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. Here are tips and talking points for talking to your kids if you are in a negative financial situation that will start affecting them.
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.
Here are some talking points.
For School-Age Kids:
“Healthy food is something we need, but sugary cereal is more of a want right now.”
For Pre-Teens:
“We can’t always buy every extra we want, so we’re focusing on essentials right now, like nutritious breakfast.”
For Teens:
“Part of managing money is choosing needs before wants, even when we’d rather buy both. This week, we’re choosing nutritious breakfast.”
Emphasize Safety
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.
For School-Age Kids:
“That video game looks fun. Let’s put it on your birthday wish list so we can remember it.”
For Pre-Teens:
“Waiting to buying something can help you decide if it’s something you truly want. Let’s think about it for two weeks.”
For Teens:
“We’re making careful financial decisions right now, even if that means delaying some purchases. If it’s important to you, we can talk about ways you could save up for part of it.”
Reinforce the Situation is Temporary
Positively reinforce that the situation is temporary. Older kids can handle a rough timeline for when things will go back to “normal”. 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.
For School-Age Kids:
“Things feel different right now, but soon we’ll be able to by the video game from your wish list.”
For Pre-Teens:
“Sometimes we have to adjust our spending for a while, but it won’t feel this way for much longer. For Independence Day, you can help me find a dessert to take to the Smith’s house.”
For Teens:
“Financial setbacks happen to a lot of people. We need to follow our budget really well for the next three months just to make sure we’re spending our money wisely.”
Let Your Kids Ask Questions
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.
When your kids ask some tough questions, answer with honesty and emphasize their safety if they are concerned. Remember to reinforce that this setback is temporary so they don’t develop a sense of hopelessness or anger.
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. When both partners are committed to the same goals and spending plan, it creates more stability and less tension at home. 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.
For School-Age Kids:
“Dad is staying at work a little longer this week to take good care of our family.”
For Pre-Teens:
“Mom is babysitting for some friends so we have extra money to save.”
For Teens:
“Our family is making choices right now so we can improve our finances now and not be stressed later.”
Spend Time Doing Low-Cost Activities
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.
For School-Age Kids:
“Let’s play at the park today with Jenny and then come back to our house for dinner.”
For Pre-Teens:
“We’re trying new activities that don’t cost as much money so we can do something more fun later this summer.”
For Teens:
“Right now, we’d rather spend less on outings and put that money toward bigger priorities. How about you plan an activity for us to do this weekend?”
Overcome the Situation
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 help you get control of your finances and plan for your future.
