Just as you can be sure that your child will one day ask where babies come from, so you can be certain that you'll be fielding tough questions about money. We're not talking about simple curiosities, like why a nickel is bigger than a dime if it's worth less, which can be answered easily by checking the encyclopedia. We mean the type of questions that call for you to disclose intimate details about your finances or otherwise explain why you live the way you do.
As with questions about sex, honesty is key in satisfying your child's curiosity about money -- but only up to a point. "Telling the truth doesn't mean telling the whole truth. It means providing as much information as your child can handle at the time," says Miriam Stoppard, M.D., author of Questions Children Ask. "You can always add facts when she's older."
Continue reading for some tough questions that kids ask and some expert advice on the best answers.
Contributing editor Diane Harris has written a book on women and finance.
"ARE WE RICH?" OR "ARE WE POOR?"
No matter what your actual circumstances, the answer is always no. "Even if your household has a lot of money, you don't want your child thinking you can spend freely on anything you want or to run around the neighborhood bragging," says Willard Stawski, president of Cash University, a Grand Rapids company that makes financial-educational materials for kids. And if cash is tight, you don't want your child worrying about whether he'll have a roof over his head or food on his plate.
To satisfy your child's desire to figure out where your family fits in the financial scheme of things, start by saying you're somewhere in the middle and that there are people who are poorer than you and people who are richer. Then add a reassuring generalization about your financial status: "We have enough money to buy food, clothes, and other things we need."
It's also a sound idea to remind your child that there are good and bad people all along the money spectrum. "Let your kids know that rich people are not inherently better than poor ones," Stawski says.
"HOW MUCH MONEY DO YOU MAKE?"
This is one question where total honesty is definitely not the best policy. If your child is younger than 12, for instance, your answer should almost never include a dollar amount. Not only would the information be broadcast all over the neighborhood inside of a day, but disclosing your income wouldn't really tell her anything. "Children often can't grasp the meaning of numbers in the thousands, let alone tens of thousands," says Dr. Stoppard. "Young kids especially will inevitably think you're terribly rich, because no matter how much you earn, the amount will seem staggering compared with their own pocket money."
If your child is 6 or younger, a simple reassurance that your family earns enough to take care of her needs and, in all likelihood, quite a few of her wants, may be all that's required. Older kids, however, will probably want more detail. For them, St. Louis financial planner Ellie Williams Clinton, coauthor of 101 Great Answers to the Toughest Financial Questions, suggests shifting to a discussion of what it takes to earn a good salary, using your own circumstances as an example. Take the opportunity to emphasize your family's values regarding the role of education, hard work, and persistence in achieving financial success.
For children age 8 and older, you might compare different careers to underscore your point and give a general idea of what different jobs pay.
"WHY DON'T YOU JUST GET MORE MONEY?"
Kids often ask this of Mom or Dad when they've received a negative answer to a "Can I have...?" question. Paul Richard, executive vice president of the National Center for Financial Education, in San Diego, recommends countering with a question of your own: "From where?"
The answer may surprise you. Young children often think that money comes out of machines; if you need more, you just go to the nearest ATM. They may not realize that the way you get cash to put in the bank in the first place is because you get paid for the job you do.
So seize the chance to explain the mechanics of acquiring and saving money. With kids 5 and under, keep it simple: "When Mommy and Daddy go to work, our boss pays us to do our job, and we then put our money in the bank to keep it safe." With older children, you can move to a conversation about the importance of saving money so you have something set aside for your future as well as your current needs.
"HOW MUCH DID OUR HOUSE COST?"
Cite an actual figure and you can be sure that the value of your home -- or your car, your big-screen TV, or whatever other big-ticket item your child is curious about -- will soon be common knowledge around the school yard. For the most part, kids age 12 and under are constitutionally incapable of keeping such details to themselves, and it's unfair to expect otherwise.
Instead of being specific, give a general sense of what such items cost, using a medium of exchange she can understand, suggests Stawski. Substitute Barbie dolls, Beanie Babies, or some other prized possession for dollars. Then you can explain that houses generally cost at least as much as 5,000 Barbie dolls and often as much as 10,000 or more.
"WHY IS MY FRIEND'S CAR NICER THAN OURS?"
Kids spend a lot of time comparing themselves with their peers. Rather than get into a debate with your child about whose family has more or better stuff, you can gently turn this question into a discussion of the different priorities that people have for their money. You might point out, for example, that your family chooses to go on a nice vacation every year and save money for college rather than drive a fancy car or live in a big house. "You want to get across that there are only so many cookies in the cookie jar," says Arva Rice, director for economic literacy at Girls Inc., a nonprofit group dedicated to boosting girls' self-esteem.
If there is a big discrepancy between your family's income and that of your child's friend, talk frankly about how different circumstances -- the presence of both parents in the household, for instance, or the fact that both Mom and Dad work -- play a part in how much money a family has to spend.
No matter what money question your child raises, though, be prepared to answer thoughtfully rather than brushing the query aside. "If you put as much thought into how you'll answer money questions as you do into how you'll answer sex questions," says Rice, "you'll do just fine."