Why Don't Rich People Talk to Their Children About Money?

Nearly everyone agrees that children need to learn the value of a dollar, but how many parents are willing to tell their children the exact dollar figure of their own income? Turns out, not that many—and the more affluent the parent, the less likely they are to disclose their income to their offspring. The reasons for this are telling.

Writing for Motherlode, the NYT’s parenting blog, money columnist and financial advisor Ron Lieber examines the results of a study by market research firm Spectrem, which specializes in letting rich people talk about how they feel about money stuff. Lieber asked Spectrem to include some questions about family money discussions in the survey—mainly whether or not they talk about how much they make with their kids and why or why not—and they obliged.

The survey found that 17 percent of their respondents said that, by the time their children became adults, they’d share the details of their income. Fascinatingly, just as many—18 percent—said they’d never tell. Their reasons for not revealing their income ranged from reasonable to reflexively dumb.

It’s None of Their Business (32%)

This was the most popular (and let’s be honest, pretty dickish) response for why parents would not disclose their income to their own flesh and blood. Lieber adds that it is also possibly the worst reason you could give. He writes:

First of all, it’s not true; if you’re a child living with your family, its revenues and expenses affect you in all sorts of ways, so of course it’s your business. Older children have more than a passing interest in all of this too. “Of course it’s part of their business,” said Spectrem’s Cathy McBreen. “When the parents pass away, the children are going to have to walk into their house and figure it out.”

Might I add that cleaning out your deceased parents’ house, especially with no roadmap of their financial estate, has to be among the most stressful experiences in any person’s life. Don’t do this to your kid(s).

Worried How It Will Affect Kid (13%)

This reason apparently came up with particularly wealthy parents who didn’t want their kids to “aim lower” with the knowledge that they could fall back on their parents’ wealth. I think of this a bit like the reasoning behind not telling children their IQ when they’re young: If you find out someone else thinks you’re a genius, you run the strange risk of never thinking you have to try—and ending up painfully mediocre as a result.

However, as Lieber notes: Assuming your kid is not going to be motivated just because she knows you’re loaded is a pretty resounding vote of no-confidence. Being a slacker is a rich-kid thing but also just a person thing. Parents can disclose their wealth and also cultivate a work ethic; it’s certainly been done before.

Worried Kid Will Blab it to Other Kids, Families, Strangers (9%)

This is perhaps the most valid concern of all. It’s one thing to want your kids to know what you make—it’s quite another to want the entire swim class to find out. I love how often my 5-year-old discloses various things we’ve talked about to other kids, parents, and complete strangers, unprompted: “My mom doesn’t eat cheese,” she recently confessed to the guy ringing us up at the record store. “And she’s older than my dad. Like a lot older.”

Record store guy, smirking: “Robbin’ the cradle, huh?”

Cool, yeah, I’ll take that bag—not for the records though, for my head.

But you don’t have to tell a 5-year old what you make, or how old your husband is. This is why Lieber advises waiting until kids are teenagers, when you can tell them why to keep their traps shut to others about how much you make, with the added warning that a certain kind of talking about money makes you sound like a terrible jerk. (Ahem, many adults are never told this.)

Of those who do reveal how much they make to their kids, 61 percent said it made sense in case of emergency. The other reasons were just as reasonable: it’s a good education, it’s an introduction to what things cost, it’s a lesson in why saving money is good, it’s a demonstration of how to buy stuff.

Perhaps this is why lower-income parents are more likely to talk about money with their kids—they kind of have to. When your kid is going to hear “no” a lot when asking for things, it probably helps for that kid to be told why, to understand value in context of purchasing power, how her parent chooses what is worth buying for their family. Or in cases where the kid will actually be working soon to pitch in with household expenses, they will likely ask why they must do so when so many of their peers won’t be required to hold down some sort of part-time job at the nearby Foster’s Freeze.

Here’s the thing: Kids may not know what their parents make, but it’s fairly obvious what rough income bracket they’re in. Kids notice what other kids have, the size of their houses, their clothes, their toys. As kids get older, they could probably easily deduce your income down to a pretty reliable range anyway by simply using the internet. Many companies have salaries for most positions online, often posted by former employees. The value of every house and its record of sales is public record and online. The car you drive, the clothes you wear, the neighborhood you live in, the brands you advertise, the vacations you take or don’t take: All of this adds up to a class tell, a rough range of income.

But of course—and this is one of the most important reasons to have the finance conversation—this rough income range may represent desired wealth, not actual wealth. In a credit-filled capitalist economy, there’s a lot you can do in the space between your real income and the type of income you want to convey. You can look like a million bucks, drive a luxury car, and go home to a shithole. You can live in a huge house and be underwater in debt. Parents who live within this gray zone are perhaps less likely to disclose the specifics of their income discrepancy with their children, and become, in turn, more likely to pass this money-fudging habit on.

All that said: Does this really mean you need to tell your kid your actual, specific income? I don’t think so. There are many ways to help kids understand the value of money without having to know your exact salary. Knowing your exact salary opens you up to a specific kind of scrutiny, possibly the expectation that you “should” be able to afford certain things (without the nuanced understanding of how you, as a parent, value various purchases over others), or even resentment stemming from you not paying for certain things your kids thought you could afford but you felt were their responsibility (college, first car, etc).

As I’m sure you are all now thinking, most of this was addressed brilliantly in the King of the Hill episode “Rich Hank Poor Hank.” In it, Bobby is particularly concerned with money, what things cost, and how much they have. He asks Hank how much he makes a year, and why he never talks about it. Hank responds that he did mention it, “quietly and without mentioning any dollar figures,” then adds, “Bobby, only jackasses go around saying how much money they make.”

“Julia Roberts makes $20 million a picture. Are you calling America’s Sweetheart a jackass?” Bobby asks.

“It’s just vulgar,” Hank responds. “The amount of money a man makes is between him and the professionals down at the H&R Block.” (Tell #1: Rich people use accountants, not H&R Block.) Later, when Hank and Peggy are paying the bills, Hank laments raising Bobby so poorly that he would be so crass as to discuss money so openly. Peggy assures him: “We raised him to be uncomfortable about anything that personal!”

Later, when Hank gets an annual bonus check for $1,000, Bobby overhears them talking about it and mistakenly thinks Hank makes that much every day—which he immediately calculates to $365,000 a year. And at 20 years of work, Bobby deduces that this is a net worth of over $7 million dollars. They’re rich, and he can finally start spending like a rich kid.

The best part of the episode is when Bobby tells his friend and neighbor Connie that they’re loaded now, and she replies: “You don’t seem rich. You guys don’t have half the stuff we do. And everything you do have, we have a better version of.”

Eventually, after Bobby steals Hank’s credit card for a shopping spree, Hank has to tell him what he makes. The episode doesn’t actually reveal the salary he makes selling propane, but he does lay out his family finances, expenses, and even the entertainment budget, which Bobby realizes he uses entirely on buying CDs every month.

The episode laid out Lieber’s message: not telling your kids how money works—specifically, how it is allocated, for what, and why—is like not explaining puberty to a teenager and just hoping they never get knocked up. You can even use a similar approach. When a kids asks what you make, or where babies come from, ask very non-defensively, “Why do you want to know?”

It is a straight-up stalling tactic. But it gives you time to figure out the level of readiness, and your answer, and the level of detail necessary. And if nothing else, leaving the conversation open-ended is far less of a dick move than just saying, “It’s none of your business.”