Best Answers to Kid’s Money Questions

This week, the New York Times Money section has been sharing a list of some of the toughest money questions a child can ask his/her parent. I’ve been intrigued with this discussion and thought it might be helpful to have one resource that not only lays out these questions but also looks at some of the best answers. Mind you, “best” is a subjective term, but these are the answers that I found most thoughtful and thought-provoking. So, without further adieu, let’s take on some tough money questions.

Why don’t we have a summer home? I’m not sure this a really relevant question for most folks, but I really liked this answer.

Jessica from Chapel Hill, NC writes – Kids (especially four year olds) care far more for experiences than things. Hence the ever popular garden hose extravaganza on a hot summer day, or abandoned refrigerator box-turn-fort-turn-spaceship game. Sounds cliché, but that cliché was earned, thanks to its endless generational appeal. A four year old conceptualizing loss tied to materialism (“why don’t we have x”) may be displacing a loss of engagement with peers or parents, and could do with an affirmation of intrinsic value (here it’s obviously being influenced by external forces – the question was not just asked, but asked ‘stomping’ and ‘turning red’, indicating a sense of perceived value for the house). Sure, I loved the opportunity to travel to nice places in Europe to visit family when I was younger, but what did I enjoy the most (both at the time, and in retrospect)? The non-romanticized answer is, in fact, making new friends; sitting at a small cafe with a piece of paper and drawing; wading through a river; the priceless things parceled with a very small dollar value, comparatively, despite the nice surrounding venues. The best resources aren’t the most expensive! It’s about creating value for your child, and a summer home is the least of that which she will intrinsically value as important – it will be the experiences in that home, the people, the good times that eventually become far more memorable.

Will you buy me (insert latest want here)? I think most people can answer this, but I included it anyway

Steve from Cedar Rapids, IA writes – I’ll never forget the time about two years ago when my kids got in my old Honda Accord and said “No offense Dad, but your car is kind of old.”

So I patiently explained that I could have a lot nicer car, but Mommy and Daddy would rather spend money on sports, camps, dancing and all of the activities they like to do. I got silence.

Next time they got in they said “You know Dad, this car is pretty nice!”

Sagemum from Colorado writes – We give our kids an allowance, and with that money they can buy whatever they want. We do try to guide them–suggesting, for instance, that they shop at the Dollar Store rather than the local boutique, since they will get much more bang for their bucks–but in the end, the decision is theirs. I figure that’s the best way to teach them to handle money now, and think about budgets and saving, when the risks are low.

How much do you make? This one can be tough. My personal opinion is that a kid really doesn’t need to know earnings as much as how much things cost.

Responses:

Michael from LA, CA writes – I don’t want my kids to know, not because I don’t trust them (they’re fine with secrets) but because I don’t want them to get a big head. We spend far less than we make – and far less than many of their peers spend.

Sure, we could try to explain why that’s the case also, but do you want to then have that argument each time you refuse to purchase something unnecessary?

To allay any concerns they might have about things like foreclosure or unemployment, I always let them know that even if both my wife and I lost our jobs, we’d still be fine, and able to afford everything, because we save and save.

And that’s the lesson I’d like them to get – spend less than you earn, and save, and you’ll have security.

Dennis from Indianapolis, IN writes – The child’s question is best met with a question of the parent’s own, such as the illustration Lieber presented in his article (e.g., “Gosh, what got you thinking about that?”). This can get at the source of the child’s inquisitiveness, which may be the core issue. For example, if the children are anxious about money, their fears can be relieved without needing to provide specifics (“There’s no need to worry, we have plenty of money to meet our needs”).

If the child is merely comparing notes with classmates in a game of “My Parents Make More than Your Parents” or is presuming a place on the executive management team alongside his parents, then no specifics are required.

A moment like this can provide the parents with an opportunity to reinforce the gradually eroding boundary between the generations. Calmly and without emotion, the parent can simply inform the child that this is subject, like many others between parent and child, that will not be discussed in specific detail. With the flattening of the hierarchy seen in most families today, post-modern parents believe that they are obligated to answer any question put to them by their children–they are not.

The asking of the question is not a problem. The answering of it–with too much detail in response to a less-than-good-faith question–is. In either case of a good- or bad-faith question, the query by the child can be used to both address the larger issue while at the same time reinforcing the generational boundary.

Are we rich? I think the context that this reader provides is a great way to consider answering this question.

Responses:

Kenny from Chapel Hill, NC writes – My oldest daughter asked me exactly that question when she was–I don’t know, maybe 7 years old. I told her the truth. We are rich–incredibly rich, unbelievably rich, one of the richest families in the whole wide world. And I don’t mean “rich in love” although we are that too–I mean “rich in money.”

You know how you can tell? We get to eat good food any time we are hungry. We get to go to the doctor any time we are sick. All our children get to go to school. Those things make us much richer, and much luckier, than most of the families in the world.

The only reason we don’t *feel* rich all the time is because everyone else we know is also rich. Our lifestyle is “normal” for middle-class America, but it is not “normal” for the world, and I want my children to know that.

Are people without nice things lazy? See my response below, and another that I liked.

Responses:

My response – Son, success tends to be a combination of both luck and hard work. You can’t control your luck, but you can control how hard you work so do your best, and often you will find that while you’re working hard and striving for your goals you tend to get a little luckier in the process.

MM from “the south” writes – There exists a very human tendency to ascribe one’s own personal successes to hard work and failures to bad luck. The flip side is that many people look at the successes of others and attribute them to good luck, and their failures to a lack of personal responsibility. The reality is complicated, and parents need to teach their children that.

The person who works hard for little money may simply have thrown their heart into a less renumerative field, may not have applied themselves to their education or career, or the deck may have been stacked against them from birth, making success that much harder. The person with greater wealth may have been born in fortuitous circumstances, but may have had to overcome serious personal difficulties (so easily hidden) to achieve their current financial stability. Plenty of rich and poor work hard, and plenty of rich and poor do not. Financial success is a useful indicator of hard work, but it is faulty.

Most people have some cross to bear, and most people fail at something, but these things are easily hidden. Better to withhold judgment, offer help when it is needed, and congratulations when it is due.

Posted in College Tagged with: ,