The Wisdom Behind Not Sharing Financial Information with Children

Growing up, I was fortunate to have a household where financial matters were rarely discussed with my children. We focused on the essentials, appreciated the gifts we received, and set our children on a path to value and happiness. This approach has proven to be quite beneficial, and I believe it's important to avoid sharing financial details with young children.

Our Approach: Transparent Without Being Consumed by Numbers

I think it's entirely reasonable for children to know how much their parents earn and spend on essential items like rent, utilities, food, and gas, especially if they've experienced financial openness from a young age. My daughter, for instance, knew our financial status from a young age, especially after we moved to the US. We reviewed all statements and receipts together, making her understand the rationale behind our choices. This approach helped without overwhelming her with financial complexity.

The Importance of Not Involving Children in Adult Matters

My husband and I had a rule: never involve children in adult matters. This includes financial matters. There's no need for children to know or worry about bills and household expenses. Our children understood the types of jobs we held, but they didn't need to know the specifics of our salaries or financial status. Keeping these matters separate ensures that children can focus on their development without unnecessary stress.

The Potential Dangers of Discussing Finances with Young Children

I remember a particular incident from my childhood that still resonates with me. My grandson, who was just a toddler, came to me and told me that his parents needed money. Clearly, his parents were discussing finances in his presence, thinking a two-year-old wouldn't understand. However, what the toddler understood was the stress that financial issues cause. This is far too young for a child to be exposed to such challenges.

The Evolution of Financial Understanding Over Time

As children grow older, their understanding of finances evolves. I grew up in a family business where I was managing the bookwork by third grade, leading to overwhelming stress. While children should be aware of family finances as they mature, it's crucial to find a balance. By the time a child starts asking for things beyond the family budget, it's acceptable to have a family meeting and discuss a simplified budget. This could be a pie chart that shows how funds are allocated, without necessarily revealing exact dollar amounts. For instance, We have approximately 280 left each month for clothing, entertainment, and school fees, and we have to split it up to allow this to happen.

Addressing Realistic Financial Challenges

Where families are struggling, it's important to be transparent. Children should know if the family is in the red each month and why this creates tension. We don't want our children to feel less than or to compare themselves to their peers. Asking a four-year-old how much money is "rich" compared to a teen demonstrates the complexity of understanding cost of living. These concepts are often beyond their grasp, and even minor fluctuations, like a 25-cent increase in gas, can significantly impact families.

In conclusion, while it's important to be transparent with children, it's equally important to maintain the appropriate level of financial information. This balance can help children develop healthy financial habits and attitudes without the stress of adult concerns. By teaching them to appreciate what they have and manage their expectations, we can set them up for a future of financial stability and happiness.