How Much Should Children Know About The Family Finances?

The following post is by MPFJ staff writer Travis.  Travis is a customer blogger for Care One Debt Relief Services, and also appears weekly at Enemy of Debt.  Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family.

“Daddy, did I mess up your budget?”

It wasn’t a question I had expected from my eleven year old daughter, and it took me by surprise.

I was on furlough from my job the first week in September, and would only be paid a portion of my salary.  When I was informed of the furlough a few weeks ago,  my wife and I immediately reworked the budget to prepare for the reduction of income which would affect us the second half of the month.  We then held a family meeting telling our two children what was about to happen, but assured them that through careful planing, and watching our spending we would be OK.

The weekend before school started we took the kids shopping for some new clothes.  We told them because of the furlough we wouldn’t be able to buy them all the new clothes that day that we had originally planned.  We had an amount we could spend on each of them now, and we’d stage in additional items over the next few weeks.

We visited several stores in the mall, and played several games of “which one do you like the best?” in order to stay within the allotted amount.  We felt really good about what we had been able to get for each of our kids until we remembered on the car ride home that we were supposed to get new shoes for our daughter.  I took an exit off the highway, and soon after we walked out of a nearby Target with a new pair of shoes.

Suddenly her question made a lot of sense.

I had noticed that my daughter had acted a little strange as she was trying on shoes.  We had made a big deal at the mall that we had spent exactly the amount we had allocated for school shopping, so she knew that purchasing the new shoes would result in us overspending.  She has seen my wife and I discuss and even argue about money in the past and can see the stress it puts on her parents’ relationship.  She was aware of the financial challenge of my furlough and was worried the impact her new shoes would have on her family.

That’s quite a burden for an eleven year old.

My wife and I are using our journey out of debt as a tool to teach our children about finances every chance we get.  I suspect that we share more about our finances with our children than most parents.  We try to balance telling them as much as we can, without crossing the line and giving them specific numbers.  We also try to balance exposing them to the challenges we have in life (like my furlough) with ensuring they see us performing our bi-weekly budget discussions and concluding them with a smile on our face.  We want them to see that handling the family finances can be hard, but necessary and can be done successfully without arguing.

What I don’t want is for our increased exposure of our finances to cause them to worry, so it was important for me assure her that everything was OK.  I told her we had some extra money set aside in case unforeseen things popped up.  We had wanted her to have some new shoes for school as her current ones were looking pretty shabby and her feet had likely grown.  She hadn’t seen it, but her mother and I had a quick discussion while she was trying on shoes that we would use some of those funds for her new kicks.

Readers, what do you think?  Are we exposing too much of our finances to our kids causing them to worry unnecessarily?  How much of the family finances would you expose to your kids?

Share your experiences by commenting below! 

Comments

  1. I think it is good for them to know a little, but not to the point where they are stressed.

    One of the reasons why I don’t get along with my mother is because she always made her money problems OUR money problems. Starting at the age of 11/12, she already had me helping her pay her gambling bills (my parents were divorced, and my dad did not know). I was working more than she did and she constantly guilted me into giving her money.
    Michelle recently posted…Are you looking for successful freelancing tips?My Profile

  2. Before disclosing about our finances to our kids, we need think about kids’ age whether they are ready to understand the situation. At some age like 12-15 years we can discuss with them what can we do as a family to mange our fiances. After some age like 16-17 years we need encourage them to contribute to family finance so that can be more responsible and take initiatives about family finance. Thanks for your thoughtful post.

  3. Just as Michelle said, it’s good to have them know about budgets and the importance of not overspending, but not to stress them out. She surely got too much info and was scared she’d burden you too much. I think a good way to get out of this is to explain the child that the shoes are not an overspending and it’s a needed ‘investment’. It’s good you have a kid that’s so careful and invested in the family.
    dojo recently posted…Which of the simple money saving ideas can actually work for you?My Profile

    • She certainly is VERY invested in the family…she needs to have everyone happy at all times, and works very hard to cheer people up when she sense they are unhappy or that there is tension in the home. I really stressed to her that the shoes were necessary and we needed to find a way to get the shoes since she is growing, and wearing shoes that don’t fit will not be very comfortable for her. Thanks for your suggestion, Dojo!
      Travis @DebtChronicles recently posted…Being In Debt is NOT a Necessary Part of LifeMy Profile

  4. I think it’s good for them to know as appropriate for their age. I think the easy way out would’ve been not to tell your children about what was going on or just simply buy the shoes with no questions asked. I know that that knowledge is a lot for a child to handle, but the lessons you’re teaching them about being wise with money is invaluable.
    John S @ Frugal Rules recently posted…Christmas Shopping That Won’t Break the BankMy Profile

    • I believe it was necessary to tell them that we were cash constrained to buy them clothes, so they knew that we would be buying some now, and some later. I thought it would be a good exercise to have them know how much they had to spend, so they could really think about what items they liked the most. I guess the best case scenario, John, would have just been to remember that we needed the shoes. 🙂
      Travis @DebtChronicles recently posted…Being In Debt is NOT a Necessary Part of LifeMy Profile

  5. I was worrying a lot when I was young and then realized that my parents were really overdramatic. They were doing well but wanted us to know the value of things so they told us it was complicated for them to buy XYZ instead of saying they had the money but other priorities. I think it is good you learn what things cost but kids are not to worry about your finances.
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  6. I think it says a lot for the relationship you have with your children, that your daughter could voice her discomfort and you could have a conversation about it. It’s great that you guys have such an open family! I was always involved in my parents’ finances, but my siblings were not (I’m the oldest). Now that I’m married and out of the house, my mom and I still talk about her finances. When I have children, I’m sure we’re going to raise them to be aware of our money situation, but not stress them! It can be very hard to balance the two…
    Alexandra @ Real Simple Finances recently posted…Financially Savvy Saturday, Third EditionMy Profile

    • It wasn’t always this way, Alexandra. My wife and I didn’t talk about our finances at all – which is how we ended up with a pile of debt. Now we’ve come around full circle and talk about it all the time. we want our kids to enter their adult lives knowing the benefits of having everyone on the same page financially. Thanks for stopping by!
      Travis @DebtChronicles recently posted…I Love You Like A Blogger Roundup – 9/13My Profile

  7. Your daughter sounds wonderful! For an eleven year old she’s really quite attuned and knowledgable. It seems that you’ve already taught her a lot about personal finance. It sounds like there’s a fine balance between teaching your kids and telling them too much so they get stressed out. I’ll find out when I get to that point in life how to work it.
    Christine @ ThePursuitofGreen recently posted…Things I Wish I Could get my Money BackMy Profile

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