EDUCATION

Your child asks about your wealth. What do you say?

You don’t have to fumble for an answer. Here’s one father’s story and an expert’s insights.

Sometimes our children can ask the toughest questions about wealth. Sometimes they don’t ask at all. One way or another, they will find answers. To help put them on the right path for life, surely we want to be the ones who shape our children’s understanding of wealth. The challenge: How do we do that—and do it well?

Here, we share a story about a client and his child, who suddenly asked a question his dad didn’t quite know how to answer. This is followed by expert commentary from Michael Liersch, cognitive psychologist and Head of J.P. Morgan’s Goals-Based Advice & Strategy.

Client story

When I’m driving my kids to school, we often have interesting, meaningful discussions.

One morning, my 10-year-old boy asked: “Daddy, are we rich?” His twin sister perked up and waited with her brother for my answer.

Surprised, I punted: “That is a very good question.”

Then I tried my best. “We are fine,” I said. “We have enough money to live in a nice house, send you to great schools, do fun activities and take trips together. We always have food and stuff. But even though we have money, we always want to be sure to make good choices about what we spend on—because Mommy and Daddy both work very hard to earn that money."

“Does that make sense?” I asked.

Their response was swift and matter-of-fact. “Yes,” said my son, and moved on to his next question: “Are we going back to Florida this winter?”

The discussion turned immediately to the upcoming winter break.

I wonder if the fly-by-the-seat-of-my-pants answer was good enough. Mostly, I wanted to make sure they knew they were safe, and to let them know my wife and I are glad to work for what we earn.

The jury is out—wish us luck.

Expert commentary

This is not a surprising question, but actually a very common one for curious students to ask—or wonder about, even if they do not ask directly.

Other-aware

As children become more aware of others and increasingly seek group acceptance among their peers, they naturally want to understand where they fit in. This is the age at which they are trying to find their place.

The father’s answer in this story is positive in that it describes both parents as income earners and joint decision makers. His answer also seems effective in both providing comfort—alleviating potential existential fears—while emphasizing thoughtful decision making about financial choices.

The “right” answer

In the future, the father doesn’t have to feel pressured to immediately provide the right answer—or even any answer at all—to big questions. His first response could be an inquiry along the lines of: “Interesting, why do you ask?” Not only does answering a question with a question buy parents more time to compose good answers, it also could yield very valuable insights into the child’s state of mind. Is the child reacting to idle schoolyard talk about who has how much? Or is the child concerned for some reason about having enough? And, if so, why?

Most of all, take comfort in knowing that one response in a single point in time, no matter how worded, does not define your children’s understanding. Their comprehension of money matters is created cumulatively over time by verbal and nonverbal cues alike.

Clients have long asked J.P. Morgan advisors for guidance on how to help children develop skills to be better prepared for a complex financial world. In our Teaching your children about wealth series, we have gathered best practices from our global team of advisors and a leading financial educator, Susan Doty, President of the National Association of Economic Educators, to help parents, grandparents and other caring family members empower children, ages 3-22, in money matters.

For additional insights into how to teach children about wealth, please contact your J.P. Morgan advisors. They are available to help you and your family with all your financial needs.



Important Information

All case studies are shown for illustrative purposes only, and are hypothetical. Any name referenced is fictional, and may not be representative of other individual experiences.