You’ve talked to your kid about sex and drugs but what about money? Parents often wait too long to tackle topics like work, debt and taxes, according to Beth Kobliner, author of “Make Your Kid a Money Genius (Even If You’re Not),” coming out today. But there are also some things you should not tell your kids when it comes to your own finances.
#1 Don’t be specific about how much you make
Your kids do not need to see your W-2. It might feel good to brag about your six-figure salary or set them straight about making minimum wage, but young kids can’t process it. No doubt, they will ask how much (probably, at a really inopportune time), but Kobliner says to keep it to yourself. Instead, she recommends talking about the median income. “You can either say, ‘We’re very comfortably ahead of that, but we really still think it’s important to save for the future, or you could say, ‘You know what, we don’t quite make that so we’re really trying to be careful about money.’”
#2 Don’t tell your child who makes more
If both you and your spouse work full-time, there’s no reason a kid should know that one parent makes more than another. Kobliner writes that “putting dollar figures on what Mom and Dad earn can send the message, especially to young children, that one parent’s contribution is more important.” If one of you takes care of the kids full-time, Kobliner says it’s a good idea to discuss the value of stay-at-home parenting.
#3 Don’t share how much you pay the sitter
Keep how much you pay the babysitter/nanny/tutor to yourself. It’s fine to tell kids that babysitting is a job, but Kobliner says sharing your sitter’s hourly wage could “give your children an informational upper hand” and possibly strip the person whose job it is to be the boss of their authority.
#4 Don’t share how much is in your 401(k)
Don’t tell a 10-year old how much is in your 401(k) or other retirement accounts. Explain to them what a 401(k) is used for, and talk about the miracle of compounding, but they don’t need the grand total. Kobliner says, “Your kid doesn’t have the perspective to understand that this isn’t money you should tap now.”
#5 Don’t talk about how rich or poor your relatives are
Your cousin may be a deadbeat who still owes you a wedding gift or your uncle might be a hedge fund billionaire, either way watch what you say around your kids about their financial status. Kids don’t forget and may expect more or less from a person depending on what they’ve heard from you. As Kobliner points out, “If you’re looking to teach a lesson about the hazards of lending to family members or friends, go with a story that’s not about people they know.”
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