How To Talk To Kids About Money

A Q&A with Ron Lieber, author of "The Opposite of Spoiled"

Today, I’m thrilled to be running an interview with Ron Lieber, the “Your Money” columnist for The New York Times, whose book The Opposite of Spoiled is incredibly helpful. I read it years ago, and then re-read it — it’s full of smart (and sometimes counterintuitive) advice on talking to kids about money and finances. His new book, The Price You Pay for College, is one that parents of older kids won’t want to miss.

I spoke with Ron over the phone a few weeks ago and asked him why and how parents should have conversations with kids about money and inequality, why he recommends NOT tying chores to allowances, and why it can be helpful to have your kids split their allowance money into “Spend,” “Save” and “Give” jars.

Ron, I loved your book. I re-visit it often and have recommended it to many friends. My first questions are basic ones: Why do parents avoid talking about money with kids? Why does it feel like we shouldn't give our children a straight answer when they ask, “How much did that car cost”? And why is avoiding these kinds of conversations potentially harmful?

I think there's probably at least three reasons people avoid these conversations. I think many of us, if not most of us, have some amount of shame about money — mistakes that we make, or examples that we set for our kids in the moment that we worry are inconsistent or are sending the wrong message. And there's an element of worry that if we say too much, our kids may go and blab about our personal information to other people in a way that will sound like bragging, and reflect poorly on our parenting.

Then I think there's a desire to preserve their innocence. If we can just protect them from all of this money stuff a little bit longer, that would somehow be good for them. And that's a lovely instinct, but it's not really practical. Part of our job — I'd say a big part of our job — is to satisfy their curiosity, because their job is to figure out how the world works, and how to navigate within it. And money is a big part of what makes the world go round. At least if you live in a capitalist system. It's only natural — not inappropriate or strange — it's natural that they have questions about this stuff. And it's our job to answer them.

This is so true for so many areas where we tend to not engage as parents — like about sex and about race — when actually, the more we talk about these things, the better.

Yeah, the sex one is really interesting, right? We don't really look forward to that conversation, either. We worry about whether we're going to do a good job with it. But there's a biological necessity to having that conversation, because, you know, puberty is going to happen. I think it's easy to fool ourselves into thinking that money's not going to happen as quickly as puberty is. But I would argue that money happens much sooner.

You mentioned the concern that kids might blab about personal information to their friends. Is that a valid concern? And if it is, do you actually recommend talking to kids about that? Like saying, “Don't tell your friends how much we spent on the house?”

I would encourage people to worry a little bit less about it. Chances are, your family is running around with a group of people where the majority of them are roughly equal to you in terms of socioeconomic status. So they probably don't care all that much about what you have and what you do. Remind yourself that if you’re posting vacation pictures on Instagram, or driving a car or wearing clothes or owning a house — the Zillow estimate is a matter of public record — you're already broadcasting a fair amount about yourself to the world. And as far as super sensitive stuff, like what you earn, we definitely don't have to tell them that until they're ready to handle it. I would argue that that's not the case until they're at least 14 or 15.

One thing I struggle with is how to talk to my kids about why people have different amounts of money. On the one hand, I want my kids to know that there are some things that you can do to increase your chances of succeeding in life, like working hard at school, not giving up in the face of challenges and stuff like that. But on the other hand, I don't want to imply that people who are struggling financially are in that position because of choices they made, because so much of these differences are fueled by systemic issues that are out of people’s control. What's your advice on talking to kids about why there are differences in terms of how much money and financial security people have?

This often comes up with the younger ones — first, with homelessness, if you live in an area where there are people who are unhoused and that's visible or obvious. I think the best way to answer the “why” should start with: “We don't always know what people's stories are. We don't know why or how some people ended up with more, or some people ended up with less, but the one thing you should know is that it's not always somebody's fault if they end up with less. Maybe they don't have a home because their family members kicked them out and made them leave for reasons that aren't fair. Maybe they're sick.

“And by the same token, the people who have more don't necessarily have more because they deserve it. Maybe they have a whole bunch of money because a relative gave it to them. And maybe they have a whole bunch more money because the area that they work in pays them a lot. But that doesn't mean that we should respect people less who earn less or have less, because some of the most important jobs, like being a teacher, don't pay as much as they should, given how important they are.” So the conversation can start there.

But I think for the little ones, one thing to keep in mind is that the right answer to any question is always “Why do you ask?” And it's not meant to be an accusation. There may be something specific that the kids are driving that, and you can answer that question, and not say anything else, and see if that satisfies their curiosity. And if it does, your work is done for the moment. And if it doesn't, they'll ask more things. But it’s possible that if you like launch into a sermonette on inequality, it will go right over their head, since it's not what they were asking about in the first place.

Let’s talk about allowances and chores. You argue in your book that parents should not tie allowances to chores — they should be totally separate things. Can you explain why?

We don't get paid for chores as grownups, and neither should kids. Chores are things that we do because we love one another, and we value at least a semi-orderly household. So it's as simple as that.

Another practical reason is that if we treat this like a job, the kids who are good savers are going to eventually collect enough money, and the smart asses are going to come to us and say, “Hey, I've got enough money for now and for the foreseeable future, so I'm going to quit my job.” And then what are you going to do? The logic sort of falls apart at that point. Then parents are like, “Well, how am I going to get them to do the chores, if there's no incentive?”

I'm not saying that there shouldn't be consequences. If they don't do their chores, you're still in charge. You're trying to teach them to be responsible. If you turn the internet off if the chores aren't being done, I think you can rest assured that it's all going to start up again. Or if you temporarily take away or suspend some privilege or activity that they value most highly.

You recommend that parents have their kids split allowance money into “Give,” “Spend” and “Save” jars. Remind me where that idea came from originally, and why you suggest it?

I don't know who first brought this up. It's not surprising that it's been out in the world for some time, because this is the way grownups do it, too. We just don't think about it that way. We spend most of what we make; we're also trying hard to save enough for short or medium term goals, but also, especially, the big one, retirement. And hopefully, we have enough left over to help people who have less than we do, or who need at least as much help as we do ourselves. So that's three jars. We might as well start early with helping kids think about their money in the same way, because we're in the adult-making business.

The other reason I like the jars is that it occurred to me early on that the all of the values and virtues and character traits that add up to the kinds of decent kids we want to put out into the world — the very values that the amount to the quasi definition of “the opposite of spoiled” — you can actually draw a direct line between those things and those jars. So spending is about modesty and prudence and thrift. Saving is about patience. And giving is generosity and hopefully a sense of gratitude for being lucky enough to be able to help other people or institutions that are important to you.

And then hovering over all of it is the curiosity, right? We want our kids to be curious: To have the curiosity that both causes them to ask questions about money, and then to think about and ponder the best ways to use what they have. And also perspective about their place in the world. That comes from the answers that we hopefully give them as to: Who has more? Who has less? Is it fair? And what can I do about it?

To read more, be sure to check out Ron’s book.

My New York Times Well newsletter last week was all about decoding dog behavior. I learned so much from interviews with dog cognition researchers — like that tail-wagging doesn’t necessarily mean a dog is happy and that dogs don’t lick our faces because they love us. I also provided practical advice on how to help nervous dogs and how to meet (and NOT meet) dogs you don’t know. Read it here!

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