Are we poor?' How parents can answer awkward money questions-By Mandi Woodruff

No matter how many lectures kids get about the value of a dollar and how hard Mommy and Daddy work to put a roof over their heads, there are still reminders of money and the wonderful things it can buy around every corner — and we’re not just talking about a few toy commercials in between cartoons. The Internet, especially social media, has opened a whole new avenue for young minds to be exposed — in both good ways and bad — to the reality of money and the world of haves and have nots.

As a father of a tween himself, New York Times columnist and author, Ron Lieber, noticed that most parents he knew all seemed to share one common fear: raising a spoiled child. So Lieber set out to figure out exactly how parents can teach their kids to respect and understand how money works, without feeling entitled to it.  The result is his new book, "The Opposite of Spoiled," released in early February. (Watch our interview with Lieber here.)

The worst thing parents can do is to make money a taboo subject. In fact, he encourages parents to tackle every awkward money question kids may ask — from “Are we rich?” to “Why is that person homeless?” — head on. In the video above, we put a few brave parents to the test, putting them face to face with their kids and all of their burning financial questions. As you can tell from our experiment, coming up with answers is easier said than done.

“Kids pick up way more than we think they do,” Lieber says. “They can sense our anxiety. I dont know if we do them any favors by trying to protect them from the truth.”

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Over the course of writing the book, Lieber says he discovered the best way to respond to just about any awkward money question kids can throw at you — with a question of your own:

“Why do you ask?”

This tactic serves the dual purpose of giving parents a few extra seconds to think about how they can respond and letting you know what in their world has triggered the question in the first place. Lieber says most money questions usually come from a place of fear (overhearing Mom and Dad bickering about the mortgage) or “lunch table talk” (kids in class arguing about whose parents are richer).

When these types of questions come up, keeping your tone positive is important, so that the kid doesn’t start to worry about your reaction and shut the whole conversation down.
That can be difficult, especially when kids inevitably ask the mother of all awkward money questions: “How much do you make?”
Stalling with the “Why do you ask?” trick may work, but the question will only come up again, inevitably, as children grow older.  While Lieber does believe parents should be forthcoming about how much they earn in most cases, there’s a right and a wrong way to do it. Finding the right approach and the right time to answer it can depend on a lot of different factors. Is the child old enough to have a good idea of the value of money? Are they themselves earning an allowance yet? Have you spoken to them about the basics of your household budget yet?

“After [kids] have several years of earning allowance and several years of learning and thinking about the basics of the family budget, then you can tell them [how much you earn],” Lieber says. “But they get it when they have context for it and they’ve … proven they can keep it private.”

The budget is probably the best starting point. Helping them understand everything that has to be paid for in a household — the cable bill, electricity, their school fees, even their Cub Scout dues — and adding it all up is a much better way of explaining how much you earn than simply giving them a big round number.

Another common question — “Are we poor?” — can be easier to tackle.

Lieber suggests this line: “People who are poor don’t have everything they need, like food and clothing and medicine. We have those things, so we’re not poor.”

And for families that may be going through hard financial times, this question can be more difficult, especially when kids start to notice changes in their lifestyle, like the cable is turned off or the family has to cancel a pending vacation. He encourages parents to frame the answer as realistically as possible while focusing on positives.

“Because the future is unknowable, it’s probably best not to make any guarantees. But you can promise that no matter what happens, you have friends and family who are going to try to help and that you will do everything you can to avoid changing everyone’s lives too much.”

How do you answer your kids' awkward money questions? Let us know in the comments below.

Culled from Yahoo finance