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Answering Tough Money Questions


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.



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."