A friend recently mentioned how shocked she was when her 5-year-old asked, “Are we rich?” Her shock was mostly, according to her, related to the child’s curiosity about their financial status. She wondered about what triggered the question and how far a child that young may be concerned about the family’s finances.

As I listened to her recalling how she scrambled to an appropriate answer to this question, I saw how sensitive we are often in providing our children with straight answers when their curiosity is related to money. This sensitivity may be as result of our concerns that they are too young to understand financial difficulties or to have their priorities straight when it comes to things that the family can afford. Despite these somehow legitimate issue, having a child who is totally unclear about where the family falls on the financial scale also can turn into a challenge in itself.

For example, a child who is clueless about the family’s means is unlikely to develop a good sense of essentials versus luxuries. This knowledge deficit may linger to adolescent years when trying to explain these matters becomes a matter of power struggle. With that in mind, here are four easy ways that can help you reach out to your children and let them form an idea of your family’s financial status — without worrying about damaging their sense of security.

Put money in perspective

As young as five- or six-year olds, children learn and understand numbers and can easily be trained to look at items based on prices and within a budget. For example, set a budget for small items, like buying a toy that doesn’t cost more than DH 10. This will teach your child that money matters and that you as a family are bound by a budget for whatever you buy. Teach your child ideas such as the ability to afford something or considering an item overpriced. The more your children become aware that “want” is different than “need,” and buying something involves some decision making, the more likely they will develop a sound sense of money and affordability based on the family’s standard of living.

Get them involved

Hand the decision making process to your child. For example, a child with DH10 may rush to the first item in the store and pick it up. If so, don’t intervene, but do take him or her for a tour of the store just to allow for an opportunity to see that there are always more — and probably better — choices. If your child backs down and changes the item, remain cool and neutral, which will further affirm that you’re totally out of the decision making process.

Explain priorities

Even for families that are well-off, explaining financial priorities must be part of children’s upbringing. For example, ask: Would you rather going to a theme park or having a new desk? If the answer is both, explain — again — that it is not a matter of whether the family can afford both or not, it is a matter of making a decision based on spending priorities. That is why spacing gifts, goodies and treats can be essential because it helps children develop a sense of self control and understanding that some things are worth waiting for.

Avoid labels

Back to my friend’s concerns about her daughter’s interest in labelling the family based on its financial status, this can be understandable. The “rich” label carries expectations and entitlements that any family doesn’t want children to take for granted. Even worse, a “poor” label can be damaging for a child’s self-image and self-esteem. So while it makes sense to avoid such labels, make sure that your son or daughter is as familiar as possible with the real-life situation and what it allows the family to do or not to do.

Rania Oteify, a former Gulf News Business Features Editor, is a Seattle-based editor.