by Emily Hechler 
Talking to your kids about your finances can be tough. If you are well off, this conversation is probably easier. If money is tight, this conversation is a lot more difficult. Where is the balance of talking to your kids about your finances, especially if you aren’t in a great financial situation?
The conversations you have with your kids about money can vary depending on their age. Older kids can handle some discussions better than your younger kids, but that doesn’t mean they always will. Sometimes, ignorance is bliss. However, this can shift when your child’s reality is about to change due to financial matters.
First, honesty is key. Honesty creates trust. Generally, kids trust their parents over other adults. The value of having your kids trust can reap benefits for years to come. (If you have a track record of not being honest with your kids, work on having other honest conversations about less serious matters before bringing up a difficult conversation about money.) However, don’t tell your kids more than they need to know. Little kids can escalate situations to the extreme because of one comment. Older kids can feel not up to par with their friends due to knowing too much about your financial situation.
You may be facing a time where life looks different for a while due to your current financial situation. In this situation, emphasize safety and reassurance. Let your child know that their needs are being met, but that their wants might have to wait. If there is a toy or electronic they keep asking for, tell them to put it on their birthday or Christmas wish list or encourage them to buy it with their own money. Gifts and hard-earned rewards will be much more meaningful if they had to wait a few weeks or months before getting what they want.
Positively reinforce that the situation is temporary. If your child thinks that this phase of life will last for several months or years, it will only feel like it’s lasting longer. Research shows that positive and proactive thinking can reduce stress a child may have about a situation. It can be appropriate to say to your kid, “We aren’t going to buy that right now because we want to have a little more money first. We have a plan to make sure that we are all well taken care of.” Or, “That isn’t the best way to spend our money right now. We need to save it to buy something even better soon.”
Like all curious kiddos, yours are likely going to have some questions. Let your kids ask questions. By allowing them to ask questions about what they don’t understand, it reemphasizes that they can trust you. This will help bring any fears to the table so you can remind them that they are safe – both emotionally and physically.
Work as a team. If you have a partner that you share finances with, it is critical that you are on the same page about overcoming your financial challenges. One person saving money to cover your needs and the other person while the other continues spending as usual will quickly lead to tension. If they see you both following your plan to improve your situation, they will understand that this is a serious but temporary phase. Teamwork might mean one person taking on a part-time job for a while, but it’s important to maintain balance at home, even if one parent is away more often. If you display unrest about the situation, your kids will likely pick up on it.
Spend time doing low-cost activities. Family outings can get expensive fast, especially if you pay for tickets to an event on top of food and parking. Instead of spending the day at Six Flags, plan a picnic in Forest Park instead. Head to the zoo for hours of low-cost entertainment and eat lunch outdoors. It’s okay to acknowledge that this is an activity that you don’t normally do. Remind your kids that you don’t need to spend a lot of money to have a good time.
While your family is going through a difficult situation, we are here to help. Alltru’s financial advisors can help answer your questions and help you create a plan to get your finances under control again. Whether taking out a personal loan or opening an opportunity checking account, we are here to make your financial dreams a reality.
