In this excerpt from his new book, The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money, financial writer Ron Lieber makes a compelling case for telling your kids how much you make and having them participate in family budgeting. The whole article is worth a read, but Lieber’s argument boils down the idea that, the sooner they understand what’s actually going on when you pull that piece of plastic out of your wallet, the more likely they are to become fiscally responsible adults — think of it like an insurance policy on your retirement plan. A few of his tips:
- Kids as young as 6 can understand the grocery bill, which is a great opportunity to delegate coupon clipping.
- A family vacation budget gives kids context to then help make decisions — Which do you want more: Hawaiian pizza tonight or pizza in Hawaii in 4 months?
- Once your kids are comfortable searching the internet, they have access to more specific financial information than you might realize, like your home value. Be proactive in talking about the family finances so they don’t have to speculate and will have more time to discover other things that you don’t want them to learn online. Like your old dating profiles.
- Conversations about money are ultimately conversations about values, so explaining how you spend money is an opportunity to also impart why you spend it that way.
- Lieber’s best anecdote? The guy who took his entire month’s salary out of the bank in singles and made stacks for each monthly expense so his kids could visualize how much their lives actually cost. You’ll have to buy the book if you want to learn whether or not he then stuffed the bills in a bag and went to the club.
If nothing else, getting your kids acquainted with the family financials might soften the blow when you introduce them to that other money concept: “the summer job.”