<p>This is a very personal decision to make. It depends upon your situation and it also depends upon the maturity of your child. So, there is no one size fits all piece of advice. IMO, as ones children get older, more information should be forthcoming. Children should not be totally in the dark about their parents’ finances, but revealing every detail could be too much. But personal situations such an impending death or other big change in ones life should be shared, as the the child gets older. It can be a balancing act.</p>
<p>In our situation, when the FAFSA and PROFILE were to be filed, the kids did get to see the info. They had some idea by then, what our income was, some assets, home value and most importantly, what we were willing to pay for their college. None of my children were interested in eyeballing the specific numbers, from what I could tell. In fact, they were down right disinterested, but different students certainly could have reacted differently. I believe they are entitled to see the FAFSA numbers if they so wanted anyways. </p>
<p>Once, my kids knew how much we would pay, the focus was more in their own budgeting and their own finances, something that they did need to get working on, and sadly, some of them did not get the grasp as well as they should have. Though they were fine in college, once they were out of school, they have had issues in this area. I am focusing more in this area with my younger kids. </p>
<p>There’s another stage where the kids need to know about their parents’ finances, and that for us is now: as we approach retirement. The kids are no longer kids. Whether they are still on our budget or not (sometimes it seems that at least one of them is…), as we move to estate planning the kids need to be informed, if not directly involved, about decisions in areas of health (including medical plans, health insurance, advanced directives), finance (income, savings, investments, property titles, etc.), and other insurances (home, life, long-term care).</p>
<p>For our kids, the most important communication is perhaps who our lawyers, doctors, and insurers are, as well as their roles if we become dependent on their help for estate or health management.</p>
<p>Perhaps it’s equally important for them to know that in our case, it’s very unlikely that they will bear any financial responsibility for us. But they may have a role in managing things, including final arrangements. </p>
<p>We were transparent about finances while they were growing up on an age appropriate basis. A seven year old can’t comprehend what an annual salary is… but certainly can be told, “We aren’t buying you a XYZ for your birthday (whatever the hot item is that year) because it costs more than we spend on food for an entire month and we all like to eat”. Then the message can get more detailed as maturity allows.</p>
<p>I don’t think it’s fair to wait until junior year of high school to spring on a kid that even though he/she has been enjoying an upper middle class lifestyle up until now, there is no money for college so it’s ROTC or bust. (or whatever options you’ve identified). Make your kid part of the solution, not part of the problem. If a parent has anxiety over job security, medical costs for an elderly parent, etc. it creates LESS anxiety for your kids to explain what the situation is, than to pretend that everything is normal when your kid can plainly see that it’s not. If you drop HBO, put the thermostat to 55 degrees, sell the boat and the timeshare in Stowe within a three week period with no explanation, THAT causes anxiety. Not a family meeting where you lay out what the plan is.</p>
<p>I never suggested to my kids that we expected them to file our taxes. But if a kid grows up thinking that if someone makes 90K they are actually taking home 90K, you’re not doing them any favors.</p>
<p>^ I do agree with that. Before FIL died he went over all his financials with DH. It was very helpful when MIL went into assisted living. FIL had always been in charge of the finances so she really didn’t understand what she could afford.</p>
<p>After reading this thread, I wonder if i should be more active in involving my kids in my finances.</p>
<p>I too have a divorce situation that makes involving them complicated. </p>
<p>I have shown my son how to do his own taxes for two years (he does them online while I assist over his shoulder), likely next year he’ll do them alone. My daughter only has her first job this year so I’ll sit with her as well. In both cases they need this for their FAFSA forms anyway.</p>
<p>Their school has a financial literacy requirement that can be filled with a home-ec type course or economics. Both cover budgeting, loans, etc.</p>
<p>She knows our finances pretty well - she doesn’t expect to get everything her friends get (16th birthday car! vacation every year!), and she works, too. I don’t make a lot, but I manage what I get well enough. She knows what I can afford, that we’ll need to be on a payment plan because there’s not a lot in her college savings. </p>
<p>"“Strong believer in self- learning” - but didn’t you spend two years creating spreadsheets for your D in order to choose undergrad school?
-That was for my own entertainment. I just mentioned to her that I have a spreadsheet. It was entirely up to her if she wanted to use it or not. She did because her top criteria happen to be exactly the same as mine - getting accepted to the very very selective bs/md program.<br>
These has nothing to do with the self-learning or financial education. Just like my GrandS loves to do pottery with me, it is just fun for both of us, very entertianing. Yes, he would ask me questions,. yes, I would answer them. However, if he did not care doing that , I would never initiated it. Exactly the same situation, nothing more.</p>
<p>There’s a difference between self-directed learning, learning from experience, and learning from others’ mistakes. All can be valuable experiences. However, I see nothing wrong with giving our children real world examples so they can learn to manage their money well. My children will make mistakes but there’s no reason to let them learn things the hard way. </p>
<p>I would just point out one more thing: sometimes middle and upper income parents want to make choices about to allocate their discretionary income that might not seem “fair” to a child who wants the money for tuition dollars. That might be an allocation of resources among siblings or other family members, or the choice between paying money for college vs. bolstering retirement savings, or even making discretionary purchases (such as a vacation or home improvements) that don’t seem to the child to be as important as the college choice. </p>
<p>Especially among siblings, these choices can lead to long term hurt feelings and resentments, even if the parent feels there are good reasons. We can’t always give each kid equal resources, nor should we feel obliged to, given that kids have different needs, levels of talent, and interests that sometimes result in widely different expenses to maintain. </p>
<p>In other words, it might not be so easy to explain to one kid that the money isn’t there to pay for their college because a greater portion of assets is being spent to finance a sibling’s schooling – but there may be good reasons from the parents’ perspective for making the particular choices.</p>
<p>You are absolutely right, Calmom. One thing I did make clear to my kids was that my contributions to my retirement fund were automatic, and independent from, contributions to college savings accounts. Later in life, i.e., after college, as the kids once in a while have expressed curiosity how we were doing financially, I explained this to them again: my 401k (403b) was automatic, and had been for 25+ years, so we were going to be OK.</p>
<p>You raise another point, however, about equity in the treatment of siblings. My promise to my two kids was that they would be able to attend the college of their choice (of course that depended on the colleges choosing them!). That they got. But there came a time, a few years after the second one graduated, that she decided to enroll in an MBA program, while the first one was happy to stop with a BA (AB). We partially subsidized that MBA program while she was attending, namely by paying the rent. But she ran up a fairly prodigious amount of debt in federal loans ~at 7.5% interest. She made steady payments on that debt in two years of employment, but still it remained a heavy burden, especially with the interest rate. </p>
<p>About a year ago we received some money in the form of inheritance. Our first goal with that money – since my 403b was going to give us all we needed for our retirement – was to get the younger one out of debt. However, before we forked over the money to clear that debt, we talked to the older brother. He had no reservations at all, no apparent feeling in inequity in treatment, about our paying off the MBA debt for his sister. I think in any case he didn’t see the money that we would use to cover that debt as his by right. If in fact we had not spent it on the debt, it would have remained in our control, and he might have seen some of it down the road as part of our estate. But he wasn’t looking for an immediate cash contribution to his own bank account that was commensurate with the money we spent to help his sister through her MBA program. We were glad we asked, however.</p>
<p>I would never justify my spending on one kid to another kid. That’s not what I’m advocating.</p>
<p>But you’re setting up a whole troubled dynamic down the road if one kid’s interests/needs/wants are being funded at a greatly accelerated rate vs. the other children in the family. Paying for a liver transplant? That’s a given. The family comes together. But funding Timmy’s travel soccer because the family is “into” sports, but not Johnny’s cello lessons (when both are affordable activities) because the family thinks music lessons are a waste of time and money… Let’s just say these brothers may not be walking arm and arm out of church after the parents’ funeral.</p>
<p>It’s not that I’m picking one child over the other, it’s just that one’s education costs more, mostly due to the second one getting scholarships. I set the college budget the same for both, but one came in way under and she is quite put out that I’m paying more for her sister. She still cannot understand that fair doesn’t always mean exactly the same and that she doesn’t WANT what her sister wants. She could have gone to the same school as her sister and I would have paid the same for both, but she didn’t want to. She could have gone to Europe on a high school trip like her sister, but she didn’t want to. She played a sport that sometimes cost a lot, sometimes a little, while her sister’s was almost always a ‘medium’ amount. Each got what they wanted and needed.</p>
<p>Adults make different choices with money than younger people. When I was 30 I made about $35k per year and that’s what I managed. I learned to manage more as I made more. I also added things to the budget like charity giving and retirement savings that I didn’t see the need for as a 30 year old (at least to the extent I do now). I give my kids some choices with ‘family’ money (what vacation, where to go to dinner, what type of birthday party) but they don’t control much of it.</p>
<p>I will say my daughter was shocked just after she got her learner’s permit and started paying attention to the gauges in the car. I filled up the car ($50) and we drove about 150 miles and she was shocked to see that I’d used a 1/2 tank, and that I’d be out of gas by the time we got home, so another $50 tank. Why yes, it costs a lot of money to drive the car. Managing the small things teaches them just as much.</p>
<p>I think much depends on the kid and family. We urged S to apply to Us where he would get significant merit aid for his great test scores and good grades. He did apply to several Us known for generous merit aid for kids with stats similar to his. He also lazily also applied to some top Us that do NOT provide any merit awards (not writing the needed essays and sending in portions late). He did get generous awards at 3 Us and chose the one that appealed the most to him.</p>
<p>We didn’t give him a $$$ figure but told him if he got significant merit, we would make things work. We honestly DIDN’T have any particular figure, as H’s salary and pension were in flux and we were uncertain whether we would have to support S or D for the rest of their lives. S has since graduated and D attended the same expensive privaate–we paid full freight for her because she didn’t get any merit.</p>
<p>By the time D entered the U, H’s salary had happily increased, and mine had as well. H’s pension had also significantly risen, so we weren’t as stressed about finances. Both kids were able to get their bachelor’s degrees without debt and H was able to retire after the last tuition payment was made.</p>
<p>We have not involved our kids in our taxes and tax returns, but they have noticed we are traveling more and dining out more than previously and are grateful but not feeling guilty that their educations were so expensive. ;)</p>
<p>Blossom, sometimes there is one kid who has an expensive activity and the other kid doesn’t. Sometimes one kid’s activities really do merit more financial support than the other’s – to take your example, maybe the parents are perfectly willing to pay for both activities, but one kid has a super-star quality and the other doesn’t. If two kids are involved in sports, and one has the potential to be an olympic athlete… and the other kid barely can manage to keep up with the high school team … maybe the parents do spend a lot more to develop the olympic talent. Or maybe both kids are pursuing their passions, but one kid’s passion just happens to be a lot more costly. </p>
<p>Or maybe things are very different and one kid has special educational needs because of a learning disability or other health problems, and the other kid doesn’t. </p>
<p>The OP mentioned having twins, so I guess that it is potentially a lot easier to try to keep things exactly equal between them… but outside of that circumstance, it is pretty unrealistic to expect that each kid will get exactly the same in terms of parental resources. For one thing, financial situations change. Times change as well – for example, if in a hypothetical world I had been able to pay full cost for each of my kids to attend the private college of their choice, I still would have been confronted with the reality that college costs were significantly higher when my daughter started college than when my son started 5 years earlier. A parent who has ample resources and who says, “your sibling’s college education 6 years ago cost us $30,000 a year, so that is what we will give you” – is being “fair” and “equal” – but if the same college now costs $45,000 a year to attend, the younger sibling would be getting the short end of the stick. </p>
<p>Calmom, that’s precisely my point. You don’t deny one kid braces (if you can afford them) because the older sibling had perfect teeth but needed glasses which are half the cost of orthodontic care.</p>
<p>You don’t need to justify every decision to your kids. But to keep them blind about financial reality is also a mistake.</p>
<p>It’s a difficult subject. My kids aren’t that needy, so they get most of what they want - “not that needy” means no new clothes, shoes, toy requests. As for college, I feel very reductio ad absurdum, in that yeah, we can afford cheaper schools, and middle cost schools, but once it is past our EFC, and possibly a little less even, we get to the tipping point and would have to decide if his college choice is “important enough” to pay more and therefore deprive the rest of the family of something for the next four plus years.</p>
<p>My son knows we can pay for his college. And he knows that we might nix a college because of a poor FA package. I think he is comfortable with that, and hopefully everything will turn out positively. But I can’t imagine doing what my friend’s parents did to her - let her apply to a bunch of places and then told her that her top choice was out of the question due to money, after she was accepted (they did not qualify for FA at all so it was not a surprise for them).</p>
<p>We’ve been transparent with our kids about finances, and I think it’s been a good thing for them. I think what’s most critical in terms of college admissions is that kids are informed well in advance of application time (and before picking where to apply) what the financial limitations and expectations are. Every year, we see posts from upset kids who believed that they could go to expensive private schools, but only after getting in, learn that they can’t. We also see (and this is a pet peeve of mine) posts from parents of high-performing kids who seem surprised to learn that their kids can get full (or nearly full) scholarships from less selective schools, and are now having remorse for having told the kids that they could go wherever they wanted. It’s a pet peeve because it is knowable in advance, and should be addressed in advance.</p>
<p>Hunt- the posts don’t bother me. These people are strangers, and if they decide they won’t pay full freight for Johns Hopkins because some tiny school in Pennsylvania is giving the kid a free ride and hey, it doesn’t matter where you go for med school anyway (says so many experts on CC and elsewhere). Never mind that the tiny school has three med school applicants per year, only one of whom ever gets accepted and then usually not to a US school but heads to the Caribbean. Never mind that the average math SAT score at the tiny college is 200 points below their kid. (probably correlated to their premeds not being able to pass organic chemistry).</p>
<p>It’s the kids I know in real life that pain me. For some of them it doesn’t matter- either because they are “bloom where you are planted” types who are happy in most situations and will indeed make the best of wherever they end up, or because they were indifferent students in HS and are likely to be indifferent students in college, and so the parents would rather take the free ride then spend the cash.</p>
<p>But every year I know one or two. Mom decides she can’t live without Aruba at Christmas. Dad decides he can’t live without the Utah ski vacation in February. So why spend money on the kid’s top choice college when there’s a school which will provide the free ride? </p>
<p>What galls me is the family that has the money for Aruba and the expensive college, but, when the free ride offer comes in from a lesser school, comes here to get support for the idea that it doesn’t matter where you go to college. I just don’t like the bait and switch. It’s not necessary, because of course a kid who can get into a top 20 school will have free ride offers elsewhere.</p>