by Ron Lieber
You’re telling them that your values helped you decide some of these big questions, that this is a value you hold dear to your family. What’s potent about that is that it’s part of how a child acquires an identity, which helps dictate behavior. Values should drive behavior. And you’ve spent a lot of time thinking about what makes you whole as a human being. That’s worth teaching.
Why don’t you send me to private school?
This is another one from the question-that-feels-like-an-attack category. Parents often respond by saying that they can’t afford it and that it costs too much money. But those are actually two very different responses. One of them is sometimes not true and the other represents a lost opportunity for parents to explain how they make choices.
Parents who don’t think they can afford tuition at private schools can apply for financial aid, though they might not receive it, or enough of it. Those who don’t apply can’t be sure whether it’s actually affordable, since they don’t know what sort of aid they might receive. Some families who don’t qualify for aid could probably cut spending elsewhere to afford tuition but choose not to.
Which brings us to the “it’s too much money” explanation. This is a value judgment, and it may be the right one in any number of circumstances. Still, curious kids, particularly older ones, crave a better understanding of how their parents think about important decisions that affect their lives. They don’t have much power, so knowledge is the next best thing. So we need to try, if at all possible, to give them a sense of how we make big decisions like this. Maybe the public schools are better or more diverse or both. Charitable families also worry about the impact of tuition on their capacity for giving. There is nothing wrong with any of these stances as long as kids get a chance to hear them out loud.
These conversations won’t always be easy. Take one mother I encountered in my reporting, who asked to remain anonymous because she didn’t feel comfortable having her own choices laid bare and was taken aback at the specificity of her fifth-grade son’s inquisition. She lives in an urban area filled with excellent public and private schools, and what follows is a condensed version of his interrogation.
Why were some of his friends able to go to private school, even if they didn’t seem rich? The mother suspected that many of these kids had grandparents who were footing all or part of the private-school tuition bill, so she told him that.
Why can’t Grandma and Grandpa help? They have two houses. That wasn’t going to happen without their selling one house and then some, given that there were other grandchildren whom the grandparents would presumably want to help in equal measure. She explained this, too.
Isn’t a kid’s education the most important thing? This one was directed at the mother in particular, given that she’d recently scaled back to part-time work. She explained that she hoped that he would actually like the fact that she was home a bit more, helping out with homework and going on more school trips.
So why did we take that trip to Thailand? Indeed, an extended summer trip had cost about the same as a year of private-school tuition. But experiences are valuable, maybe even more valuable than an expensive education. And travel is part of the family’s shared experience. It’s something they’ll remember forever. So she tried to drive that point home.
This isn’t even the whole transcript, and what lingered in the mother’s mind for months afterward was her own question: Are they really this on to us, at such a young age? In fact, they are. By challenging our spending, they’re challenging our priorities and values. But curiosity is just another word for trying really, really hard to figure out how the world works and how grown-ups make decisions. Getting angry or defensive about all of that won’t make kids smarter. And while our answers may not always be satisfying, we ought to try supplying some anyway.
How much money do you make?
By now we know that “none of your business” is not the right answer here. But simply spitting out a number isn’t usually the ideal response, either. Before there can be any financial transparency, there has to be readiness. Joline Godfrey, the former social worker and Polaroid staffer who now counsels wealthy families, said that she remembers at least one 13-year-old girl who was truly ready to have a mature discussion about her parents’ income. Godfrey also shared the story of an attorney who called her, trying to figure out what to say to a 90-something-year-old client who didn’t think his 70-year-old daughter knew enough about the real world to grasp the nuances of her inheritance.
Our own kids will probably ask this question before their teens, so we need to be ready with a response. And the best way to handle this is to explain that we may indeed want to share our salaries by the time they’re in high school, but they first need to learn a lot more about what it actually costs to pay for the things that the family has and does. After all, it’s not the income number that’s important here as much as the context. What must we spend each month, and what do we choose to spend? How much is left over at the end, if any, and what are we saving that money for?
These are not rhetorical questions. Start with the smaller monthly bills. Cable. Mobile phones. Electricity. Teach them how to make a simple spreadsheet to keep track. If the family still pays bills by check, this is a good time to teach them how to write one, even if you think they’ll never use the skill. At this point, they may bow out of the exercise, since it will start to feel like homework. That’s fine; it’s just a sign that their curiosity about your earnings is not that strong after all.
If momentum is building, however, start in with the insurance lesson. What sort of unlikely but expensive events is insurance for, anyway? Health insurance. Home insurance. Car insurance. Life insurance. Burial insurance. Maybe you have some disability coverage, too. If this line of conversation doesn’t dissuade their curiosity, they’re ready to know what your monthly rent, mortgage, or home equity loan payment is and how many more years you’re going to be paying it. To engage them further, ask them to guess the amount of all these costs or do some research online rather than handing them the information. Explain your tax bills, too.
Now, for the rest of the spending: If you’re a debit or credit card family, take out the bills and show them. Let them ask all the questions they want. Then, turn the tables. Can we remember a single thing we ate at that restaurant 7 weeks ago? If not, should we have saved the money and eaten at home that night, or were we traveling or busy and we truly needed to eat out? This sounds tedious, but there’s no need to do it line by line all at once. Space out all the household bills over several months, or just go through a few. The goal is simply to help kids understand what things cost and what the family spends. This alone may give them enough information to feel satisfied about what the family has or makes.
Families with relatively pliant children will find that they happily play along, learning all the while and asking good questions about why things cost what they do (and perhaps making some uncomfortable inquiries about why we spend what we spend). Other kids, however, will be impatient, and they’ll set out to acquire the household income information in some other way.
Which brings me to one of the best reasons to be honest with our kids about the family finances: They’ll probably find out anyway. I know this because I was a snooper. I went looking for the tax returns, and I found them. I know other journalists who did the same thing when they were kids and thought that perhaps it was only those of us with the investigative gene who helped ourselves to our parents’ financial information. But when I wrote about the “How much do you make?” question on The New York Times’ parenting blog, Motherlode, in late 2013, a commenter told the tale of her snooping too. I tracked her down, and she told me her story.
At around the age of 10, Magnolia Davis’s parents separated, and not long after, her father lost his job. His income declined by about 50 percent, and she had to change schools. All of a sudden, money—which had never been spoken of much—was a source of frequent conversation, conflict, and anxiety. So she beg
an poking around the house. “When my mother took my brother for a lesson, I’d dig through papers,” she said. “I looked through all the drawers. I did it regularly because there was so much secrecy.” She did the same thing when she was at her father’s house.
Magnolia’s monitoring sometimes made her feel better. Her mother had been threatening to let the bank foreclose on their home in order to ruin her father’s credit, but once she saw the mortgage statement she knew her mother wasn’t following through on the idea. Other past-due bills would also be in the piles, however, which alarmed her. Neither the relief nor the fear changed her desire to know even more though. “I wish I could have seen it all,” she said.
Some kids are just like that. Yours may be too, but perhaps not all of them. Magnolia’s brother never expressed much interest in the topic of their parents’ finances, though she would sometimes fill him in on what she had learned. Nevertheless, now that she’s the mother of three small children herself, she plans to tell them everything they want to know about their family finances as soon as they’re curious and ready to digest the information. “I’d rather just talk about all of it,” she said.
Those of us who lead mostly paperless lives, in which most financial information resides behind passwords on the Internet, may not be completely shielded from the investigatory powers of curious children. The tricky questions about big numbers may start when they google their address for the first time. The first thing that usually comes up below or next to the neighborhood map is an estimate of the property’s value from a site like Zillow. Try it yourself, so you can see what they will inevitably find. Once a child discovers this, they may show their friends, and soon all of them will have looked up every friend’s home and those of their teachers and principals.
Also, if you’re talking about local home prices, your kids will, too. Jim Dario, a TD Ameritrade executive, was driving around Mill Valley outside of San Francisco a few years ago with his wife and son, and his son’s kindergarten classmate. When his wife pointed out a house that had just gone on the market, the classmate piped up from the backseat that the price was $1.8 million. Clearly, he’d already driven by with his own parents, who had looked up the price and discussed it out loud. This is yet another reminder that kids are always listening for a tantalizing piece of information that might be useful at some other moment.
Income itself is often publicly available too. Salaries of government employees, including state university professors and administrators, may be in a database that’s reasonably easy to find. The same thing is true for people in the military or top executives at public companies. The five most highly compensated people at most nonprofit organizations also have their salaries listed in the federal 990 form, which older kids can probably find with the right bit of Google sleuthing. If any of this applies to your family, it doesn’t seem wise to decline a question about a parent’s income if an older child asks. After all, it would be difficult to justify a refusal to discuss a number that any random stranger can look up.
Income disclosure is also part of the process of applying for financial aid in college. Aid-seekers, including anyone who wants a federal student or PLUS parent loan, must fill out a form called the FAFSA. It asks for a bunch of information about your income and your assets. Parents sign it and swear that the information is correct, and the kids who are going to college put their signatures on the form as well. While some parents may simply hand the last page of the form to their child and ask them to sign it (without allowing the child to look at most of the income and asset information), doing so is in effect signaling that it’s fine to sign important forms without knowing what is on them. Hiding most of the pages also implies a lack of trust, which is illogical. After all, the 17-or 18-year-old signing the form is getting ready to move away from home and spend piles of money on a college education.
Scott Parker didn’t consider any of the above factors on their own when he made a decision to reveal his income to his six children. But he and his wife were intensely focused on character education in general. Like most Mormons, they devote one night in their calendar each week to “family home evening,” when the eight of them would gather to engage in prayer, study, and other activities.
When Parker was growing up, his parents shared nothing about the family finances, even though they were open about everything else. “I had no idea what it would take to take care of a family,” he said. “I felt it was a big disadvantage, and I wanted my kids to have a different sort of vision than what I had.”
Then, one day he walked into a Wells Fargo branch near the family’s San Diego home and asked to withdraw his monthly paycheck of around $12,000, all in $1 bills. The bank didn’t have that many singles lying around, so it took a day or two for them to gather them and stack the money into $100 piles.
Parker, who worked in real estate, brought the stacks with him for the next family home evening and presented the money on the dining room table without much fanfare. “I definitely had their attention,” he recalled. “And then I just started peeling it away.”
He narrated as he went. First came the family’s 10 percent tithe. Income taxes were next, followed by the mortgage and insurance payments. Then came the electric bill, car payments, gas, and groceries and other necessities. And that was just the needs—the baseline costs that were not optional. Next came the money for the weekly restaurant outing, followed by soccer and debate team trips and other activities. By the end of the presentation, there wasn’t much money left at all.
“The first thing I thought they might think was that I made a lot of money, because they were sitting there with their mouths open the whole time,” he explained. “But that was the last thing I was trying to teach. None of them, I was sure, had ever tried to add any of these things up. So I think it made a strong impression. I probably should have done it again later when the younger kids were older.”
Their oldest son, Daniel, remembers many details from that night and also recalls the lengths his father went to to explain to the kids that it was a family discussion. Nobody needed to tell their friends about it. “I was taking a risk,” Parker said. “But I can tell you that it never became an issue. I figured that whatever risk there was that they would talk about it was worth taking.”
One of the things that gives parents so much reluctance to simply tell the truth about their income or net worth once kids are ready is this persistent concern that they will tell other people. But parents shouldn’t underestimate how much kids just want to be like everyone else. Children of all ages generally don’t want their peers singling them out as having more or less than others, so they may try harder than you do to keep the information private. Few of them want to be the richest kid or the object of anyone’s pity.
When telling teenagers about household income, remind them that the information may not have much value to their friends in any event. Many of us live in communities or send our kids to schools where most other people are in a relatively narrow income band and not particularly interested in what other families are earning. Meanwhile, for those who are fascinated by this information, learning of it might be hurtful if they find out that they’ve fallen behind most other families in the neighborhood. This may be doubly true for friends of your teenagers, who probably don’t need additional reminders that they’re richer or poorer than everyone else and that people are taking notice of it. By explaining all of this, most teenagers will understand that there’s no good reason to share the information with anyone.
Those teens curious enough to ask about the family income, ready to learn about the ways we spend it and wanting the information for the right reasons, deserve an honest response. What we make and how we make it is so essential to our lives that it seems wrong on the most basic of levels to shroud it in mystery and silence. And if we’re talking about money all along—answering questions as they come and giving our children the proper context—knowing our incomes will just seem natural, and not a surprise or a privilege at al
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3
The Allowance Debates
Three jars, unpaid chores, and a whole lot of patience
In the 18 or so years before your children leave for college, they are likely to want many of the following items: American Girl dolls. One-hundred-fifty-dollar sneakers. Then another pair six months later, when they grow out of the first pair. A second ear piercing. Beats by Dre headphones that will cover the piercings. Apps by the dozen. A microscope as powerful as the ones they use at school. Jeans with a price tag higher than in-state college tuition was 30 or 40 years ago. Concert tickets. Cars. An iPad. An iPhone. The new iPad. The new iPhone. Replacement chargers for the ones they lose, repeatedly. North Face jackets. A dog.
All the while, there will be many things you want them to do: Pick up a younger sibling from an after-school activity. Make the floor reappear in their room. Take out the garbage. Start dinner. Mow the lawn. Walk the dog. The dishes. Four loads of laundry. Grocery shopping.
Most parents consider these two lists and deliver a consistent message to their kids about the connection between them: Do the work, and we’ll give you money to save up to buy the stuff. They call the work chores, and the money is the children’s allowance. The lesson is that you can buy things, just so long as you do things.
It all seems reasonable. But there’s something fundamental that we fail to stop and ask ourselves during the decade or so that we make our weekly distributions to our children: What are we really trying to accomplish with an allowance anyway?
When parents tie allowance to the completion of chores, they make work the primary focus, not money. But children have many places to pick up a good work ethic. Strict teachers, drill-sergeant coaches, and choral conductors will instill plenty of discipline. Homework is a slog that builds stamina over time. Most part-time jobs that teenagers take on involve a fair bit of drudgery, but they adjust and get dressed down by difficult bosses, and few of them ever get fired.