Should you tell your children how much you earn?

AS children grow older and become more aware of lifestyle differences between friends, one question that usually comes up is how much their parents earn.

Certified financial planner at Alexander Forbes, Kerry Sutherland, shared her opinion on how to deal with this curious question.

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A number of parents discuss money with their children as it is a valuable lesson to promote financial independence when they grow older.

The older children become, the more comparisons they make with their friends on the playground about the size of the house, the cars they drive and fashion worn over weekends.

Before they enter high school, they can already work out very quickly that different incomes yield different lifestyles.

‘You can tell them that you understand they have questions about money and how much you earn.

‘Answer it by rather talking about what food, toys, stationery, extramural sporting activities cost, and if this can be afforded.

‘Saving for things such as holidays can also be discussed,’ said Sutherland.

In many cases, an exact number is meaningless for a child, as they would rather want to compare for better understanding.

‘You need not tell your children how much you earn, but you can use it as a motivator to encourage them to work harder at school if they wish to achieve a certain lifestyle as an adult.’

‘When these line of questions arise, use the opportunity to discuss basic financial planning.

‘Explain to your children that a lifestyle is not always about what you earn, but that it is also about how you manage your money.

‘You can discuss budgeting, keeping debts as low as possible and, of course, the compounding benefits of long-term savings.

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‘It is important to emphasise that it’s not wise to spend all you earn every month, as when you reach retirement age, you must have saved enough to see you through your retirement years,’ Sutherland says.

‘By telling your child how much you earn so they can brag to their friends, is not helpful.

‘If it’s to explain why you can’t afford a fancy holiday, then just explaining this will suffice. It’s also not necessary to treat it like a secret.

‘If your adolescent asks, it is important to be honest, open and authentic in your answers.’

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