Money Talks

MCF Intersection

A regular snapshot of the trends, news and research in the world of philanthropy — and its impact on business.


Conversations about money are often awkward under the best of circumstances, even among adults. Throw in the difficulties that many parents and teens encounter in communicating openly with each other about nearly any sensitive topic, and the thought of talking to your teenager about money can be daunting. Make it personal—talking to your teenager about your salary, something you may never have revealed to anyone except your spouse or partner—and your anxiety might climb to another level.

But should you have that conversation? Or would it actually be better—perhaps to your great relief—not to?

Indications are that many parents aren’t inclined to talk to their children much about money at all. A survey last year by T. Rowe Price of Americans age 18 to 24 found that about 40% of them thought their parents were reluctant to talk to them about money and finances when they were younger, and one in seven said their parents never discussed financial topics with them when they were growing up.

Financial advisers say you should talk to your children about money, to prepare them for financial independence when they get older. But advisers differ on whether those discussions should include telling your teenager how much you make.

Some say that revealing your salary is an important part of educating your children about money—a key piece of information that will help them make sense of the family’s finances and learn how to manage their own. As a bonus, the openness and trust you show in telling your teenager how much you make can help bring you closer to each other, this argument goes.

But others say the opposite is true: You can give your children a thorough financial education without ever revealing your salary, and telling them what you make can actually distort their understanding of money. Knowing how much you make also can help drive a wedge between family members, some advisers say.

Manisha Thakor, vice president of financial well-being at wealth-management firm Brighton Jones, says parents should reveal their salaries to their teens as part of their children’s financial education. Beth Kobliner, a financial-literacy advocate and author of “Make Your Kid a Money Genius (Even If You’re Not),” says it’s better for teens not to know what their parents make, at least until they’re applying to colleges.

YES: It’s a great chance to teach children about money
By Manisha Thakor

Parents should be completely upfront about their salaries with their teenagers. It’s good for everyone involved.

To have a fully informed discussion of family finances with their children, parents, of course, first need to take a close look at their money situation. This by itself can be a positive step, allowing parents to find areas ripe for change.

Most important, teenagers will benefit from getting a real-life education about what it takes to support oneself. They will also have a better understanding of why Mom and/or Dad says no to certain purchases—be it because they are truly unaffordable for the family or that they aren’t in alignment with the parents’ financial values.

Beyond the educational benefits, teenagers may even be grateful to parents for trusting them enough to have this kind of mature conversation.

Baring all financially is one of the most intimate rituals a household can go through. It can create a surprisingly strong family bond, and it can clear away years of built-up unspoken assumptions, expectations or hurts.

Now, if the mere thought of this is giving you palpitations, let me offer some reassurance. First, you’d be an outlier if you didn’t find discussing family finances with your children awkward. Second, this shouldn’t be a one-shot conversation. Salary disclosures should happen as part of a broad discussion of financial matters that takes place over a period of time, and you shouldn’t tell your teenager what you make until he or she is mature enough to process the information.

In other words, the idea is not to sit your 13-year-old down one night to bluntly announce, without any prior discussion of family finances: “Hey, Mom makes $430,000 a year as a general counsel, and Dad makes $52,000 a year as a physical therapist.” That would be like flipping a switch that turns on a blinding light.

Instead, think of your child’s financial education as gradually turning up the light on a dimmer switch. I suggest a three-step process that can take place over whatever period of time is appropriate for your family—from weeks to years.

Start with needs, wants and savings. Talk to your teen about how much your household allocates to these buckets and their subcategories.

Next, explain taxes to them, emphasizing the difference between a salary and take-home pay. Only then should you share specific salary figures, and they should be presented in the context of the national range of household incomes, to give your teen a better understanding of what your income means.

There is no particular age at which a child is prepared to process information on your salary. The pace of this process should be dictated by your teen’s maturity.

The most vital part of this disclosure is explaining how your income figures relate to the cost of maintaining your household, so that your teen understands not just how much you make but how you manage your money. This is something that can’t be achieved nearly as well by talking in broad terms about finances without disclosing the actual figures involved.

Not disclosing parental salaries also perpetuates the notion that money isn’t something to be talked about openly. And that can lead to teens growing up to be afraid to ask for raises or comparison shop or negotiate a home price or talk to their spouse comfortably about money.

Opponents will say that if the salary numbers parents reveal are big, it could instill in teens a desire to spend foolishly in an effort to keep up with the Joneses. Or if the numbers are lower than what their friends’ parents make, teens will feel ashamed. Or if there is a big difference between the parents’ salaries it will affect how their children feel about them.

It is my personal opinion that openly discussing these issues, using them to teach teens crucial financial lessons such as emphasizing that people shouldn’t value themselves or others according to how much money they make, can be life-altering.

Transparency—and the understanding it allows—is a key way parents can equip their teens to make smart financial decisions in the future.

NO: Revealing your salary can be harmful to children
By Beth Kobliner

Your children don’t need to know the size of your paycheck. In fact, they are better off not knowing.

Whether you earn $50,000 or $5 million, a specific salary figure isn’t helpful in teaching important money lessons. Consider one of the most common complaints I hear from parents—that their children don’t appreciate how good they have it and complain about what they can’t have. Although it might seem like knowing your salary will help your children understand what you can and can’t afford, it won’t.

Why not? Because without a thorough understanding of economic subtleties like the cost of living, family size and your tax burden—subtleties that teens, and especially younger children, probably can’t totally grasp yet—your salary is just an abstract number.

And even if you think you’ve given your children enough context to understand what your salary means to the family, once you’ve put a number out there, they’re likely to fixate on that number and stop listening to what you’re trying to teach them. No matter what you make, it will probably seem like more than enough to afford those $150 sneakers.

This lesson can be taught better without the distraction of a salary figure. The next time your child complains that his friend is going to Disney World over spring break while he’s going to Grandma’s, acknowledge that there are families that have more than yours. Then add that there are plenty of children staying home over break—or working part-time jobs. For even more context, take him to volunteer at a local food pantry or homeless shelter.

Telling your teens your salary isn’t only unhelpful. It can actually be harmful. Does a big number make them feel like they should keep up with the Kardashians, with all the wild spending and borrowing that suggests? Will a lower one make them feel ashamed, especially if they think it’s below that of their peers’ parents? In a perfect world, eighth-graders would compare household incomes and then elaborate by discussing the economic sacrifices their parents make for the good of society, the added cost of caring for elderly relatives, the real-estate market where they live, etc. But the schoolyard is no utopia. Many children would prefer to score cheap points than take time to appreciate the big picture.

And if you earn twice as much as your spouse or ex, will your teens equate your value to the family with the dollar amount you kick in?

It’s too much information, too early. Parents can teach their children the key financial lessons they need to be successful and happy without ever revealing their salary.

It has been my experience that when children ask about salary, they’re often wondering about something else. Your children might be feeling uneasy about your family’s economic stability. Maybe you’ve been talking about layoffs at work, or even lost your job. Taking the time to reassure your children that your job is safe, or that a recent setback only means cutting back on restaurant meals, will go a long way toward addressing their real concerns.

If your situation is more serious, talk to your children about any coming changes that will directly affect them, from forgoing summer camp to moving—but keep the conversation positive.

But what if your teen keeps asking about your salary?

Compliment her on a terrific question, and note that it’s always interesting to learn about the family budget. Then say, “Although I keep the number private, I do want to talk about it.”

Explain that the median family income in the U.S. is around $62,000. With this context, you can give a sense of where your family falls on the continuum, without giving a specific number.

So, is there any time when you should tell your children what you earn? Yes, fall of senior year of high school, when your child is narrowing down her college choices and applying for financial aid (as most families should).

Your financial secrets will be revealed via the Free Application for Federal Student Aid. But knowing that your salary will help pay for something as important as education will make your child appreciate those hard-earned dollars a lot more.