“Mom, Dad, how much money do you make?”

This question might feel like a bit of a gut-punch for parents. I remember asking my parents this question over dinner. “It’s none of your business” was the immediate response. It was assumed that once I knew, then so would all of my friends. Maybe, but not if my parents respectfully asked me not to share the information. We know that we will be on the other end of this question in the near future. How will we respond?

Growing up, my parents rarely discussed money and didn’t enjoy working. In high school, I had no idea what it cost to live the life I knew. Should I strive for an annual income of $40,000 or $400,000? What was a realistic income out of college, and what was a realistic peak-earning income? In my mind, retirement happened when $1 million was saved by age 65. This was achieved through a retirement fund at work and savings accounts. When I took accounting in high school and we had to choose stocks as part of a national competition/education, my partner and I spent all our money buying stock in Starbucks. We figured since there was a Starbucks across the street from our open campus high school it must do well (now I wish I really spent a few hundred dollars buying Starbucks stock in 1995). Meanwhile, our classmates continuously traded stocks and were one of the top teams nationally. I didn’t get the big picture.

When I asked my parents how much they made, I was trying to learn where I was coming from and how to plan for my future. Ron Lieber guides parents through answering this question in his book Opposite of Spoiled. Start with telling your kids about all the fixed expenses you pay: rent or mortgage, gas, electricity, cable and internet, phone bills, groceries. If they’re still paying paying attention, move on to insurance: life insurance, health insurance, disability insurance, car insurance, renters or homeowners insurance, burial insurance, disability insurance. Had I heard all these routine monthly expenses when I was in high school, I would have been shocked, and scared. I also would have been satisfied with this answer, it’s much more informative than struggling to put an annual salary in context. It would have floored me to learn there are state AND federal taxes withheld from paychecks, in addition to social security and medicare. If you child is writing all this down, teach them how to use a spreadsheet and spend some time going over income and fixed and variable expenses for the month. They’ll likely be impressed how little is left over after standard expenses, both mandatory and elective.

Lieber has a few examples of kids who got a similar response as I did. Unlike me, these kids had the motivation to find tax returns, bills, check books. Today, it doesn’t take much to Google the average income of several specialties. State employees’ salary is public domain and fairly easy to find.

I know Ron Leiber’s approach would have been fulfilling to me as a teen, and we plan to answer our kids this way when they finally ask how much we make.

Check out our books section for more recommendations on how to raise financially healthy kids.

How did your parents answer this question? How have you answered this question with your kids? How were you introduced to finance? Please share your stories below.

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