Advertiser Disclosure

Life Events

The Dangers of Lying to Children About Money

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The Dangers of Lying to Children About Money

As a parent, have you ever felt it was necessary to lie to your children about money? Maybe you’re in debt, and you don’t want them to worry. Maybe you’re wealthy, and you don’t want your kids to feel entitled. Or maybe you’re ashamed, and you want to hide your mistakes from them.

It can be difficult to know what to tell your children and what to keep from them when it comes to financial matters. You’re not sure if they’ll understand. You’re not sure if they’ll forgive you. You’re not sure how much of an impact the news will have on them.

It’s natural to feel apprehensive. After all, you want to be a good financial role model for your children. You want them to succeed. You also want to give them everything you couldn’t have when you were a child.

Lying has the opposite effect, though. You’re not teaching your children anything by ignoring the issue, even if you have the best intentions.

Unfortunately, according to the 2015 Parents, Kids & Money Survey conducted by T. Rowe Price, 32% of parents said they lie to their kids about money. Yet, one of the top concerns they had was “Setting a good financial example for my kids.”

Parents can start being good financial role models for their children by discussing their financial situation and money, as opposed to lying about it. The dangers of lying to children about money can potentially be grave.

Kids Know Much More than You Think

When asked if they were reluctant to talk about financial matters with kids, 72% of parents said they were at least somewhat reluctant. What was the reason? 52% answered, “I don’t want them to worry about financial matters.”

However, when asked if their parents worry about money, 61% of kids said yes. They knew.

Kids pick up on much more than parents give them credit for, and I’m talking from experience here.

I was around 8 when my dad lost his job, and my family hit quite a financial rough patch. My parents would often talk in hushed whispers. As soon as I entered the room, they stopped. It was obvious something was going on, and they didn’t want me knowing it. They wanted to protect me instead.

Guess what? This only led to me to worry even more. When kids are kept out of the loop, they don’t know what to think. They pick up on the actions and body language of their parents, and if you’re stressed, it will show.

What you can do instead: Talk to them calmly and explain, in simple terms, what they need to know.

This doesn’t mean you need to tell them every last detail of what’s happening. What you choose to reveal will likely depend on their age and what they can understand at this stage in life.

Being 8 years old, I knew enough about the concept of debt to understand my parents couldn’t afford extras anymore. I was told we had to be mindful when shopping, because they didn’t have enough money to afford anything that wasn’t a necessity. I didn’t push back because I wanted to help out where I could.

Depending on what’s going on, give your kids an opportunity to help. It doesn’t have to involve money (obviously, 8 year olds can’t legally work!). If you need to take on an extra job, ask them to pick up extra chores around the house. Ask them if they would be okay brown bagging lunch to school. Explain how this will help improve the situation.

Lying Can Instill Fear in Children

I developed an unhealthy relationship with money because of what I saw my parents go through. I made saving a priority, but I had a hard time bringing myself to spend any money. I was fearful of what would happen if I did.

This came as a direct result of witnessing what happened to my parents who weren’t savers. They were deep in debt and couldn’t save because at the end of the day, all of their money was allocated toward bills.

When anything major happened, such as the A/C unit breaking, or the washing machine overflowing, they had to put it on credit. This meant going further into debt, and added more stress to the situation.

Always wanting to spend the least amount possible and constantly depriving myself wasn’t very healthy. Only in the last year have I managed to be more laid back about my spending. I’m still financially responsible, of course, but I don’t agonize over pennies.

What you can do instead: Be a good financial role model, and be proactive about your finances.

40% of parents from the T. Rowe Price survey said they agree with the statement, “When it comes to talking to my kids about finances, it’s ‘Do as I say, not as I do.’”

This isn’t how you go about being a good financial role model. Kids pick up on actions and words, and they’ll wonder why you’re contradicting yourself. You need to build upon a solid foundation when it comes to shaping your kids’ views on money.

Also, make sure your kids don’t have any reason to be fearful of money. Emergencies will inevitably occur. Be prepared for them by regularly contributing to an emergency savings fund, otherwise these unexpected moments in life can often make or break your financial situation.

If you haven’t already, do your best to save up at least $1,000. It’s still $1,000 less you’ll have to put on credit in the event something does happen.

Don’t Outright Lie About Your Salary and Net Worth 

Parents that are well-off might not want their children to know the particulars of their net worth. They might want to protect them from jealousy of others at school, or keep them from feeling entitled.

While that’s understandable, you shouldn’t completely lie and say you’re not doing well if you are. Don’t give your kids a reason to worry. For example, they might hear a friend at school talking about the unfortunate situation their family is in, and wonder if that’s where you’re headed.

What you can do instead: If money isn’t a concern for your family, leave it at that. If your children asks about how much you make, you don’t need to give them an exact figure (especially if you’re worried about it getting out at school), but assure them you’re doing fine, and explain why.

Do you or your spouse own a business? Do you have several sources of income (i.e. rental income, side business, full-time job)? Let them know that and explain how much hard work it took to get to where you are in life.

You’ll be setting a great example for them to follow. If they know mom and dad are entrepreneurs, they might be more inclined to go down that path. Always seek to make these kinds of interactions learning experiences for your kids. They might be interested in the work you do, and there’s no reason to hide it from them.

If you want to avoid your child feeling entitled (or as though they should expect an inheritance), show them how hard you work. If you can take your child to work someday, or show them a little bit of what you do at home; you’ll be giving them valuable knowledge. Most kids aren’t aware how hard they’ll be expected to work once they graduate from school. This will give them a better appreciation of what goes into earning an income.

Additionally, if you’ve earned most of your wealth through investments, then be sure to pass that knowledge down to your children.

You can start with the basic concepts of investing early, especially if you’ve opened a 529 Plan or IRA for them. Give them the necessary guidance and knowledge to choose their investments, and get into the more complex concepts down the road. This is one of the best gifts you can give your children, as it ensures they can grow their own wealth in adulthood.

Don’t Say You Can’t Afford Something When You Can

These can be toxic words, and you might not even realize it.

I’ve been guilty of saying this phrase in the past, and it came from hearing my parents say it when I was a kid. I recently came to the conclusion that it’s a limiting phrase. There are better things you can say that are much more empowering.

What you can say instead: When you tell your children “no,” explain why in a way that makes sense to them. “No, we’re saving up for that trip, remember?” “No, not this time – we need to save for a car right now so we can keep picking you up after baseball practice.”

Tying it to something your children can relate to makes it easier for them to process. This is another reason why you should involve your children in the family’s finances.

For example, if you budget, let them in on it. Explain what the purpose of budgeting is, and why you’re tracking your spending. Like investing, this is a crucial money management skill they should learn early on. It will serve them well when they move out on their own someday.

Including your kids in budgeting will also help them learn how to prioritize. Does your family enjoy going out to eat together? More than going on vacation? The next time your kids ask to take a trip to a restaurant, you can remind them it’s not in the budget because you’re saving money toward your vacation.

Lastly, if you’re part of the 70% of parents who give an allowance, according to the survey, set expectations and let your children pay for their own things when it comes to toys and games. Help them budget their purchases and sit with them while they create a list of things they want.


At the end of the day, lying to children about money isn’t benefiting anyone. Children know when something’s off, and they’ll start worrying. It’s best to let them know something, even if it’s not the entire story.

Take the opportunity to teach them the lesson you learned from your mistakes. As a parent, you should educate your child when you can, especially with personal finance not being taught in many schools. Focus on being a good financial role model, and your children will catch on.

Our FREE debt guide can help you dig out of debt and learn the budgeting skills to pass onto your children.



Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at [email protected]

Advertiser Disclosure

Life Events, Mortgage

The Risks and Rewards of Out-of-State Investment Properties

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.


They say real estate is all about “location, location, location.” That’s especially true when it comes to investing in rental properties. Where you choose to buy can have a significant impact on your return on investment.

For example, in a state like New York, where the median mortgage exceeds the median rent by nearly $250, buying a property to rent out doesn’t make much financial sense. If you consider buying rental property in a different state, such as North Carolina where rents in the city of Charlotte top mortgages by $84 per month, you’ll net a profit instead of a loss every month your tenant pays rent.

Before you start the interstate home search process, you should know the risks and rewards of out-of-state investment properties.

Potential rewards of buying an out-of-state investment property

Very often, the primary reason to buy an out-of-state rental property is investment properties where you live are too expensive. There are some other more strategic reasons that we’ll cover next.

Diversify your real estate assets

Real estate markets rise and fall. During the housing boom of 2003 to 2007, many of the “sand” states, such as California, Arizona, Florida and Nevada, experienced home price appreciation at rates well above historic levels.

Investors learned a painful lesson in the danger of not diversifying when the housing markets in those states crashed during the housing crisis. Investors who had investment real estate concentrated only in these states lost big, while those who spread their portfolios out to other states fared better.

Purchase future vacation or retirement residences

If prices and rents are competitive in a state you’ve always wanted to vacation in, you may want to purchase the property first as a rental and allow tenants to build some equity for you while you generate income. After a few years, you may decide you want to spend a few months a year vacationing in the home and rent it out seasonally with a rental plan from a service such as Airbnb or VRBO.

Alternatively, you may live in a cold-weather state, such as Massachusetts, and want to retire to the warm winters of Arizona. You could put the wheels in motion on your retirement plans by buying a rental property there first that has the amenities you would want in a home for retirement.

Once you’ve pocketed some rental income and equity from renters, you can pack up for the cross-country move into the rental, throw out the snow shovel and enjoy wearing shorts instead of parkas during the holiday season.

Buy where the laws suit your rental strategy

Short-term rentals have become very popular for real estate investors, but they face legal challenges in some places. For example, New York City subways are covered with signs warning riders to avoid short-term rentals.

If you are interested in renting out your property through a service like Airbnb, buying in a state that has more flexible laws about short-term tenants is your best bet.

Net more income monthly with lower property taxes

According to a recent LendingTree study, homeowners in San Jose, California, paid on average $9,626 in property taxes each year. In Salt Lake City, homeowners pay only $2,765 per year — which means you’d have to get an additional $567 per month in rent in California just to cover the property tax expense before you could make any profit.

Risks of buying an out-of-state investment property

Like any investment, there are risks associated with buying out-of-state rental properties. We’ll discuss those next.

Long-distance property management problems

If you have a rental in the city you live in, you can deal with an unexpected tenant move-out or a late-night plumbing problem by driving over to the property and taking care of the issue yourself. But you’ll need to make some decisions about how to manage an out-of-state rental.

If you hire a property management company, they’ll take 8% to 12% of your monthly rent as a fee, eating into your monthly rent profit. If you self-manage, you’ll need to make sure you build relationships with local handymen, roofers, plumbers and pest control professionals so you have their numbers handy if a tenant emergency comes up.

State laws that restrict how you rent your property

Short-term rentals, such as Airbnb, may be a great way to generate a higher monthly income than you would get with a 12-month lease, but some cities and neighborhoods aren’t too keen on having a lot of different people coming and going through a nearby house. If the laws prohibit short-term rentals in an area you’re interested in, you’ll have to crunch the numbers to see if market rents for long-term leases provide you with a good return on your rental investment.

What to look for when considering an out-of-state rental property

When you’re buying in another state, take extra precautions to make sure you understand everything about the local housing market, building standards and how the local economy is doing before you start making offers. The last thing you want to do is end up with an out-of-state money pit.

Get a thorough home inspection

No matter how nice the home may look in pictures or at an open house, there can always be problems beyond the smell of new paint and carpet. Building standards and practices may vary from state to state and city to city, and you don’t want to be caught by surprise because you didn’t know polybutylene pipes behind the walls of homes built in Tucson, Arizona, have been known to burst without warning.

A good local home inspector will also help you understand whether a property has been built and maintained according to local building standards and identify any issues, such as an unpermitted room addition, that could cause you trouble with local housing inspectors down the road.

Interview several property management companies

Depending on the town, you may find very high-tech, organized property management shops with decades of experience or small mom-and-pop shops that offer real estate property management services. Either way, you want to know what they do for their fee. The graphic below provides a list of questions you should ask to make sure the property manager is a good fit for your out-of-state rental.

  • How many rental units do you manage? Ideally, you want a manager who has between 200 and 600 rental units. This indicates that the management company has a solid enough client base to understand the local market but not so extensive that they won’t be able to handle managing yours.
  • What experience does your company owner have managing rentals? When the long-distance plumbing hits the fan you don’t want to be dealing with a company that’s never managed rentals. There is no college of rental property management, and you don’t want to have your rental managed by someone who’s still learning the ropes.
  • Are you actively investing in real estate in your market? If you are buying in a housing market you’ve never purchased in, you may want to have a property manager who understands the nuances of the local rental market. This is especially important intel when you’re dealing with an out-of-state investment property in a neighborhood that may be going through changes that only an experienced local investor would know about.
  • How do you collect rent? In order to track cash-flow of a rental property, you should be able to easily track payments. The best method is through an online payment system that gives you real-time information about any late payments. If you took out a mortgage to purchase the rental property, you want to know as early as possible if a tenant is going to miss rent, so you can move money to cover the mortgage payment.
  • What is your average vacancy time on rentals? The correct answer should be two to four weeks. An experienced property management company should have the marketing and rental pricing know-how to make sure your property is not vacant for more than a month. It’s bad enough having a rental vacant, but when it’s out-of-state, you want to know the company managing the property has a track record of getting renters quickly to minimize the expenses you incur when a rental is without a renter.On the other hand, a property manager that rents out your place in less than two weeks may be pricing it too low.
  • How do you handle maintenance and repairs? It’s not uncommon for a property manager to have “preferred” vendors to help with the inevitable issues that come up with maintaining and repairing a rental. You’ll want to get a list of these preferred providers and keep track of their expenses.Also be sure to put a cap on the cost of repairs that can be done without your authorization. You should trust the company to handle a $100 fee, but you may want to cap them on anything more than $200 so you can have a chance to see if you need a second opinion with a different vendor.

Track property tax trends in the neighborhood

Property taxes are a fixed expense you can’t get around paying, so be sure to track the last five years of property taxes to see what the average increase has been. If you’re seeing an acceleration in the tax rate, figure that into your return-on-investment analysis, so you don’t end up in a situation where your monthly expenses are more than the rent you’re taking in.

Make sure you understand the rental market in the area

Rental markets ebb and flow as new homes are built, new employers set up shop nearby or new schools are built in the area. A good property manager or experienced real estate agent should be able to give you a good idea of where the market is headed with a comparable rental analysis.

When you bought your first home, you may have gotten a comparable market analysis (CMA), which analyzes what homes are selling for in the area you’re thinking of buying. A comparable rental analysis looks at rentals nearby to give you an idea of what your monthly income is going to be.

If you finance the property with a mortgage, you’ll likely need a rental analysis form 1007, which is an additional report in a residential home appraisal that provides an opinion of the market rent for the home you’re buying. In some cases, the appraiser’s projected market rent can be used to help you qualify for the new mortgage, even if you don’t have a lease on the property you’re buying.

Special mortgage considerations for out-of-state rental property

If you’ve been buying investment property in your hometown, you already know financing a rental property comes with higher down payments and interest rates. There are a few more factors to consider.

Are transfer taxes due and who pays them?

Depending on what state you are buying property, transfer taxes may be charged for you to take ownership of the property you are buying. Unlike property taxes, these are a set lump sum percentage of your sales price, added to your closing costs.

Transfer taxes are often paid by the seller, but in some cases they may be payable when buying a home, adding to your total closing costs. It’s also good to at least know how much they are so they don’t end up being one of those hidden costs of selling a home. In places like New York City, that could mean an extra 1% to 2.625% of your sales price subtracted from your profit, in addition to real estate fees that usually run between 5% and 6%.

Are you buying in an attorney or escrow state?

Depending on where you purchase your rental property, you may need an attorney to handle your contract negotiations. That means higher costs than you’ll find in an escrow state, where an escrow offer can handle the signing usually at a much lower cost.

Are you buying in a community property state?

If you’re currently married or have a domestic partner, the community property laws could affect what happens to the property in the event of a divorce. Community property states require a split of equity down the middle, whereas the equity can be split up in negotiable amounts in a non-community-property state.

Final considerations

A little due diligence and research will help you avoid unpleasant surprises if you’re considering buying an out-of-state investment property. While many real estate companies offer “virtual tours” of homes, there’s nothing like an in-person tour to soak up the light, views, smells and feel of a home before you buy it.

If you can, budget enough time to take a trip to the state you’re considering buying in to inspect the top contenders before you start making offers on an out-of-state investment property.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Denny Ceizyk
Denny Ceizyk |

Denny Ceizyk is a writer at MagnifyMoney. You can email Denny here

Advertiser Disclosure

Life Events, Mortgage

The Hidden Costs of Selling A Home

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.


When you decide to sell your home, you may dream of receiving an offer well above your asking price. But putting your home on the market requires you to open your wallet, which could cut into your potential profit.

While some line items probably won’t come as a surprise, you may find that there are a handful of hidden costs.

Below, we highlight those unexpected expenses and everything else you need to know about the cost of selling a house.

The hidden costs of selling a home

It’s easy to fixate on the money you expect to make as a home seller, but don’t forget the money you’ll need to cover the cost to sell your home.

A joint analysis by Thumbtack, a marketplace that connects consumers with local professional services, and real estate marketplace Zillow, found that homeowners spend nearly $21,000 on average for extra or hidden costs associated with a home sale.

Many of these expenses come before homeowners see any returns on their home sale. Money is spent in three main categories: location, home preparation and location.


Your ZIP code can influence how much you pay to sell your home. Many extra costs are influenced by regional differences — like whether sellers are required to pay state or transfer taxes.

For example, if you’re in a major California metropolitan area like Los Angeles, you may pay more than double the national average in hidden costs when selling your home.

Below, we highlight 10 of the metros analyzed in the Thumbtack/Zillow study, their median home price and their average total hidden costs.

Metro Area

Median Home Price*

Average Total Hidden Costs of Selling

New York, NY



Los Angeles-Long Beach-Anaheim, CA



Chicago, IL



Dallas-Fort Worth, TX



Philadelphia, PA



Houston, TX



Washington, D.C.



Miami-Fort Lauderdale, FL



Atlanta, GA



Boston, MA

$ 466,000


Source: Thumbtack and Zillow analysis, April 2019.

*As of February 2019.

Generally, selling costs correlate with the home price, so expect to pay a little more if you live in an area with a higher-than-average cost of living or one that has a lot of land to groom for sale.

Home preparation

Thumbtack’s analysis shows home sellers may spend $6,570 on average to prepare for their home sale. These costs can include staging, repairs and cleaning.

Buyers are generally expected to pay their own inspection costs; however, if you’ve lived in the home for a number of years and want to avoid any surprises, you might also consider paying for a home inspection before listing the property for sale. Inspection fees typically range from $300 to $500.

Staging is often another unavoidable expense for sellers and can cost about $1,000 on average, according to HomeAdvisor. Staging, which involves giving your home’s interior design a face-lift and removing clutter and personal items from the home, is often encouraged because it can help make the property more appealing to interested buyers.

It also helps to have great photos and vivid descriptions of the property online to help maximize exposure of the property to potential buyers. If your agent is handling the staging and online listing, keep an eye on the “wow” factors they include. Yes, a virtual tour of your house looks really cool, but it might place extra pressure on your budget.

You could potentially save hundreds on home preparation costs if you take the do-it-yourself route (DYI), but expect a bill if you outsource.

Closing costs

Closing costs are the single largest added expense of the home selling process, coming in at a median cost of $14,,281, according to Thumbtack. Closing costs include real estate agent commissions and local transfer taxes. There may be other closing costs, such as title insurance and attorney fees.

Real estate agent commissions range from 5-6% of the home price, according to Redfin. That amount is further broken down by 2.5-3% being paid to the seller’s agent and the other 2.5-3% being paid to the buyer’s agent.

The taxes you’ll pay to transfer ownership of your home to the buyer vary by state.

Other closing costs include title search and title insurance to verify that you currently own the home free and clear and there are no claims against it that can derail the sale. The cost of title insurance varies by loan amount, location and title company, but can go as high as $2,000.

If you live in a state that requires an attorney to be present at the mortgage closing, the fee for their services can range from $100 to $1,500.

There are also escrow fees to factor in if you’re in a state that doesn’t require an attorney. The cost varies and is usually split the homebuyer and seller.

If you have time to invest, you could try listing the home for sale by owner to eliminate commission fees. One caveat: Selling your home on your own is a more complicated approach to home selling and can be more difficult for those with little or no experience.

Other home selling costs to consider

Now that you have an understanding of the costs that may get overlooked, remember to budget for the below expenses as you prepare to sell your home.


It’s important that you make room in your budget to keep the utilities — electricity and water — on until the property is sold. (This is in addition to budgeting for utilities in your new home.) Keeping these services active can help you sell your home since potential buyers won’t bother fumbling through a cold, dark property to look around. It may also prevent your home from facing other issues like mold during the humid summertime or trespassers.

Be sure to have all of your utilities running on the buyer’s final walk-through of the home, then turn everything off on closing day and pay any remaining account balances.

Homeowners insurance

Budget to pay for homeowners insurance on the home you’re selling as well as your new home. You’ll still need to ensure coverage of your old property until the sale is finalized. Check the terms first, as your homeowners insurance policy might not apply to a vacant home. If that’s the case, you can ask to pay for a rider — an add-on to your insurance policy — for the vacancy period.

Capital gains tax

If you could make more than $250,000 on the home’s sale (or $500,000 if you’re married and filing jointly), take a look at the rules on capital gains tax. If your proceeds are less than the applicable amount after subtracting selling costs, you’ll avoid the tax. However, if you don’t qualify for any of the exceptions, the gains above those thresholds could be subject to a 15% capital gains tax, or higher. Consult your tax professional for more information.

How to save money when selling your home

Keep the following tips in mind when you decide to put your home on the market:

  • Shop around and negotiate. Don’t settle on the first companies and professionals you come across. Comparison shop for your real estate agent, home inspector, closing attorney, photographer, etc. It could also work in your favor to try negotiating on the fees they charge to save even more.
  • Choose your selling time carefully. The best time to sell your home is during the spring and summer months. If you wait until the colder months to sell, there may not be as much competition for your home.
  • DIY as much as possible. Anything you can do on your own to spruce up your home — landscaping, painting, minor repairs, staging — can help you cut back on the money you’ll need to spend to get your home sold.

The bottom line

There are several upfront costs to consider when selling your home, but planning ahead can help you possibly reduce some of those costs and not feel as financially strained.

List each cost you’re expecting to pay and calculate how they might affect the profit you’d make on the home sale and your household’s overall financial picture. If you’re unsure of your costs, try using a sale proceeds calculator to get a ballpark estimate of your potential selling costs. Be sure to also consult a real estate agent.

If you’re starting from scratch on your next home, here’s what you need to know about the cost to build a house.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Crissinda Ponder
Crissinda Ponder |

Crissinda Ponder is a writer at MagnifyMoney. You can email Crissinda here

Compare Mortgage Loan Offers for Free

Home Purchase Quotes

Home Refinance Quotes

(It only takes 3 minutes!)

NMLS #1136 Terms & Conditions Apply