Should You Tell Your Children How Much You Earn?

“An investment in knowledge pays the best interest” (Benjamin Franklin)

Children can ask some very awkward questions. Sometimes, it is difficult to give honest answers. So how much should you tell them about what you earn?

This topic might come up in all sorts of ways. Your child might ask why one of their friends lives in a much bigger house, or why someone wears old clothes. They might simply be blunt and ask a direct question like: ‘Are we rich or poor?’


Don’t dismiss the question

It is important to be aware of your reaction when this happens. Don’t simply dismiss it as none of their business.

Children base their relationship with money largely on what they learn from their parents. As a starting point, therefore, you shouldn’t make it seem like money is a topic to be avoided. If they are curious about it, help them to understand it and hopefully build a healthy appreciation of how finances work.


Put things in context

When children start asking questions like this, it’s useful to help them to understand that incomes can differ widely. Particularly in a country like South Africa, it is worthwhile helping them to appreciate that there are entrepreneurs and CEOs of large companies that earn huge salaries, and unskilled workers that earn very little. 

It may help to situate yourself on that scale rather than actually telling them your salary. Depending on the age of your child, giving them an exact figure for how much you earn may be meaningless anyway.

Understanding that people get paid differently for different jobs will also prepare them for thinking about their own financial futures, and the kind of career that they might want to follow.


Explain that income is not wealth

Perhaps the most important lesson to share with your children is that not everyone who seems rich, actually is. Buying expensive things is a sign that they are spending money, not growing their wealth.

Explaining this may seem complicated, but you can start by telling them that every month you get paid for the work that you do. That has to be used to pay for all sorts of essential things like food and school fees, as well as small luxuries like eating at a restaurant or buying toys. 

Some of it should also be saved every month so that at some point you can stop working and still have enough to live off. If you spend it all, that means you just have to keep working.

These are concepts that even young children can appreciate. And the younger you give your children an understanding of money, the more likely they are to grow into financially astute adults.

To discuss the ways in which you can educate your children about important financial concepts, speak to your financial adviser.