“How to Respond When Your Child Asks, ‘Are We Poor?'”

24 January, 2025

It’s important to remember that children are impressionable, and the way we answer their questions today can shape their thinking well into adulthood. Have you ever been caught off guard by your child asking if your family is rich or poor? Perhaps they’re curious because they’ve been comparing your lifestyle to that of their friends or neighbors.

Discussing Wealth and Poverty with Your Children is Essential

There’s a story about a father who, when faced with this question, responded by saying that while they weren’t poor, he and his wife chose not to spend money on a bigger house or expensive shoes. Instead, they prioritized comfort and happiness, and preferred to save for their children’s education or to help others. Some might call this father idealistic, but his response avoided shaming and taught his children a valuable lesson about money.

Our financial situation, how we spend our money, and our overall attitude towards wealth are all critical lessons for our children to learn. The way we, as parents, approach these topics can either motivate our children or hinder their development.

Here are some tips to consider:

Be Honest About Your Financial Situation Without Instilling a Poverty Mindset

Some parents might be tempted to emphasize their poverty to curb their children’s demands. However, constantly hearing that your family is “very poor” can be tiresome and disheartening for a child. It may even foster a sense of helplessness and lead to hidden resentment. Instead, teach your children about the value of money and how to prioritize their needs and wants accordingly.

Teaching Children About Money Helps Them Develop a Healthier Perspective

If your child demands something you can’t afford, explain why it’s not a wise purchase and offer alternative options. Instead of saying, “We don’t have money,” try, “Let’s prioritize other things first.” This teaches your child about budgeting and the importance of delaying gratification. Lying about your financial status to keep up appearances can lead to your child developing a sense of inferiority and a lack of self-worth.

On the other hand, spoiling your children and pretending to be wealthy can lead to a sense of entitlement and a lack of appreciation for the value of money.

Teach your children the difference between needs and wants, and how to spend their money wisely. This will help them develop a healthy relationship with money and a sense of financial responsibility.

Educate Your Children About Money

When your children ask about money, take the opportunity to teach them about personal finance, even if they don’t specifically ask about it.
Explain where money comes from and the value of hard work. Encourage age-appropriate chores and, for older children, part-time work to help them understand the effort required to earn money.
Guide them on how to use money wisely by teaching them the difference between “needs” and “wants.” This will help them develop healthy spending habits and a sense of financial responsibility.
Give your children a monthly allowance and let them manage it themselves, rather than giving them money daily and dictating how they should spend it.

Wealth and poverty are sensitive topics, but it’s important to have open and honest conversations with your children about money. Doing so will help them develop a healthy relationship with finances and set them up for success in the future.