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.