Are you prepared for a time when your kids might ask you “How much do you earn?”.
For most parents, this is a super awkward question to answer. Discussing salaries is a taboo subject (sadly). Therefore, we don’t want our kids sharing our personal financial information with their friends.
Whilst I don’t claim to be able to provide the best response, in this blog I have set out some things to consider to help turn this awkward question into a teachable money moment.
Side note: Companies love that people don’t share their salaries as it allows them to pay certain people more without it being disclosed. Hopefully this will change in the future and the increased transparency will help reduce some of the unfair pay gaps that we all know exist.
What not to say!
As I’ve mentioned in other blogs, it is really important that we help our kids have a positive mindset towards money. We want them to be excited to learn about money. Therefore, we need to avoid shutting them down if they ask questions about money, even if they are awkward questions.
Here are some things I would suggest you avoid when answering the question:
“That question is very rude!”
“We don’t talk about that!”
“That’s none of your business”
These responses will make kids feel that money is a bad thing and could result in them avoiding asking more questions about money in the future (which isn’t what we want).
Find out why they asked the question
When you are first asked the question, why not try saying:
“That’s a really interesting question, why do you ask?”.
This first response has a number of parts to it:
Gives you a bit of time so you can get over the shock of being asked the dreaded question 😱
“That’s a really interesting question …” keeps it positive and shows you are supportive of their curiosity.
Children might have many different reasons for asking this question which can help you respond in an appropriate way. They might have heard about homelessness and that’s on their mind. They might have seen the price of something expensive and want a reference point or heard about someone making / losing a lot of money from somewhere. With an understanding of where they are coming from, you can tailor your response, e.g. "Don’t worry, we earn enough to make sure we have a roof over your head and food on the table, even if things go bad".
Should you tell your kids how much you earn?
There is no right or wrong answer to this. Some parents are happy to share this information. Others might want to keep it to themselves for now.
The key is to make sure that your kids understand that not everyone is comfortable sharing how much they earn with others. Therefore, they shouldn’t tell other people without your permission.
Regardless of whether or not you are comfortable telling your kids about how much you earn, the fact that they have asked the question opens up a lot of teachable money moments which I recommend you discuss with your kids.
Teachable money moments
Rich vs Wealthy: Use this opportunity to remind them that it’s not about how much you earn, it’s about how much you save. This is a really important lesson for kids to learn. I know plenty of people who earn a high salary but they also spend a lot so have little to no savings, i.e. they are 'Rich' but not 'Wealthy'. On the other hand, I also know people who don’t earn a lot but do save / invest so are a lot more financially secure.
For my daughters, I tell them that if they save and invest their money, they are planting a ‘Blue Tree’ (hence the name of my website). I let them know that there are lots of people who have earned a lot of money but have less Blue Trees than them. Luckily for me, they love growing their Blue Trees, especially as they know that their Blue Trees will produce more seeds and help them grow more Blue Trees in the future.
If you haven’t already, I would strongly encourage you to tell your kids about the Millionaire Janitor. This will help them appreciate that you don’t need to earn a lot in order to become very wealthy over time.
Family money values: One of main reasons why kids ask this question is because they are wondering why their friends have something they don’t. For them, they assume it’s because their friend's parents earn more (hence the question). However, it’s not always the case. It could be that you don’t value the same things as their friends' parents.
When I was growing up, one of my close school friend's parents were building a massive barn conversion and they had a flashy sports car. I always thought his parents earned a lot more than mine. I later appreciated that my parents already had a nice house so they didn't value moving. They placed much more value on saving so they could retire early (which they did). My old school friend’s parents are still working.
Discuss with your kids what you, as a family, value the most. It might not be what their friend's families value.
Taxes and Expenses: As your child gets older, then it is a good idea that they have some sense of how much they might earn for different jobs. This allows you to open up the conversation about paying bills and tax. We need kids to appreciate that if someone earns £50,000 (say), they can’t simply go out and spend £50,000. A lot of that money will go towards paying tax, rent / mortgage and bills.
I remember when I first got my graduate job and was told the salary. I kept thinking I’d buy a nice car. It wasn’t until I experienced the pain of paying tax and bills that I realised it would be quite a while before I’d be able to get a nice car.
Power and happiness: Just because someone earns a lot of money, doesn’t make them ‘powerful’ or ‘happier’. Many people who work in high-paying jobs actually say they have low levels of job satisfaction (which is linked to happiness). Whereas, teachers, nurses and firefighters have a high level of job satisfaction, as they feel they are making a big difference. Sadly, not all jobs get paid as much as they may deserve.
We really don’t want kids to think that they shouldn’t respect certain people just because they don't earn a lot. It shouldn't matter how much someone earns, you should treat everyone with respect.
Personally, I say to my daughters, “I hope you have money in the future but I care more that you do what makes you happy and you are kind and respectful to everyone.”
Summary
Whilst it’s not essential for kids to know your salary, it is important they don’t focus just on how much someone earns.
If they ask the question, 'How much do you earn?', first find out why they asked it and then use it as a teachable moment to discuss:
Rich vs Wealth
Family money values
Taxes and expenses
Power and happiness.
I hope this blog has helped you think about what you would say if your kids ask you ‘How much do you earn?’. I would love to hear your thoughts or experiences on this topic in the comments.
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P.s. any children’s birthday parties coming up? Why not buy the birthday boy/girl a copy of Grandpa’s Fortune Fables so they can start learning about money in a fun way.
