Should Your Kids Know Your Financial Situation?

by TTMK on March 29, 2015 · 3 comments

The following post is from staff writer Melissa Batai

Every week, my kids and I go to the park so they can play with other kids in our homeschool group. One little eight year old boy is the envy of the group because he has a motorized scooter. He let my son try it out. My son liked it, so the little boy, I’ll call him Joe, said nonchalantly, “You should ask your parents for one for your birthday or Christmas. It’s only a couple of hundred bucks.” With that he scooted off.

I *think* I looked normal on the outside after that comment, but inside, I was astonished for several reasons.

First, I spend a couple of hundred dollars TOTAL for my three kids for Christmas. I have never spent a couple of hundred dollars on ONE toy for ONE child for Christmas. Birthday presents are usually capped at $50. A motorized scooter will probably never be under the tree for my kids.

Second, Joe’s comment was as nonchalant as if he had told my son, “You can get a soda for 69 cents at the gas station.” He had no real concept of a couple of hundred dollars.

Third, I’ve often talked to Joe’s mother, and I know that they’re really struggling financially. His dad is only working part-time at a low paying job, and his mom started her own business a few years ago, but it’s not taking off the way she’d like. She’s currently looking for a full-time job. They’re behind on both their car and house payments.

On Not Explaining Your Financial Situation to Your Kids

I don’t know if Joe’s parents have explained their financial situation to Joe, but based on his attitude, I don’t think so. Joe is an only child, and his house is full of toys for indoors and outdoors.

Certainly, not telling Joe about their financial situation allows Joe a more carefree, idyllic childhood. Who wants to worry about money as a young child?

On the other hand, if his parents haven’t explained their situation, they’re setting Joe up in a way. Eventually the lifestyle they’re leading will come to an end, and that will be a shock to Joe if he doesn’t really know anything is wrong.

On Explaining Your Financial Situation to Your Kids

My husband and I have been paying off debt for a few years now. We still have student loans to pay off, and we’re on a very strict budget so we don’t go any further into debt. Our kids know about clipping coupons (my oldest, who is 10, is a real coupon maven), shopping sales, and garage sales. They know about our tight grocery budget. In fact, my nearly 5 year old will say to me, “No more groceries now, mama. You’ve spent enough.”

I don’t really like that they’re already so cognizant of money, but on the other hand, life is easier that way. They know that a motorized scooter is not in the budget; in fact, they’ve never asked me for one. They may mention somethings that they like, but they almost never whine and nag for things the way other kids do.

My Question for You

Do you think kids should have at least some awareness of their parents’ financial situation, or does the old saying “Ignorance is bliss” prevail here?

{ 3 comments… read them below or add one }

Mike March 29, 2015 at 6:33 pm

Letting children in on your financial situation helps them to understand life in “the real world.” Do we have to tell them all the nitty, gritty details? No. But going with the “ignorance is bliss” strategy will only result in children who don’t understand money and who will grow up to be adults with unrealistic financial expectations. Making our children money-wise will promote their success in the future!


David S. March 31, 2015 at 11:13 am

“Where ignorance is bliss, tis folly to be wise”. And in this case I think it applies. If ignorance is bliss (carefree, no concept of money and how hard it is, toys are endless) than prudence (or wisdom) is going to be treated as folly and the poor kid is going to end up with a heavy entitlement attitude. He’ll need to learn that toys come after great sacrifices.


Gary @ Super Saving Tips March 31, 2015 at 10:30 pm

I think it’s important for kids to know something about their family’s financial situation, but they don’t need to know everything and it should be kept age-appropriate. Understanding that there is a limit to the family budget, no matter how big or small that budget is, can be an important lesson that will set your children up for success in the future.


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