Would You Tell Your Kids Your Net Worth?

I was reading a comment on a website the other day about the fact they would never tell their kids their net worth.  Which of course to me sounded odd, but then again I do publish mine online for strangers to read. 😉

Yet it did get me thinking, how am I going to explain to my children when I finally retire that Daddy doesn’t need to go to work anymore?  According to my plan that would be roughly when the kids will be 14 and 12 years old when this will occur.  I’m somewhat tore on the idea of how to approach the topic, since on one hand I do want to be honest with them, but on the other don’t let them think they are rich (My wife and I may be, but they won’t be).

I think the approach used will change based on their ability to understand the numbers or not. I do think I will explain the basic concept of we lived below our means for many years and saved the extra money.  After we invested the extra money it began making its own money.  Once our invested money made more income then our current spending I didn’t need to go to work anymore unless I wanted to.  From there I’ll likely just answer questions.

Yet for now I don’t hide our conversations about money.  It’s just something that Mom and Dad talk about in front of the kids.  Besides when I comment to my wife that our investment accounts are nearly $200,000, the kids never made a comment.  To them it was only a number and frankly they don’t have any context for it.

I think it helps that we never argue in front of the kids, instead we endlessly debate things.  So they are used to hearing bits of conversations on ethics, social policy, government debt, social dynamics….well just about anything that either one of us reads during a day.  So money really isn’t a taboo topic in the house which should help with things when I do have to sit them down and explain: Daddy got a new job as a private wealth manager…for my wealth.

So would you tell your kids your net worth?  Why or why not?

10 thoughts on “Would You Tell Your Kids Your Net Worth?”

  1. I have seen this happen over and over again.
    Either someone is an only child (and the only heir), or knows that when they turn x years old, they will be getting money from a relative.
    Every one of them that I have known like that, seem to acquire a “I’m not going to have to work once I get my inheritance, so why should I make an effort at building skills or a life?”

    I would say it would be safe to say you are retired (don’t forget that 40 is old to a 12 year old), and also assuring them as they get older that you do have enough to cover your needs.

    Perhaps after they are established in their work ethic and have a plan and are responsible for their own lives, maybe then share more information if you want.

    In the end , it depends on the kids and what they are like, but personally I fell there are somethings they don’t need to know at certain ages.

  2. It would depend on my kids age. If my kid was under 10 I would probably tell them what I make a month (or withdraw a month) and where most of that goes (housing, food, taxes, etc) so that they have it in context.

    Once they are old enough to understand interest (usually grade 7 or so) I would be more then happy to explain my net worth and why I can only touch a small percentage of it each year so that it doesn’t run out.

    It depends on the kid but once they can put the number into context they are capable of understanding what the amount means.

  3. I don’t have kids, but if I did I don’t think I would disclose net worth until they were fully independent and in charge of their own money. It would also depend on the personalities of the kids involved.
    I have a rough idea of my parents net worth – they retired at 54. And they are among the very few who know of my own plans to retire by 50. So because we have no intent or need to rely on each other financially, we can share that info freely.

    The reverse could also be an issue – do you tell your parents YOUR net worth? If there was a chance I thought my parents would try to go after my money, I wouldn’t disclose my net worth to them. The same would be true when disclosing finances to children.

  4. I was once married to someone who was very much aware of his parents’ net worth and his likely inheritance. I refer to him as the Heir In Waiting. This tainted every decision he has ever made. All his life he used it to justify not working to his potential, for buying cars and toys he couldn’t afford, taking trips to Europe every year for the past 10 years or so (after all his parents are now in their 80s and 90s so it can’t be long now) and somehow getting enough credit to do so. He doesn’t own a house but rents in an area keeping with the image of his future inheritance and struggles to keep up with the Jonese. I am someone who makes their own way and I couldn’t stand the stress of the bills, etc. so eventually I left after he was laid off in his late 20s and decided he didn’t need to look for work again (he got a job within a week). He re-married and his second wife and son share the same attitude. HIs parents don’t often indulge him but have had to bail him out sometimes when things got really desperate and I know they have grave concerns. Their other son became a successful doctor. We all remain on good terms – he has lots of good traits too and I like his parents – but sometimes he complains about his son’s sense of entitlement! The son we share together has no idea of my net worth and has an excellent work ethic. So be very, very careful about disclosing. I know others in this same situation with similar results.

  5. Interesting comments! Our net worth doesn’t really resonate with our 17-year old son. But what he is fully aware of is the value of his RESP and how he must contribute his share to the college-kitty (but this may not work if he were a different kid). I’m lecturing now(yikes)on managing cash flow since he is required to pay back the cost of purchasing his first used car. I watched him panic when he handed over his payment. Yet I smiled inside when I also heard he’d called his boss for more hours at work.

  6. We don’t have kids but if we did I’m guessing the numbers won’t mean much to them.They likely would want to know why I don’t work like other dads more than anything. I agree with one commenter above that 40 is old to a 17 year old. If I explained I would tell them the truth but numbers mean nothing. Share your successes and how they should plan for their future. I’d worry more about motivating them to be their own person, getting an education and making their own path in this world so one day they too can possibly retire early.

  7. My kids know my net worth because they lived the dream.

    They learned about budgets, savings and not keeping up with the Jones.

    We taught our kids through example how to be a millionaire so they can and will repeat the behaviour. They have all the tools.

    My kids are happy they won’t have to support us! Lol

  8. Explain to them how you plan to exit this world with $0. Then they won’t be expecting an inheritance. 🙂

  9. I know my parent net worth (about 2m$). They know mine (850k$, I’m 42). I will be completly transparent with my kids.

    My dad “plan” was to make the familly progress through generation.

    The only thing he got from his parent was a good education.
    They gave me a good education and enough cash and trainning to start on the fast track of wealth accumulation.
    My kids will get the same and more.

    To me it would be immoral to take everything my parents gave me and leech off it the rest of my life.

    Taking an early retirement is not a plan for me. Making my familly get from 7 digit wealth to 8 digit wealth and making sure my kids are smart enough to keep it growing is my goal.

  10. This is a no brainer. How can you teach your kids necessary money skills without showing by example? I may not have known exactly how much my parents had (until recently – I now provide advice to my parents on managing their portfolio), but I can’t imagine how they could have effectively taught me the necessary skills without showing me what they themselves were doing with their finances. If you’re worried that your kids will develop an inheritence syndrome, just make sure to tell them you’ve also drawn up your will and it includes your favourite charity.

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