Are we poor?

If you have kids who talk as much as mine (gee, wonder where they picked up loquacity as a trait), conversations can go nearly anywhere. My boys, ages 9 and 6, are quite interested in money lately, a phenomenon driven in part by the tooth fairy and their discovery of gift cards at a recent birthday party. Here is a recent excerpt:

"Mom, is the reason that I can't have the Lego Batman DC set because we are poor?

"We are not poor."

"Well, if are rich, then why can't I have it?"

"I didn't say we were rich. We aren't rich."

"Mom . . . . [big sigh of frustration] . . . Are we rich or are we poor?"

I recently read the Opposite of Spoiled by Ron Leiber, a NY Times money reporter. He provides straightforward advice on how to handle these questions and more. Even if one takes a slightly different tact with their kids, I completely agree with his main point:  parents should not avoid these conversations because they are uncomfortable or inconvenient or difficult. Kids talk about this stuff and draw conclusions. Creating a conversation is a way to share your values and learn about your children.

We often lament the lack of financial literacy among young adults, but literacy--in the sense of being able to understand APR--likely isn't the real concern of parents. It is helping their children have a sense of why money is important, how one gets it, and most importantly, how to make wise decisions about it. These are concepts well beyond what we can or should put on our schools or demote to "literacy." They reflect important value choices. 

When I served as California Monitor working with families facing foreclosure, one of the most common fears that emerged was that kids would discover their family's financial problems if the family moved. I certainly understood the difficulty but I tried to reassure parents that children are going to face ups and downs--financial and otherwise--throughout their lives, and that simply explaining that a different house was a better choice for the family and a better fit with their money was probably best. We woefully lack research about the effects of downward mobility on children, with some of the only research dating back to when I was a kid in the farm crisis.

While Lieber's book is definitely aimed at the upper swath of America's  99% self-identified "middle" class, he has some thoughtful ideas about how to address kids' concerns about money problems as well. In today's economy of mobility and instability, parents across the income range and wealth spectrum will face hard questions from kids.  To get updates from Lieber on his work, go here.