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Airing Out the Family's Money Secrets

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Information for Your Child's Age

The time you share certain financial information and the way you do it depends on your child's age. Obviously, a 6-year-old won't understand the technicalities of bankruptcy, but he can grasp the concept that things are tight and that he can't have an expensive birthday party.

You may want to follow some guidelines in sharing family money information with your kids:

  • Elementary school age. For daily finances, tell them about limits on family spending in general. Explain that the family is on a budget (if it has one). Children should know some specific things that they can understand, such as whether your home is owned or rented, and whether you're saving for certain anticipated expenses that means doing without for now. Let them contribute ideas to a family wish list. In a crisis, share the fact that a crisis will impact the family's money. Tell them whether it's temporary or whether it requires re-engineering the family's finances.
  • Middle school age. It's time to get more specific about money. Children can—or should—understand at this age what things cost. Let them listen in on discussions about money. Encourage them to ask questions about anything they don't understand. In a crisis, children of this age also can handle more details. For example, in a divorce, they can understand why you need to move to a smaller home and why everyone must get along with less.
  • High school age. At this age, you can't keep things from them any longer (they probably already know the money score at home). Depending upon your situation, you might want to show your children your monthly budget, explain how much you spend for items such as groceries, and whether you're committed to saving for your retirement. You may want to involve them in your budgeting process, taking their input into account. Be sure to tell them where you keep important papers that may be needed in a crisis. As a minimum, they should know about your will, records of financial accounts (banks, brokerage accounts, mutual funds, and so on), and the names and numbers of financial and other advisers (your accountant, attorney, life insurance agent, stockbroker, and others).

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Excerpted from The Complete Idiot's Guide to Money-Smart Kids © 1999 by Barbara Weltman. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.

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