Author Topic: Will/Do Your Kids Know Your Net Worth?  (Read 25603 times)

MB

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Will/Do Your Kids Know Your Net Worth?
« on: September 14, 2012, 09:50:17 PM »
NB and I had an interesting discussion awhile back.  I mentioned that I want to have an open book with our future kids with regard to our finances.  Monthly expenses, savings goals, etc.  I want them to know the entirety of what goes into managing a family's finances.  This is, of course, when they are old enough to understand. 

NB said that he would draw the line at our net worth.  By the time we have kids and they are old enough to understand the concept, we should have a decent net worth.  He thinks they may resent the fact that we are living well below our means and, in the worst case scenario, not try to make it on their own because they know that mom and dad are loaded.

Thoughts? 

gooki

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #1 on: September 15, 2012, 02:16:24 AM »
If they understand your financial goals I see no reason to hold back your net worth.

With that said I have no idea what my parents net worth is, and I still took on board most of their financial ideals.

twinge

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #2 on: September 15, 2012, 04:23:15 AM »
My 11 year old son knows all the details about our finances.  While I've always made it a point to talk about money/investing with him, the full disclosure of our finances was done sort of accidentally because I showed him an Excel file with all our finances on it as I was explaining to him a smaller point about his college account.  I didn't think my idiosyncratic spreadsheet would be interesting/comprehensible to him, but it was and he had lots of questions about it etc.  My in the moment decision was then to be frank about what the file represented, why I did it, what it showed about investing growth over time etc.

Beyond a fascination with how numbers grew etc, I would say knowing our net worth hasn't had a major effect. Maybe a slight disheartening about how much money is involved in being an adult and managing a life etc.  He still thinks in terms of how many gifts he combines and how long it takes him to save for a big lego set. That said, he HAS fairly well ingrained our stance on money and consumption, which is pretty impressive given that we currently live in one of the highest income areas in the country and everyone he knows consumes far more than us.  He's more likely to talk about how much other kids have with a bewildered rather than envious tone.  Like, how could anybody want that much?

MB

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #3 on: September 15, 2012, 07:45:53 AM »
twinge - your son's attitude towards how much other kids have is amazing.  That is what I hope I'll be able to somehow instill in our kids, especially since they'll have cousins whose parents have a much different attitude toward money than me and NB.

And I'm still disheartened about how much money is involved in being an adult, haha... and, for the most part, I didn't have a clue until I started living on my own.  I had no idea what my parents' mortgage payments, electric payments, etc. were... I took for granted that my dad took care of all that.  So the first year or so after college was a definite reality check.

igthebold

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #4 on: September 15, 2012, 09:22:51 AM »
The only reason I would keep it back is because below a certain age, all knowledge is public knowledge. I don't really care if people know my net worth or my goals, but we have a backwards enough society that people judge personal worth by net worth. It would be awkward, so I don't. Not yet anyway.

rjack

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #5 on: September 15, 2012, 09:43:43 AM »
NB said that he would draw the line at our net worth.  By the time we have kids and they are old enough to understand the concept, we should have a decent net worth.  He thinks they may resent the fact that we are living well below our means and, in the worst case scenario, not try to make it on their own because they know that mom and dad are loaded.

This is BS.

My parents were depression era children and they always taught me to live below my means. It was one of the most valuable lessons I learned from them. My Dad openly discussed their finances with me when I became a teenager. How are your children going to learn that it is a good idea to live below your means if they don't KNOW that you are setting the example?

MB

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #6 on: September 15, 2012, 01:31:31 PM »
rjack - you won't find me disagreeing with you!  Although of course I would word it a little more tactfully with NB :-)

I guess the difference is between living below our means and living WELL below our means.  Of course it's a great lesson for any kid to learn and/or witness.  However, simply living below our means would increase our current expenditures multiple times over.


electricdisco

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #7 on: September 15, 2012, 01:59:02 PM »
My parents try to keep much of it a secret from me. Probably because they have terrible management skills and they know its embarassing.

But overall I know they are still worth quite a bit. If anything it motivates me to replicate them and try to do even better myself.

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #8 on: September 15, 2012, 06:34:12 PM »
I was brought up in a household where  finances were not discussed with the children. There was always a vague sense of not having enough money. My parents now at 85 years of age only recently disclosed their net worth to me.  I think my father whispered the figure even though there was no-on else around.

I've tried to be more open with my kids so as to teach them limits, and what is important etc... I do think growing up now is more challenging with regard material goods....back in the 60s and 70s, there was stuff and there was some marketing, but not in the epic proportions of today. Do my kids know my net worth, no, not specifically..... hell I've only begun working it out and tracking it detail this year myself.  But its not a secret... I am sharing  my mustachian journey with them, so at some point it will come up and be disclosed when its relevant.

Kids learn best on modelling, so I want them to know and experience all this stuff as soon as they can understand it.....if they choose to reject it so be it, but I want them to at least hear it and live it with me for a while before they make their own choices.

travelbug

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #9 on: September 23, 2012, 11:30:01 PM »
Yes, we will, in time, reveal all to our children.

They are only young now but I see what we are doing as a business model and they will need to have access to all of the figures to be able to learn from our mistakes and successes.

Hopefully this will enable them to make choices and have our model as a (positive) basis to move forward from.

The idea of how we came to be FI, and how passive income works is an amazing tool that I wish I'd have had at a young age.

Nords

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #10 on: September 24, 2012, 06:18:40 AM »
Our 10-year-old daughter looked over my shoulder one day when I was updating our Quicken portfolio and exclaimed "Holy sh-- cow, Dad, is that how rich we are?"

Luckily she'd been watching re-runs of The Cosby Show, so I was able to respond:  "Your mother and I are rich.  You, however, are poor." 

Then I had to explain that what seemed like all the money in the world was actually a pretty small amount which would have to last Mom and me the rest of our lives.  And if it didn't work out then when Mom and I ran out of money we'd come live in her home, so we wanted to make sure we set a budget now and stuck to it.  Our daughter decided that she was onboard with the budget.

A few months later another teachable moment arose in a popular teen sitcom where the adult children asked Mom & Dad to lend them money to buy a new home.  Mom & Dad refused.  The kids got angry at the parental parsimony and managed to figure out how to buy their own damn house with their own damn money.  The parents applauded their creativity and said "That's why we wouldn't lend you the money.  We didn't want to deprive you of the experience of figuring out how to do it on your own!"  I've gotten a lot of use out of that sitcom self-reliance simile, and I think our daughter gets it now.  She'll turn 20 next month.

We've also made sure that she maxed her Roth IRA every year since she turned 15 and started earning an income.  She knows when we're not kidding around, and we've explained many times why a Roth IRA is "too important to screw up".  When she took a class in probability & statistics we ran through the Roth IRA spreadsheet of the early starter and the later starter, so she's internalized the concept.

She's doing college on a ROTC scholarship.  The military is paying three-quarters of her college expenses, so that means her college fund will have some leftovers for profit-sharing.  Today we tell her that we're going to share those profits by gifting her a little of her inheritance every year so that she's able to max her Roth IRA and her TSP.  The idea is that the tax-deferred compounding of her inheritance will give her choices in her 40s and 50s-- when she might need the work-life balance-- instead of in her 80s when it's no longer relevant. 

Or else it'll help her pay for the really nice addition that she'll have to build on to her house when we move in with her...

Saving mom

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #11 on: September 24, 2012, 02:08:37 PM »
Not at their current ages but yes we will. My family always discussed money openly and I discuss it regularly with in laws. However I am also likely the one to be left in charge of finances on both sides as they age. Our more difficult issue with kids is having them understand that most people don't live like grandma and grandpa. They have all done very well and retired early and have lives involving lots of far flung travel and luxurious homes, cars and even boats. One of my kids thinks all grandparents have elevators in their homes.

gooki

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #12 on: September 24, 2012, 03:27:00 PM »
Luckily she'd been watching re-runs of The Cosby Show, so I was able to respond:  "Your mother and I are rich.  You, however, are poor."

Made my day. Thanks.

Nudelkopf

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #13 on: October 19, 2012, 03:01:49 AM »
Just last night Mum showed me their numbers for retirement. I think they were quite Mustachian in many of their habits, and it definitely pays off. I think they probably only showed me though cos I'm now an adult, and also they're quite excited about retiring.

I think I'll do the same for my kids. They don't need to know the numbers, really, ever, but I guess the idea of saving is what I'll try to impart.

I really could have gone for ever without knowing my parents net worth, because I've always known that they'd be smart about whatever decisions they'd make.

vieja

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #14 on: October 19, 2012, 12:25:46 PM »
We have a 13 yr old.  He probably can't ever remember a time when we didn't talk about money or anything else for that matter, in front of him and to him.

He  doesn't know many of the exact figures but he gets the idea of spending less than you earn, short term sacrifices lead to long term gains, and reaching financial independence as quickly as possible while maintaining a decent quality of life along the way.

He witnesses us working 50-70 hours a week in the family business and helps out enough to know what work is.  We talk about things like deciding if the amount of pleasure recieved is worth the time it takes to earn the money to do/buy whatever it its he wants.

My goal is for him to be an independent well-rounded individual as an adult and that is how everything in life is approached.  Learn to do a load of laundry now so you can do it when your 20 and on your own.

Slightly off topic but amusing none the less:  Our son gets an allowance.  It started out as $5 and is now $10.  He also earns a few bucks here and there by helping his grandfather or by getting tips from customers while bussing tables.  I needed some small bills for work and asked if he had $40-60 in change he could give me for larger bills.   Well the kid cracked open his bank and there was over $800 in it!  Not a big spender, this son of mine.

twinge

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #15 on: October 19, 2012, 03:10:10 PM »
Quote
Well the kid cracked open his bank and there was over $800 in it!  Not a big spender, this son of mine.

Sounds like a good time to start teaching him about investing!

ch12

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #16 on: October 19, 2012, 04:51:52 PM »
My kids, when I have them, will know my net worth. I'm going to raise them to understand the very basic arithmetic involved with personal finance. My parents told my sister and I about their money when we filled out the FAFSA together. I don't think that you have an obligation to your children to tell them how much you have - but I do think that I want my children to make business-ish decisions from a very young age. Being transparent with them about my own net worth will be part of that decision. If my kid has an allowance, I want to show my kid how to maximize those few dollars. When I was in elementary school, I started a mock stock portfolio when I was in 4th grade and tracked it on a daily basis and I fully expect that my children will do something similar when they are taught about exponents and exponential growth.

My kids will also be fully involved with the way that the family spends the budget. It's not reasonable to ask a 1 year old to make decisions about that kind of thing, but by age 7 I think that a kid can make a simple decision about whether to go to the expensive, faraway aquarium once or the nearby water park 7 times.

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #17 on: January 08, 2013, 04:31:21 AM »
Up to now I don't have any idea about my parents' net worth. I think it's okay for the kids to have a rough idea on his/her parents net worth. At the same time we have to encourage them to succeed on their own by telling our own success stories. In case your net work is below average, they might become driven to do their best to alleviate your current financial situation.

LowER

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #18 on: January 08, 2013, 07:43:13 AM »
"The Millionaire Next Door"  addresses this exact topic but differently than addressed here. I wonder why such different approaches. I'm not sure how to address this with my children.

sol

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #19 on: January 08, 2013, 08:57:13 AM »
I don't intend to tell our kids our net worth until after we retire.  They already know that we save most of our income, but at 7 and 9 I don't think they appreciate the magnitude of the sums involved.


NumberJohnny5

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #20 on: January 14, 2013, 10:35:29 PM »
I have regular money talks with my 6yr old son.  He's not quite old enough to fully understand big numbers (not that an exceptionally large number would be needed to represent our net worth), but we do explain at least the general picture.  I.e. we explain that mommy works so we have money for a place to live, food, a car, electricity, vacations, his allowance, etc.  We explain that we could have more things, a bigger house, go on more vacations, etc. but it'd require a sacrifice in another area.  I.e. a bigger house would mean less vacations and/or mommy having to work more and/or daddy having to work (and most of that money would end up going to childcare).  We explain that we prefer experiences to stuff, and that's why he only gets a few presents for Christmas.  I even asked him which was more important to him, making memories or more toys; he responded that too many toys would break the house, and that he preferred memories.

So yeah, I'm sure we'll sit down with him when he's older (maybe 10, 12, I dunno) and go over some exact figures.  Oh, as for what my parents did...didn't really have any money talks with me.  I knew that pay-day equaled allowance day and going-out-to-eat day.  Christmas was a decent pile of presents, which caused money worries the next month when credit cards had to be repaid.  There really wasn't a discussion of exactly why they were doing what they were doing...not sure why.  Seems that it's not quite kosher to speak of money where I grew up except to complain about the bad economy, or the government taking too much of a cut (the lord giveth, the government taketh away).  Oh wait, I do remember ONE conversation about money...my dad was telling me how I should get a whole life policy, how great of a deal it was, etc.  Fortunately, I didn't follow his advice (though unfortunately, I didn't exactly invest my money elsewhere).

Ozstache

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #21 on: January 15, 2013, 01:42:37 AM »
One of my sons (21) knows roughly what we're sitting on and seems inspired by it. The other (19) has been a bit of a cash drain on us while going through university (ie. cash drain by gladly taking more than he needs) and is transitioning to being responsible for his own finances. If he knew what we were sitting on, he might keep putting out his hand for more, so mum's the word for now.

Amusingly, I'm not prepared to share the real detail of my financial situation with my parents. They, like my youngest son, have a bit more growing up before they're ready, the way they spend their money and get deeper in debt. They'll soon know when I ER at 45!

2527

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #22 on: May 14, 2013, 05:36:55 PM »
I have a general principle of not telling people information if they aren't capable of understanding it.  And somebody else brought up the point that kids tell things to other kids at school. 

I think it is more important that kids see the process of investing and financial planning than they know how many zeros are involved. 

As they get older more details can be revealed. 

sdp

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #23 on: May 17, 2013, 12:21:44 AM »
I grew up in a household that was very open about money, but I never learned the networth number from my parents.  It was an arbitrary number anyways.  As savers we always had more than enough and that was the important message I gained from it.  knowing that the amount of money you have and the amount of money you spend are NOT linked is the lesson I learned.  I always knew my family was rich, but I also knew that we were rich because we didn't spend money on frivolous things.  When I grew up we had a volkswagen beetle as the family car until it finally died when I was 17, I am sure my parents net worth was atleast a million by the time my dad and I got all greasy trying to rebuild the engine in highschool. But I never thought that just because we could afford something new and bigger, that we should.  I don't have kids yet, but if the circumstance arises that we need to reference a specific number we will, otherwise who cares, there is enough to fund whatever we need as long as we are thrifty.
 On a different note, my grandparents started a nonprofit family foundation with lots of their money and since I was about ten or  eleven I have been involved.  Since I was a kid I have been involved in the investment and dispursement of the foundation funds and am probably way better with money and saving and investing because of it.  It has helped me develop a perspective on wealth that i doubt I could get from just saving my allowance.

gdborton

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #24 on: May 17, 2013, 08:59:54 AM »
I think society in general would be a way better place if everyone knew everything about others' finances.  I think money being a taboo topic is a huge factor in living above your means.

I absolutely plan to tell my kids my net worth, with the caveat that they are mature enough to understand.

Also, out of curiosity why do people care if the kids at the playground (or their parents) know what your net worth is?

sdp

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #25 on: May 17, 2013, 10:42:44 AM »
gdborton,
I LOVE thinking about what the other people think about me, knowing my net worth and seeing me drive the beater car I do.  It is kind of like a silent punch in the face machine and hopefully stirs some emotion and makes them think......

EK

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #26 on: May 19, 2013, 02:33:00 PM »
I haven't put much thought towards what I would tell a future child (a child is not in the immediate future), but in retrospect, I wish my parents had been a lot more up front with me about what they were making and spending, and why they chose to do what they did with their money.  They were very responsible and I'm only now beginning to appreciate their good choices.  They brought up me and my sister one one income, sent us both to expensive private schools from elementary through high school, put us through college, and are now still only months away from retiring in their early 50s.  Aside from paying from school, and the occasional new car, they were always very mustachian.

I don't know if teenager me really would have taken it to heart at the time, but at least the seed would have been planted.  Knowing everything involved in a budget would have been pretty eye opening. I was pretty sure at the time that my parents were just holding out me, where as if I had more specifics I could have at least had the opportunity to see how much it costs to be an adult and understand the reasoning behind their choices.

Nords

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #27 on: May 19, 2013, 08:42:15 PM »
Also, out of curiosity why do people care if the kids at the playground (or their parents) know what your net worth is?
When my daughter's teachers noticed that I had the time to spend volunteering at school, they'd seek me out specifically to have the money talk and to figure out how achieve their own FI.

Ironically they'd already heard my daughter's version of my advice, and my version usually didn't have much to add to that.

LizzyBee

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #28 on: May 19, 2013, 09:12:00 PM »
As of now, I definitely want to show our son (and any future children) our net worth and our budget. Showing him how much we've saved and how it's grown over time, will be a powerful tool in his own journey towards financial responsibility. I want him to know that our net worth is high because we live beneath our means. I don't worry about him expecting monetary gifts after knowing how wealthy we are/will be in the future because all of that will be an open discussion. I will explain to him that he has to work (Once he reaches a reasonable age) to contribute towards his own expenses (clothing, college, car, etc) because that is part of becoming a responsible adult. Once he graduates from college, he is financially independent from us. That's not to say we wouldn't take him on a trip to Europe with us as a gift, but we definitely won't be helping with his daily living expenses. I have siblings whose lifestyles are highly subsidized by my parents (whose net worth is not so great because of it) and I know that this is not healthy for anyone involved. Maybe if my parents had been more forthright about budgeting and what it takes to be a responsible adult, my siblings would not be constantly one step away from financial disaster.

Self-employed-swami

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #29 on: May 19, 2013, 10:41:36 PM »
gdborton,
I LOVE thinking about what the other people think about me, knowing my net worth and seeing me drive the beater car I do.  It is kind of like a silent punch in the face machine and hopefully stirs some emotion and makes them think......

I LOVE thinking about this, while driving around in my 1995 Tercel.

I recently bought a new-to-me work truck, from a small used car lot.  The sticker price was $12,900, but the owner was having a heck of a time selling it, because everyone was trying to finance it, and with more than 200,000km on it, no one could get financing secured.  When I said I was going to pay cash, the owner asked me what I do, and I told him (oil and gas consulting, and I hinted at how much I make).  He offered to let me take it at $11,000 including tax.  I picked it up a few days later, and negotiated a reduced fee on cleaning and shampooing my 'other car'.  I came by the next week with the Tercel, and he couldn't believe what I was driving.  He asked me why I owned such a car when he knew that I could buy anything on the lot in cash, and I told him, just because I could afford any vehicle I want, doesn't mean I wanted to spend my money on it.

Now, I don't know if he thought I was a little crazy, or if he got it, but I'd like to think that he thought I was even more awesome.

Whenever someone cuts me off in the Tercel in a big truck, I like to think about how foolish they are, for likely having large payments.
« Last Edit: May 19, 2013, 10:47:58 PM by Self-employed-swami »

LN

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #30 on: June 07, 2013, 06:35:29 PM »
Oh my goodness.  People watching is one of my favorite pastimes while commuting to work on the subway.

Lately, I've noticed that I'm not jealous when I stare at people and their expensive/luxury brand gadgets/accessories.  I used to think, "that looks cool, and maybe I'd like to buy it."  Now, my mentality is, "you don't need that" or "why do you spend so much money on things" and "I'm glad I don't own that"?

I've just realized that my change in perspective is one more thing that I can credit to reading this blog (over a year now).  How did I get so lucky?

lifejoy

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #31 on: June 07, 2013, 08:20:14 PM »
I'm a kid. I have a rough idea of my parents' net worth, because my dad explained to me that if he kicked the bucket - I'd have no idea where all the money was! So he discussed it with me. But he has always been clear about the fact that he's going to try his best to spend it all (he's a very frugal, responsible man, but he's worked hard for his money and wants to have fun!).

So I'm not banking on a huge inheritance.

JAK

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #32 on: June 14, 2013, 12:02:07 PM »
Just joined and this is my first post although I've been reading past articles like crazy.  I grew up fairly poor but never felt poor.  That's because my parents never shared budget/net worth information with us kids, at least not me.  However, I was told repeatedly how lucky I was to be part of large family (12 kids).  I still agree: big family way better than big bank account.  My own family is just two kids (9 and 11).  My husband and I don't share our net worth with our kids, but if we're doing something frugal we talk about it and lately I've been using the word "baDASSity" to describe turning out lights, biking, line drying our clothes, etc.  They like that - edgier.  Both my kids have a bank account that we refer to as "growing your snowball" (I checked out Warren Buffett "Snowball" from the and it was lying around the house for a few weeks.  They were mighty curious about that book when I was reading it.)  They are only allowed to add to their Snowballs at this point, never withdraw.  With my older son, when he had saved $500 I made a big deal about transferring it to his own E*Trade account so he could start making that money work harder for him.  So the kids know what they have, but not what my husband and I have.  I think that's enough sharing with them for now, although they do know that we have our own Snowball.  As they get older perhaps it will seem appropriate to share more layers of our financial picture with them but simple feels right at this stage in their lives.

Angela

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #33 on: June 19, 2013, 02:54:28 PM »
Nope, I like the idea of stealth wealth.

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #34 on: July 13, 2013, 09:01:20 AM »
I'll go with stealth wealth too.

I DO want her to understand why we do/don't purchase certain items because of our budget. The other day, SO said we needed work on the car. I said that meant we'd have to cut back on something else. We reviewed the budget together and decided where we'd hold back this month so that we can meet our aggressive savings goals.

That exercise made me think that would be a good thing to go through with children, yet I don't think a child needs to know every detail like net worth. There's always the chance they'll share that with others and then that create a bad situations with adult friends and neighbors.

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #35 on: August 02, 2013, 08:31:13 AM »
I have a general principle of not telling people information if they aren't capable of understanding it.  And somebody else brought up the point that kids tell things to other kids at school. 

I think it is more important that kids see the process of investing and financial planning than they know how many zeros are involved. 

As they get older more details can be revealed.

+1.  My mother (retired in her 70s) and I have no secrets when it comes to money.  And my daughter, who is 25, and I have had frank discussions about our net worth, and how we got there, and what mistakes we made along the way (and hopefully she won't do the same dumb things I did at her age).

My son, however, is not quite 18 and while a very bright person not ready to talk in terms that are still meaningless to him.  When he starts working full time and getting a full appreciation for the effort and sacrifice it takes to get to a certain point we'll have that discussion, but at this age all he would see is a pot at the end of a rainbow and not the storm we had to go through to produce that rainbow. 

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #36 on: August 02, 2013, 08:54:58 AM »
I've always known the net worth of my parents. At a young age it wasn't a discussion of "we have x dollars", but more the "we have paid off the house". At a young age that is all you need to know. As I got older they taught me the details and I am thankful for it. My family lived well below its means and I do not regret it for a second. We still had fun together and love each other.

Joshin

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #37 on: August 13, 2013, 09:02:50 PM »
My almost 13 year old knows all. He remembers when we were really broke and starting out, and he had to help us deliver newspapers just to put food on the table. Until he was eight or so I had a huge budget/goals chart on our bedroom door that outlined all our bills. We would have a big celebration each time an asset was added to the chart, usually in miniscule savings amounts. No secrets.

Now we are much better off and have a nice bit of savings and investments, and there is no door chart. But I still include him when I balance the books each month because he wants to know. It makes him feel secure. It's paid off, the kid is frugal and proud of it. He brags about his home hair cuts, the great deals we find him on clothes and camping gear thrifting, our paid off cars, the fact we grow so much of our food. If his friends think he's weird or poor they don't say anything.

My younger has a general idea. He's only 8 but he's a numbers kid and my future engineer or scientist. I recently started including him in on more of the details when he started crunching the numbers on his own and asking if he was close to guessing our earnings/savings/bills, and he surprisingly was. He's also been trying to work out how to afford being an adult because he is obsessed with going to college (he's a bit precocious), so I figure you give the financial education when the pupil is willing.

I've known my parents financial standing for about 10 years, since they had to claim bankruptcy due to medical bills and a 401K theft (they got some of the money back, but it was too late to stop bankruptcy by the time the court proceedings ended). I do their taxes every year, and helped get them back on track over the last decade so they were able to buy a house this year and live comfortably on their downsized retirement income. They were secretive when I was a kid, though, which always bugged me. I always felt like we were walking on the edge of losing everything, which is probably why I am so careful and so open with my finances now.

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #38 on: August 14, 2013, 08:41:47 AM »
My almost 13 year old knows all...No secrets. ..He brags about his home hair cuts, the great deals we find him on clothes and camping gear thrifting, our paid off cars, the fact we grow so much of our food. If his friends think he's weird or poor they don't say anything.

My younger has a general idea. He's only 8 but ...I figure you give the financial education when the pupil is willing.

I've known my parents financial standing for about 10 years...They were secretive when I was a kid, though, which always bugged me. I always felt like we were walking on the edge of losing everything, which is probably why I am so careful and so open with my finances now.

Thanks for sharing this, Joshin!  What you wrote resonates a lot with me.  My husband and I also believe in holding no secrets about our finances and in teaching each child about money matters when they are ready to learn. 

For the first 8 or 9 years of my son's life, he didn't notice how frugal we were.  Now he does.  He is 11 and notices all of the new gadgets and motorized mini vehicles that other kids in the neighborhood have.  He especially notices the size difference in houses.  Last year, we couldn't go anywhere without him talking about how much better another person's home is (not just the size, he likes clutter and unfortunately has a mom that likes order...but mostly the issue was size).  I tried explaining to him how we were able to save more money by living more simply and that he already had lots of wonderful toys and a loving family, but none of that helped with him.  I could tell that he felt we were withholding love from him by not giving him all of the things that other kids possessed.  He started complaining quite a bit.  We decided then that it was time to start sharing with him specifically what amounts we were stashing away.  When I showed him how much we had in his college savings account, his eyes brightened.   He could specifically see that we were giving to him just like other parents give to their children, but in a different way.  Since that time, he has said maybe a handful of times how much he would like to live in a big house.  I taught him about mortgages a few months ago.  A week after that lesson, he told me that he has decided to live with me forever so that when he is an adult he can keep ALL of his money.  lol Our youngest has very little concept of money and its relation to overall quality of life.  Bit by bit, we'll teach her.  But when she still leaves $5 bills that Grandma sends for a b-day present on the floor, we're pretty sure she's not quite ready.

I think that the way you brought your eldest child into the family's financial matters from a very young age is excellent.  Looks like things are going really well with your youngest, too.  Props to you, sir!

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #39 on: August 14, 2013, 09:53:46 AM »
My almost 13 year old knows all. He remembers when we were really broke and starting out, and he had to help us deliver newspapers just to put food on the table. Until he was eight or so I had a huge budget/goals chart on our bedroom door that outlined all our bills. We would have a big celebration each time an asset was added to the chart, usually in miniscule savings amounts. No secrets.

I can understand the appeal of this approach, but in my family I think it would cause more problems than it would solve.  Our 10 year old lives in a universe where your playground status is determined by how many expensive toys your family has, and he feels like we're punishing him by not buying him a new iphone every year.

If we took avonlea's approach above and showed him that we have vast sums of money tucked away, I think he would immediately switch over to bragging about it to his friends because that's how his peer group operates.  The next time some kid talks about getting the new Xbox, he would say something like "yea well my parents are millionaires, we can buy whatever we want" which is not the attitude we're trying to instill.

He's certainly old enough to understand the value of saving and investing.  I don't think he's old enough to understand the discretion that is required to live so far below your means.

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #40 on: August 14, 2013, 10:25:34 AM »
If we took avonlea's approach above and showed him that we have vast sums of money tucked away, I think he would immediately switch over to bragging about it to his friends because that's how his peer group operates.  The next time some kid talks about getting the new Xbox, he would say something like "yea well my parents are millionaires, we can buy whatever we want" which is not the attitude we're trying to instill.

I guess it helps that we're not millionaires. ;) 

I do understand what you're saying, though, and that was the big struggle I had in deciding whether I should tell my son the particulars.  I made it very clear that this is something to be discussed just within the family.  He understands it and honors it.  My daughter is more of a chatterbox, so I don't really know if we'll feel as safe telling her when she is his age.  We may just show her the college savings account if she starts feeling cheated about not having as many material possessions as her friends--something to show that we are thinking about her, not just for the present but also for the future.  I do think we'll let them both know the whole picture by the time they are in high school, though.  I really want them each to have a turn running the household finances for a month or two when they are around 16 or so.  We'll see...


MrsPete

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #41 on: August 14, 2013, 12:07:51 PM »
Short answer:  No.  Not now while they're still young.

We've worked very hard at helping our kids learn how to live a frugal lifestyle, and we're very pleased at how they're interested and willing to search for bargains, set priorities, etc.  If they were suddenly to learn that we have $$$$$ amount in the bank, this could backfire on us.  To their young and na´ve ears, $$$$$ would sound like all the money in the world, and it could easily lead to, "Why can't I have a new Mustang?" or "Why are we eating potato soup for dinner instead of going out?" 

In the future, when they've developed some sense of how much the "invisible costs" of living add up -- by that, I mean taxes, insurance, mortgage payments, and other things that kids don't really think about 'til they're out of school and really in their first jobs -- I wouldn't expect them to fully grasp the full scope of what $$$$$ means.  In our case, it's enough to live comfortably for the rest of our lives, but it's not enough to spend thoughtlessly. 

However, at some point -- I'm thinking when I'm 80 or so -- I will talk to them both about what I have, what they can expect to inherit, how I'll distribute things among them and the grandchildren, and so forth.  My husband and I already have a list of all our accounts (we update dollar figures, passwords, etc. around New Year's and again on our summer anniversary) so that if one of us died, we'd have a good list of all our assets.  I'd go over the same information for the kids at some point in the distant future. 

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #42 on: September 17, 2013, 09:13:59 PM »
My dad repeatedly told me as I was growing up that my inheritance was his good looks.  I believed him.  And it turned out to be completely true.

In my family growing up we didn't talk about money.  I do talk about money with my son (9) - saving, debt, investing. 

But I don't think I will have any reason to discuss our actual net worth until many years in the future.  Not sure what purpose it would serve...

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #43 on: September 18, 2013, 12:45:43 PM »
I hadn't thought about it prior to reading this thread.  Our kids are 7 and 9 and get an allowance, are required to save, and generally are learning about money.  Both of them have bank accounts (at the "donut bank" because the branch has free donuts on saturday mornings) and have made deposits.  They have custodial accounts with accumulated birthday, etc. money invested in a balanced fund which I will disclose to them when we start explaining investing and compound interest.

I guess we will eventually disclose net worth to them, but it will have to be at the right time when they understand enough not to take it out of context.

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #44 on: September 18, 2013, 04:58:41 PM »
Our 7 and 8 year old don't really know the full story, but after losing my job recently and deciding I was retired, I think the kids get it - we're wealthy enough.  We explained that nothing will change in our household in terms of spending. 

They have seen my Vanguard accounts online over my shoulder one day.  One of the kids said "wow dad, $51,000 is a lot of money!".  That was just one IRA in my wife's name and there are lots of other similar accounts with much more money at vanguard and at fidelity.  We just left them with the understanding that we have "a lot" of money without going into specifics. 

One kid is kind of a blabbermouth (but we love her!) and we don't really want her broadcasting to our nearest and dearest friends, family, and all her classmates that we are millionaires and rich, since we live in a relatively modest neighborhood. 

It's a tricky subject, as we don't want to keep them in the dark, but I think they get it.  We have family that hasn't done so well financially, including losing a house to foreclosure among other things, and we have reassured our kids that we have way more than enough to pay off our tiny mortgage in full and we won't ever lose the house. 

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #45 on: November 01, 2013, 01:31:03 PM »
I never knew my parents net worth as a kid and I think that was a good thing.  For one, kids aren't good about keeping their mouths shut and you can imagine that info will get out to other adults in the community.  I don't want people knowing my business. 

Secondly, by the time I was a teenager my parents had become quite wealthy.  They didn't show this too much in their spending (for boomers), and I think it was a good thing not to let us kids get too big in our britches thinking we were "rich."

Only recently has my dad started sharing his income and net worth information with us (my sister and I are about 30).  He's doing this to show us that 1) entrepreneurship and investing provide the opportunity to make a lot more money than working for the man, 2) the tax optimization of being in business for yourself is CRAZY good, 3) if we want to have the sort of lifestyle my parents have, it takes moola! 

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #46 on: November 01, 2013, 01:47:06 PM »
I think society in general would be a way better place if everyone knew everything about others' finances.  I think money being a taboo topic is a huge factor in living above your means.

I absolutely plan to tell my kids my net worth, with the caveat that they are mature enough to understand.

Also, out of curiosity why do people care if the kids at the playground (or their parents) know what your net worth is?

I don't want people to have this info for a variety of reasons.  On the extreme side, I don't want to create a target on my back for theft/scams.  I also don't want to become someone people ask for loans/handouts.  More realistically, I just don't want people knowing something so personal about me, especially when I don't know the same about them.  I was raised that this information is shared within a family and was private from others.  I don't tell people my salary, my savings rate, my net worth, etc.  Maybe that's why I like talking about this stuff online where I'm anon(ish)!

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #47 on: November 01, 2013, 02:49:52 PM »
We haven't talked to our kids (12 & 9) about net worth, but we are open about talking finances in front of them. There was a time when our utilities were getting shut off and the car was almost repo'd that finances were something that we whispered about after they went to bed. Our oldest had figured out by about age five that there was some serious stress regarding money, and would refuse to even make a Christmas wishlist. I finally figured out why when I heard her explain to her brother (two years old at the time) that we absolutely could not afford the Thomas the Train thing that he was pointing at in a catalog.

Nowadays we try to be 100% transparent. When we sit down to fill our cash envelopes, we sometimes have our daughter count out the cash. It was hugely eye-opening to her to see how much we go through monthly, just in groceries, restaurants, and medication. When we get to the end of the month and have cash left over in the envelopes, we take a family vote about what we should put it towards (usually a very small amount, but I want them to get into the habit of thinking through options and naming their money). They are able to choose how much of their allowance to keep out, and how much to deposit in their accounts, and they each fill out their own deposit slip.

My parents were silent about money, but there was always a sense of underlying stress. When I moved out for college, I knew NOTHING about interest rates or compounding interest, nothing about staying out of debt or having an emergency fund...just nothing. I was absolutely shocked at how high monthly living expenses were. Looking back, I realize that I have no clue how much my parents paid for the mortgage, groceries, etc., and I still have no idea what their finances look like. None.

I don't really care if our kids know our current net worth. It's nothing special. But more importantly, I want them to understand how money works, both within our family, and in regards to spending, borrowing, and debt. It feels like our biggest responsibility to them at this point.

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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #48 on: November 15, 2013, 10:34:31 AM »
My parents were completely oblivious to money except that they earned a big paycheck.  They had no idea how to manage, talk about or handle capital in any sense.

It sent me out into the world wholly unprepared.  I will not do that to my children.

  I've spent years educating myself and figuring out how to manage and develop my finances.  I will now pass that along to my children along with the appreciation for education that my parents instilled in me.


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Re: Will/Do Your Kids Know Your Net Worth?
« Reply #49 on: November 15, 2013, 10:46:35 AM »
Growing up, my parents were very good to teach my sister and I about money - how to balance a checkbook, how to save, interest, etc.  I always knew we were more well-off than my friends but my parents did a great job making sure we were never stuck up or prideful about it. It wasn't until I was a teenager that I become somewhat aware of my dad's salary and how much money he and my mom had.

Now that I have a wife and new son of my own, my dad has brought me fully in to the fold of his accounts, his net worth, his goals etc. Partly he did it just because we like discussing finances, but also in the event of his passing. He wanted me to know he has X account here, Y account here, that the account documentation is here etc.

Regarding my own son, I plan to teach him all the basics as he grows up. I probably won't discuss net worth until he's starting to plan for his future and career and life goals - probably 16 years old or older. Most of what I learned was from watching what my parents did - even though I didn't know the details, it shaped me to how I am today.