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Sharing Your Finances With Your Children

My oldest teen daughter moved back home recently after having lived with her father for a short stint. She came back to me a bundle of nerves replete with panic attacks. The trigger for these emotions came as an astounding revelation to me—money, or the phobia of not having enough. It’s not that she is a material girl, quite the opposite actually; she is extremely frugal and never asks for anything. One evening she broke down and explained the cause of her emotional state of mind when it came to finances. She told me how her father always negatively remarked about how much he spent on her, from her insurance to her braces to her groceries. Now that she had moved back in with me, he had told her that he would no longer pay for her insurance, her cell phone, or her college.

I knew I had to work with her to help her relax about her financial situation. I hired her part time through her school co-op program to help manage my business. She is a hard worker and makes sure she gets her hours in each week. Given that she’s still in high school, I’ve made it clear to hear that she’s not responsible for any household bills other than her car insurance. She has been saving the majority of her income, which I think is terrific on the one hand but possibly not so healthy on the other; it depends on her motivation for saving. Is she saving out of her fear of being without money?

I decided that I needed to continue to get to the bottom of her hypersensitivity when it comes to finances. I started a dialogue with her about finances and I talked about the periods in my life when I struggled financially, including during her younger years when I was a single mom. During these years, she became very accustomed to budgeting, counting every penny, and even having had the electricity cut off once or twice in the past. For the most part, though, other than those rough patches, we have been very comfortable. Our “comfortable” may not be someone else’s idea of “comfortable,” but we always made it through the best and worst of times.

During our conversations, I asked my daughter if she would feel safer if I shared where our household stood financially. She actually got excited about the idea and we broke out Dave Ramsey’s “Financial Peace University.” I had been getting around to actually starting the program as soon as I could find the time, so this was the perfect opportunity for not only her to get some sense of financial security, but for me to improve my own personal finance practices.

So with Dave’s worksheets, we wrote down everything “we” owed each month. I then showed her what we were bringing in through my business. We created a new household budget together, and at her suggestion, she started planning budget-friendly home cooked meals instead of us eating out as often as we were. She also wanted to be responsible for paying the bills when they were due (not out of her pocket of course, but making sure the payments were properly made). Once she understood and gained faith in the rhythmic ebb and flow of money and how it is depleted and replenished in a continuous cycle, she felt much more powerful. This power, in turn, allowed her to relax and enjoy the fruits of our labor.

So we now designate every Thursday night for discussing finances. As part of these discussions, she has become very interested in investing, so we are investigating different possibilities. She has been very intrigued by Dave Ramsey’s program and is talking in Dave’s terms like “super savings,” “emergency funds,” and “wealth building.”

There is no more money anxiety for her, and she feels in control. She starts college next semester, but thankfully she’s not worried about where we are going to get the money to pay her tuition, because she knows where our household stands financially and that we can swing it.

I took a big risk sharing my finances with her since it could have made her even more apprehensive, but thankfully she is mature enough and gets “it.” Money is not something to fear, but something, if respected and taken care of, can multiply and enable us to live our lives to the fullest.

What do you think about sharing your finances with your children? My parents never spoke to us directly about it, but I knew that we were saving very little since our income was so low to begin with. I remember hearing my mother on the phone asking my grandmother to pay for her overdrafts at the bank. Luckily, my mother was a smart, thrifty shopper so we always dressed well and nobody would ever have known our family was financially unstable. It wasn’t easy, but it’s helped shape my fiscal responsbility.

I’d love to hear your comments on the subject below.


Melissa October 12, 2010 at 12:57 pm

My mother has always been very open about finances. While she didn’t generally get down into the nitty gritty of what we reported on the 1040, we were very aware of the ups and downs of the family business. We talked investing at the dinner table and monitored commodity prices religiously. My siblings and I helped write the checks (out of Mom’s account) for the electricity and phone bills, and would fill out deposit slips when checks came in. We all had the privilege of helping organize documents when an IRS audit came around.

Mom was very specific about what she and my Dad would contribute toward my college (they paid my rent, car insurance, and phone bill; I paid for my tuition & fees and other living expenses – all scholarships/grants/loans were my responsibility). I was encouraged to work for the family business and carry an external part time job. The money was mostly saved for college, but personal spending and giving to charity was also endorsed.

While specific numbers weren’t necessarily discussed, my siblings and I always had a good idea of how the family was doing financially. We were raised to be frugal and generally minimalists, and we ALWAYS knew how much was in our personal checking/savings/investment accounts and what our post-high school financial situation would look like.

Tyler WebCPA October 12, 2010 at 4:57 pm

I haven’t gotten around to discussing money with my two year old yet but I certainly plan on it when the time comes. When I was a kid my father was very creative about making money while my mother was in charge of making sure he didn’t spend everything he made. Although they didn’t much speak about it with me I got a great lesson just by observing. With my own son I hope to bring in him and involve him in the family finances as a stakeholder gradually as stakeholder in the family finances, as you are with your daughter.

Tim of Angle October 12, 2010 at 4:58 pm

Outstanding idea. Would that more parents did as you have done. She is now much better prepared for life than 90% of her contemporaries.

NCN October 12, 2010 at 11:28 pm

I have just started to talk about household finances with our oldest. She’s 11, had some questions, and I gave her some basic answers. As she (and the others) get older, we’ll introduce her to more advanced money management techniques, and let her in on the details.
As a kid, I was very stressed about money, and never felt comfortable asking my parents for it. I started working at 14, but didn’t learn money management until I was almost 30. My goal is to create an environment for my kids, so that they will feel more comfortable with me, and feel free to talk about finances.
Great post, which really got me to thinking –

Niki October 16, 2010 at 8:49 am

This is a great post, it seems like most parents are the opposite with their children and feel it is none of their business. But then you have the same cycle of ignorance when it comes to finances. Our household focuses on saving and budgeting and I feel it is a gift to give our children to learn those techniques, it’s not easy.

Pam McCormick November 5, 2010 at 1:44 pm

My daughter is 32 and married 5 yrs now.Growing up I let her write my checks and balance the check book.In those days my paycheck got deposited into my checking account,for my husband he cashed his at the bank and came home with cash.She saw both methods,heard different opinions on money and budgeting.She does just fine now handling her finances.I think growing up she understood why sometimes we could not afford certain things or chose not to.She also understood how we worked as a team to pay cash for college.

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