I remember it like it was yesterday. I was in the 6th grade, and my teacher found a dollar bill on the ground. She asked the class if it belonged to any of us, and I jokingly raised my hand and said it was mine.\r\n\r\nIt seemed innocent enough to me, but in two seconds flat, the girl sitting in front of me whipped around so fast her ponytail hit her in the face. She spit venom saying, "You don't need that dollar, Catherine.\u00a0Your parents are rich.\u201d\r\n\r\nI was taken aback - floored actually.\u00a0What in the world was she talking about?\r\n\r\nI went home and asked my mom how much money she made, and she said, "That's a very personal question, and it's not something you're supposed to ask people.\u201d\r\n\r\nFair enough, I thought, but that left me confused as ever. You see, my entire life, my dad drilled it into my head that my parents\u00a0weren\u2019t\u00a0wealthy. He was especially keen to point out examples of wealthy families on TV. \u201cThat\u00a0is wealth\u201d he would tell me after watching a documentary about the Rockefellers. \u201cDon\u2019t ever think you have money. People exist that have money you can\u2019t even dream about.\u201d\r\n\r\nSo, we\u00a0weren\u2019t\u00a0wealthy. The Rockefellers were. Well, then why did the girl with the ponytail seem to resent me so much?\r\nKeeping Things Hush Hush\r\nIt\u2019s taken me a long time to realize why my parents never discussed their income. Now that I\u2019m a parent, I know they just wanted to protect us from people like my classmate who seemed jealous of something I didn\u2019t even know existed at the time. My dad especially was very insistent that we never tell people where we went on vacation and never revealed personal details to our friends at school.\r\n\r\nJust to give an example, I always remember an incident around the time my parents added on to our house. My dad didn\u2019t want people to know they were paying for an addition, and he reminded me several times\u00a0not\u00a0to bring it up in conversation with my friends. However, in preparation for the addition, several trees needed to be cut down and so they were marked with a big \u201cX\u201d.\r\n\r\nI had friends over one weekend and they wanted to know why we had Xs on our trees. It was a simple enough question, but my dad\u2019s rules made me nervous. Ever the honest child, I told them the X\u2019s on the trees were\u00a0a family secret, and I wasn\u2019t allowed to tell them. Looking back, I\u2019m sure my friends thought we were in some bizarre tree-worshiping cult, but I understand now why we had these \u201cfamily secrets.\u201d\r\n\r\nSimply put, people treat you differently when they think you have money. This can work both in our favor and against us, and it\u2019s really in the moments it works against us that causes the most uncomfortable situations or \u201ccharacter building\u201d as I like to call it.\r\n\r\nSo, is it our responsibility to tell our children about their family wealth, and if so, what are the pros and cons? Is there a right age to\u00a0tell your children they're rich, and if so, how will the discussion of wealth affect\u00a0their\u00a0potential in the future and our relationships with them?\r\n\r\nStudies like the\u00a0Economic Mobility Project\u00a0show that a child\u2019s future income will likely resemble that of their parents . Thus, this question of whether or not to discuss wealth will likely be something your own children will grapple with once they have children, provided they either\u00a0inherit your wealth\u00a0or go on to professional careers that will merit a similar lifestyle. Because of that it's time for us to make these decisions now, since it will affect them long into the future.\r\n\r\n\r\nAnswering The Question: Are We Rich?\r\nIn his now infamous documentary entitled\u00a0Born Rich, Jamie Johnson of the Johnson & Johnson fortune revealed that he didn\u2019t know about his family\u2019s wealth until he was 10 years old. It wasn\u2019t even his parents who told him about it. Instead, during a free period in the library, one of his classmates was reading a \u201cRichest People in America\u201d article in Forbes magazine. The classmate found a picture of Jamie\u2019s father in the article, and apparently the whole class \u2013 including Jamie \u2013 found out about his wealth together.\r\n\r\nThis is not unusual among high net worth individuals. In fact,\u00a0a Wall Street Journal article\u00a0about parents who make more than 20 million dollars a year indicated that \u201conly a third of wealthy parents have discussed their wealth and its implications with their children before the age of 21.\u201d\r\n\r\nParents who choose to shelter their children from their wealth, whether it\u2019s in the 20 million dollar range or not, should reveal it sooner rather than later. I assume many of these families are waiting for the appropriate time when children can comprehend its ramifications, but in an increasingly social and connected world, one Google search by a child can reveal so much more than we can imagine. Plus, the earlier children understand how to manage money the better off they will be as adults.\r\n\r\nUltimately, I liked my parents\u2019 approach of helping me understand that we were fortunate, but not wealthy. After all,\u00a0having a six figure salary no longer means you\u2019re rich, and I think it\u2019s important for children to realize there are many different levels of wealth. This helps to\u00a0prevent entitlement\u00a0down the line. Also, if children believe and understand that there are others\u00a0more\u00a0fortunate than they are, they are less likely to brag and reveal private family details. At least, it worked on me.\r\n\r\nWealth Does Not Prevent Problems in Children\r\n\r\nAs many of you reading this likely know, having more money does not necessarily translate to having an easier life. In fact,\u00a0a study published in\u00a0Current Directions in Psychological Science\u00a0showed that \u201cupper-class children can manifest elevated disturbance in several areas \u2013 such as substance abuse, anxiety, and depression.\u201d What was most revealing about\u00a0the study\u00a0was \u201cthat youth at the socio economic extremes were more similar than different.\u201d - the poor and the wealthy displayed emotional distress.\r\n\r\nIn other words, even if you\u00a0don\u2019t\u00a0tell your children they\u2019re rich, there are still \u201cachievement pressures\u201d that are common in upper class families. These pressures can lead to substance abuse and other psychological issues.\r\n\r\nThis idea is not new. A\u00a01984 article in the New York Times\u00a0quoted Chicago psychiatrist Roy Grinker saying, \u201cthe similarities are far greater than the differences\u201d between poor and rich children in terms of emotional suffering.\r\n\r\nThe study reinforced Dr. Grinker\u2019s opinion; many of these issues are linked to\u00a0emotional attachment problems with parents\u00a0(it seems it\u2019s common for high net worth individuals focus more on their work than their family). Essentially, even if you spend an exorbitant amount of money on medical care to treat these disturbance issues, there is\u00a0no substitute for parental involvement\u00a0and emotional interest in the child.\r\n\r\nSo, what really matters in all of this is not\u00a0what\u00a0you tell your children about their wealth but\u00a0how\u00a0you interact with them and influence them in their day-to-day lives. Whether you make $100,000 a year or $10,000,000 a year, closeness and interest from you, the parents, will primarily determine how your children will handle their unique position in your family. It will also determine how much they will appreciate and benefit from the valuable resources that are available to them.\r\n\r\nTelling your children about their wealth\u00a0may\u00a0breed trust. Telling them how to handle their wealth in the face of public scrutiny will teach them important social skills. Emphasizing that they are fortunate but should not be entitled will create another generation of those who understand and appreciate wealth instead of abuse it.\r\n\r\nThoughts for Moving Forward\r\n\r\nSuniya S. Luthar, Ph.D., author of the previously discussed study, wrote an updated article last year entitled\u00a0The Problem With Rich Kids\u00a0that emphasized \u201cthe privileged young are much more vulnerable today than in previous generations.\u201d This means it\u2019s time to pay more attention to how our children will fit into a changing world, one where\u00a0the income gap between the 1% and the rest of the country is widening,\u00a0which will lead to more resentment from those not in the same socio economic standing.\r\n\r\n\r\n\r\nUltimately, the choice to tell your children about their wealth is yours, but in a country\u00a0where financial education is seriously lacking, it should be up to parents to teach their children about money, especially their own. This will create a more open dialogue, more trust between parents and children, and hopefully result in less emotional issues in the future.\r\n\r\nJoin Personal Capital and Build Wealth for Your Children's Future.