Parents assume that the hardest questions they will face from their children will be about life's great mysteries. But, there are practical questions that they might find more difficult to answer, such as: Are we poor? Or, Are we in the one percent? In fact, several recent studies have come to the same conclusion: Most parents today say they would rather discuss drugs, religion, death — even sex — with their kids than broach the touchy topic of money.
In these troubled financial times, discussions of wealth and economic inequality are sure to come up. Children are perceptive, and from an early age, they notice differences among their peers, including socio-economic ones.
Answering questions about income may be even more awkward when families are struggling to make ends meet or are suddenly afflicted by money troubles brought on by divorce, layoff, eviction or natural disaster. Last year's Tropical Storm Irene destabilized countless families and their finances.
As Don Peck observed in his book, Pinched: How the Great Recession Has Narrowed Our Futures and What We Can Do About It, earlier generations of Americans tended to live in communities that were more economically diverse than they are today. While this characterization may apply less to rural Vermont than other areas, Peck warns that as we segregate ourselves by socioeconomic status, we begin to lose our ability to identify and empathize with others less fortunate than ourselves.
In these times, how can parents impress upon their children the importance of financial planning and a healthy awareness of economic injustice?
For many children, the first lesson in microeconomics comes in the form of a piggy bank. John Pelletier, director of the Center for Financial Literacy at Champlain College in Burlington, says that a coin repository is a great way to start teaching children one of life's most important financial lessons: the value of saving.
"I believe that saving is like a muscle that a lot of us don't want to exercise," Pelletier says. And, like muscle memory, the earlier it begins, the more likely the behavior will become ingrained as a lifelong habit.
When children begin at age 3, 4 or 5 to set aside money for something they want, he says, it teaches them how to develop "saving goals" for the future. This becomes particularly important when children are teenagers and peer pressure to conform and seek instant gratification is more intense. Pelletier, who's the father of three boys, even set up a "Bank of Dad," which pays his kids 5 percent interest, in order to teach them the concept of compound interest.
Pelletier soon discovered that kids naturally develop their own "money personality." That is, some are naturally inclined to squirrel away their funds, while others prefer to "live for the day" and spend as though there were no tomorrow. Differing money personalities can also teach children about wealth inequality.
Children learn another valuable lesson in wealth and income when they start to earn their allowance — and Pelletier emphasizes the word "earn."
"I think an allowance is fine as long as there's actual work attached to it," he says. Children shouldn't view an allowance as a right or entitlement. Instead, he suggests it should convey the message that if you don't work, you don't get paid.
Finally, Pelletier believes it's important to teach kids the value of setting money aside to "give back" to the community, be it a house of worship, community fundraiser, food shelf or other local charity.
Pelletier, who lives in Stowe and previously worked in the asset-management field in Boston, says it was very important to him and his wife that they instill in their kids a sense of compassion for those less affluent than they are.
"One way to make them understand how lucky they are is to put them in circumstances helping people who aren't so fortunate," he says. "It's very visceral when you see it up close and personal, and you can't help but be grateful for what you have."
Better yet: go along, according to South Burlington psychotherapist Joyce Hagan. The way parents speak of and interact with poor people will make a much greater impression when children are trying to understand why some people are comfortable and others struggle. "Their action speaks louder than words," Hagan says.
On any given day, the Boys & Girls Club of Burlington serves about 250 kids from low-income families at its three Chittenden County locations. About half are children of color; one in five is a new arrival to the United States.
About six years ago, the nonprofit launched a program to teach sixth graders about financial literacy and the importance of an education to get ahead in life and break the cycle of poverty. But after five years, executive director Mary Alice McKenzie and her staff made a startling discovery: Sixth grade is too late to start the process. If kids don't acquire certain basic skills by the time they reach middle school, she says, they "check out and, in our experience, it's almost impossible to get them back on an enthusiastic track" in school.
Even those who managed to graduate "had a diploma, but they didn't have the basic skills" to work a job or succeed in college.
So the Boys & Girls Club started teaching basic financial literacy — including reading , writing, math and career aspiration — starting in kindergarten, as soon as they start coming to the Boys & Girls Club.
"We have to start talking to our kids about their futures as early as we can," McKenzie says.
Rita Markley, executive director of the Committee on Temporary Shelter in Burlington, sees many of the same kids. In her work with individuals and families who have lost their homes, she sees many parents who are under tremendous financial stress. And answering questions about income and wealth is especially challenging when their kids call the shelter home.
For previous generations, Markley notes, a job meant financial self-sufficiency. But today, some homeless children see both parents work all day — only to return to a shelter. As a result, they may question the value of work and education.
In fact, some of the hardest questions Markley hears, especially from young children, are, "Will it always be this way? Will we have a chance to be the family that gets to go to the movies or have vacations?'"
How does Markley reassure kids who are living through economic distress?
"We say, 'Homelessness isn't who you are. It's a short, tough time, and there are a lot of people in the country right now who are struggling. But you'll get through it. And, it's not your fault,'" she says. "The worst thing for a child is for them to internalize the blame."
Hagan agrees, based on her experience with patients, mostly parents and children, from a wide range of incomes and backgrounds. Much of her work involves treating people who suffer from anxiety, depression and other stress-related disorders, all of which, she notes, are "fairly epidemic" right now.
"The adults are more stressed, so the kids are more stressed," she says. "And certainly, economics are a huge part of it for a lot of people."
As Hagan explains, the age at which children first become conscious of money and family finances can vary greatly from family to family, even from child to child within the same household. Obviously, if a family is experiencing money-related stress, she says, a child is more likely to become aware of it at an earlier age.
Kids who are younger than 4 or 5 may pick up on stress in the family but not necessarily understand where it's coming from, whereas older children are more apt to make the connection to its cause. Indeed, Hagan has worked with kids who have verbalized concerns about their family's money troubles as early as age 7.
Sometimes, she says, parents are unaware that their children are paying attention to the family's financial matters. Other times, parents automatically assume that their kids are worried about money when, in fact, the kids are totally oblivious to it.
Hagan points out that even children who aren't living in a shelter or trying to cope with financial hardship will occasionally express apprehension or concern about their family's economic well-being. Sometimes, the question "Are we poor?" is driven by mere curiosity. Other times, it's a red flag about deeper-seated anxieties about the future.
Hagan recommends that parents try first to identify the source of the question by asking, "Why are you wondering?" Or, "What made you think about this issue?" Sometimes, a child's question is sparked by an experience at school, such as learning that a friend's parent lost a job, or seeing a classmate teased for being poor. In such cases, she recommends explaining to a child that you feel secure in your employment — assuming that's true, of course — and are prepared to deal with problems should they arise.
Regardless of the catalyst of such questions, Hagan recommends that parents offer a simple answer first and see if it suffices before launching into a more detailed explanation. She cites the old joke about the boy who asks his father, "Daddy, where did I come from?"
Startled and unprepared, the father sweats out a long and tortuous explanation about the birds and the bees. Afterwards, the boy sits silently for a long time. Finally, the father asks his son, "So what made you ask that question?"
"Well," the boy replies, "my friend told me he came from Chicago."