When you have kids, there will come a time when you want to teach them about money. Some basic personal finance lessons can go a long way toward helping your children understand things like spending, saving, and even investing.
But there are many things about your family’s finances that your children don’t need to know right away, even if they are curious. Information about your family’s income, debt, and spending can be confusing and even troubling to younger kids. And kids are prone to share this information when it’s best to keep it private.
Older teenagers may benefit from learning more about your financial situation as they approach an age when they will be earning money and making purchases on their own. But for younger children, especially, it may be best to keep the following financial information close to your vest. (See also: 4 Parenting Mistakes to Avoid When Teaching Kids About Money)
1. Your income
Your kids don’t need to know how much money you make. All they need to know is that you love them and will care for them. Younger kids, in particular, have no real sense of the value of money anyway. You could tell them you earn $100 a year and they would think you are rich.
Children also have a habit of blabbing, and you never want to find your children bragging to other kids — or even worse, their parents — about how much money you earn. Your kids will be better off learning that happiness and financial security have less to do with your income and more to do with what you do with money when you have it. This means teaching them about saving, about being charitable to others, and about being appreciative of what you have.
2. Which parent earns more
It’s common for one parent to earn more than the other. This is especially true if one parent chooses to stop working or works part-time to raise a family. Children should generally be left oblivious to which spouse is higher earning because salaries don’t represent a person’s full contribution to the family.
If one parent stops working, it may mean they are taking on a greater share of household responsibilities. And it’s also important to note that many of our more important professions are not particularly high paying. A schoolteacher may bring in less money than their banker spouse, but is likely to work just as hard. Rather than share details with your child about which spouse earns more, simply explain to them the value of all work, and give them an appreciation of the broad, non-monetary contributions needed to keep a household going.
3. Your retirement balance
Let’s say you’ve been saving aggressively for retirement and have several hundred thousands of dollars saved. Now, let’s say you just told your daughter she can’t have ice cream because it costs too much. A child, if she was aware of your retirement savings, might find this baffling. It’s hard for young people to grasp that you may have a large amount in savings but are still pinching pennies.
Your retirement savings and overall net worth is not something that should be shared too widely. A child who finds out his dad has hundreds of thousands of dollars in the bank may be motivated to brag, and that’s not good. So it’s best to keep information about your retirement plan to yourself.
4. Your debts
Debt can be a major source of family stress, but it’s a stress that only parents should carry. Your worries about how you’ll pay off that credit card bill or how you’ll make those car payments are your worries, not your kids’. There may be instances when you need to be honest with your children if there is money trouble, and older children may benefit from lessons in money management, credit, and the cost of borrowing. But as long as you are able to provide and care for your kids, they are best left unaware of your financial debt burden.
5. The price of your home
The cost of your house is public information, but that doesn’t mean you need to broadcast it to your kids. The only thing that kids need to know about housing is that they have a roof over their head. What you paid for your house should, to the best of your ability, be kept between the buyer, seller, and real estate agent.
Additionally, it’s best not to share too much detail about mortgage debt. If they ever get a hint that you are struggling to make mortgage payments, that will only lead to anxiety.
6. What you inherit
If a relative passes away and leaves some assets to you, the specifics of that inheritance should be kept as private as possible. This is especially true if the inheritance is quite large. If a child learns of a sizable windfall and shares that information with others, that can lead to jealous family members or friends, and could even make you a target for thieves and scammers.
Sometimes, certain family members receive less than others, or are cut out of the will altogether. This can result in family strife that children should not be concerned about.
For older children, it is OK to explain to them how inheritances work, as they may take comfort in believing you’ll leave them something when you pass. And there will be a time when you need to tell older children about their own inheritance so they have an idea of what they may have to manage.
7. The cost of gifts
Kids have a way of believing that the most expensive item is always the best. They’ll reject something if they believe you got it at a deep discount or (gasp!) second-hand. So parents may be best served by not indicating how much they spent on that video game system or that baseball bat. By hiding the cost of items you buy for your kids, they may be more inclined to evaluate the gift on its merits.
8. Child support payments and alimony
If you and your spouse have divorced, you may be on the hook for child support payments, alimony, or both. These costs are usually determined by courts and can be a major source of tension between parents. The children are best left unaware of these details and any drama or conflict surrounding them. It may be comforting to a child if they are aware that support payments are being made, but sharing specific dollar figures can be problematic.
9. In some cases, the cost of college
This is a tricky one. If your child will end up paying for their own college education, he or she will obviously need to know what they’ll be on the hook for. And if you are paying for all or part of college, they will be well served to know how much of a financial commitment you are making toward their education. (It will comfort them to know you are saving as much as possible.) But this information should not come to them immediately. A child’s first priority should be to stay in school and get good grades. A young high schooler does not need to be burdened with the stress of whether they need to get scholarships or whether they’ll be on the hook for student loans later.
It’s also important to understand that final college costs can vary from family to family, depending on scholarships and financial aid. A wealthy family might pay the full price to send their child to an Ivy League school, while a low-income family may pay next to nothing. This family financial information is really nobody’s business, so it’s important to be judicious in what you share with your child.