Here's exactly how to respond if your kid asks, 'Are we rich?'

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Kids need context.

Kids are shamelessly curious.

So don't be surprised if your child turns to you with wondering eyes and asks, 'Are we rich?'

Once kids grasp the basic concept of money, they'll naturally have questions, explained personal finance writer Beth Kobliner in a recent Facebook Live interview with Business Insider.

"Sticking to the truth is good when it comes to money, but so is adapting your message to your kid's level," Kobliner writes in her new book "Make Your Kid a Money Genius (Even If You're Not): A Parents' Guide For Kids 3 to 23."

"If they say, 'Are we rich?' you want to say, 'Well let's think about what that means. We have so much, we have a home, we have each other, we have a family ... that's kind of what they're asking to begin with, and giving kids context is so important," she said.

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Kobliner, who is a mom of three, says a good response would be to tell them what the average American family earns, and where your family stands in relation to that. It may be a lot more or a lot less, but Kobliner says there's "no need to give the number gratuitously," especially to elementary-aged kids.

You don't want to keep your kid in the dark, but you also don't want give them the perception that whatever their family earns is what everyone else is, or should be, earning too.

"Think of why they're asking, and if it's a 7-year-old or 10-year-old, be prepared if you do tell them the number ... you're going to hear it at the PTA meeting. The teacher's going to be like, 'Ah I hear how much money you make,'" Kobliner said.

But by the time you're raising teenagers, there's likely good reason to open up about family finances, she says, especially when it's time to discuss paying for college.

Watch Kobliner's explanation below:

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