own, so we are going to do our best to expose them to real world finances. We want them to see us paying the electricity bill and the water bill. We want them to have practical experience with saving and investing, and we don’t want tax time to be stressful or fear inducing. We want our kids to learn from our mistakes and start their lives out with money in the bank and the knowledge of how to make great financial decisions.
Did you grow up knowing about your parents’ finances? Are you choosing to take different approach towards money with your own kids?
Kristi Muse is a freelance writer, blogger, police officer’s wife, and mom to two beautiful children. She loves homeschooling, organic gardening, sustainable living, and cooking from scratch. For more information on how to hire Kristi to write for your blog, please visit her hire me page.
17 responses to “Why We Decided to Tell our Kids How Much We Earn”
My mother was a loan officer at a local bank, but I don’t think she was terribly financially literate. I think she wanted to be, for sure, but just wasn’t.
The only major fight I can ever remember my parents having was about money. It was a doozy. They must have really had some rough times when I was young, but I think things improved after that. I think… Like you, they didn’t share the budget, they didn’t share their challenges.
I left home not knowing how to do taxes and having never held a job until the summer before I left for college. While I had had inconsistent allowances growing up, and had saved my way to Space Camp, I don’t think I really got money. I assumed I would always have enough as long as I wasn’t wild.
We operate differently with our children. They both have Spend/Save/Share “piggy” banks and the oldest knows to get her church contribution money out of the the “Share” side. We don’t yet give an allowance, but if there is change or cash sitting on the kitchen cabinet (which usually happens after one of daddy’s frequent business trips), that’s her money to put into her bank. She’s already understanding more about money than I think some 20 year olds do.
Spend/Save/Share piggy banks are a great tool! I have been thinking about getting something like that for my kids to save with along with having their account at the bank.
It’s great that your daughter is getting an early start on understanding how to manage her money. She has wonderful examples to learn from!
My mother never told me how much money she made, but I knew it wasn’t much. I learned about money by day trading while in middle school (which my parents did help me with), and budgeting through kid-oriented finance games. I don’t know what I’m going to do with my kids since on the one hand I want them to be financially savvy enough to survive (so I’ll certainly explain some to them) but on the other hand I don’t want them to only ever think about money.
It’s definitely important to find a good balance between letting them be educated but not wanting them to obsess over it. I wouldn’t want my kids to grow up thinking that money is the most important thing, but I do want them to be able to manage their finances effectively as adults.
So agree with doing this. Growing up from about the age of 10 or so my parents have always been transparent with me about their finances and I think this really helped me to understand the value of money. I would often sit in on their monthly budget meeting and I learnt so much from doing this. It gave me the skills to be able to be financially davy when I left for college.
Mum and dad never set an amount I had to save but saving was encouraged (and was something I frequently did). Taxes seem a lot more complicated over in the USA but I agree that it is important that kids grow up understanding how their system works and also where that tax money goes.
I truly believe that transparency is essential when dealing with family finances. It’s fantastic that your parents raised you knowing that their honesty would help you become an independent and financially stable adult.
Thanks for sharing your tips on this topic.I knew how much money my parents made and also knew they had too much debt. It wasn’t something they conveyed stress about to us. I think my dad grew up in a very financially conservative home and wanted to have a little more “fun” while providing for 5 kids on a teacher’s income. So while I don’t judge them, their financial situation really made me want to be better with money and avoid debt. I’m not sure why this left such an impression on me but I’m glad I knew a little about my parents’ finances to learn this lesson. My kids are still young so I hadn’t thought about what details we’ll tell them but my 3-year-old knows we get money from working.
I think that is a great place to start with little kids, Kalie. It’s important for them to understand why their parents leave every day, or work from home every day.
I knew what my parents made growing up, the showed me the basics on how to balance a checkbook, but not much else. Our three children are including in our monthly budget discussions and understand everything from salary, investments, bills, etc. We want them to learn from our past mistakes and be as well prepared as they begin their financial lives as possible.
I agree, Brian! The main reason we are sharing with our kids is because we don’t want them to repeat our mistakes.
Growing up, I knew how much my parents were earning and it kinda helped me be more frugal and contribute something even in simplest ways such as saving for my clothes and toys. More importantly, it made me sensitive when it came to financial matters.
That’s great, Jayson! I feel like too many parents underestimate how much their kids can understand about finances. kids will definitely be more cooperative if they understand what the family’s budget goals are.
Great article! We will be teaching our kids the value of things in a different way. Each time they want something new, they have to give something of theirs away to charity. I also take the almost three year old shopping and we chat about how many things we need to buy and which is cheaper and why. For example i tell him that we are not going to buy the yoghurt with Disney pictures on it because its the same as his regular yoghurt but it costs Mummy more money and that means that we don’t have as much money for fun things like going to the Indoor Play Centre. I also tried things like getting a chocolate that he has to hold on to for the entire shopping trip because he can’t eat it until its paid for. It’s like my toddler version of delayed gratification lol. He also has to hand over the cash. Soon I’ll introduce small things like picking up all his toys at night earns him a few cents a week to save for a ride on the electric cars at the supermarket. We also have an account we put money in every month for them so that when they are older ( 20ish) they have a deposit for a house which they will have to match with their own savings. I hope this will teach them accountability! We don’t want them to struggle like we did because we were left in the dark by our own parents.
Those are great ways to get started with toddler, EJ! Very helpful suggestions!