9 Tips for Discussing Tough Family Finances With Your Kids

As parents, we are acutely aware of the worries that come along with financial hardship. But what we might not recognize is that these struggles can also affect our kids, even if younger family members aren’t able to verbalize them.

Explaining financial struggles to your kids requires a delicate balance. To help you decide how much to tell them and how to approach the situation, we've compiled the following nine tips to help you relieve your money stress and theirs.

These conversations can not only quell some of your children’s fears and keep wild imaginations at bay, but they may also serve as a great financial educational opportunity.

I know, it’s not comfortable to talk to your children about family financial issues. But whether you’re drowning in debt, facing a cut in income, or are simply worried about the months to come, remember this: Kids are pretty smart.

No matter the age, kids pick up on more than you may realize — whether by overhearing conversations, watching household spending habits change, or just recognizing that mom and dad seem overwhelmed. They might not know how to bring up what they see or even articulate it, but they probably know something is up.

Keeping them out of the loop entirely may do more harm than good, breeding more fear and even creating trust issues. No matter how simple or complex your conversations with your kids wind up being, make it a point to at least have them.

One safe way to start a conversation with your kids about financial issues (or any tough topic) is to begin with questions of your own.

Ask your child how they are feeling and whether they have noticed changes around the home lately. Ask if they understand what’s been going on and how it's affected your family.

You should also ask your child what unanswered questions or concerns they have. This gives you a chance to address their most pressing worries, such as a young child who worries that dad being furloughed or laid off will result in the family being homeless.

Any time you have a tough topic to discuss with your child, it’s important to pick the right place and time. By choosing the right place to talk (one where your child doesn’t feel cornered or forced), you better your chances of having a productive dialogue.

Often, this means picking a setting where your child isn’t forced to make eye contact, such as when you’re driving in the car, cooking dinner together, or going for a walk.

It can be tough to explain money struggles to kids who don’t have the context necessary to understand the situation. Therefore, you will need to tailor your conversations with your child(ren) based on their age and maturity level.

The details you share with a high schooler will differ from what you tell your 7-year-old and may also depend on whether you’ve involved your child in the family’s finances up to that point. 

Take some time to think about what your child can comprehend and emotionally digest, as well as their understanding of finances. Adjust the conversation accordingly.

No matter how old your child is, he or she can do their share to help with the situation. Whether that means contributing financially or just brainstorming ideas, it is beneficial to let your kids feel like an important part of the solution.

Talk to your child about the steps you’re already taking to address the family’s financial struggles. For instance, mention that you’ve applied for unemployment benefits to help you bounce back from job loss. Or maybe you’re working hard to pay off debt and reduce unnecessary spending.

For older kids, this can be a great lesson in budgeting and how a family’s needs evolve over time. It may even be an opportunity for them to get a weekend job and contribute to shared bills, such as their cell phone service.

For younger kids, this is a good opportunity to instill those important lessons about saving for the future, building an emergency fund, and planning for the unexpected. Little ones can also do their part with simple budgeting tasks, like helping create weekly grocery lists for the family.

You can also teach them to practice restraint when it comes to unnecessary expenses. For instance, explain to them that buying a toy at the grocery store just isn’t in the budget right now. However, they can earn a sweet treat at home or save their own allowance for a few weeks and buy that special toy themselves.

The goal in talking to your child about family finances is not to scare them or make them worry. Your job is to answer their questions, bring them into the conversation, and soothe their fears as best you can.

Try to frame the conversation in a productive, rather than concerning, way — no matter the reality or gravity of the situation. If you simply don’t know what the coming weeks or months hold, that’s OK, too. Just try to be as honest as possible with your child.

In some cases, the most reassuring answer might be, “I don’t know if we will need to move, sell our car, etc., but I can promise you that your needs will always be met.” Or, “Mom’s job may look different for a little while, but we have a plan, and things will be OK.”

After all, children are unbelievably resilient as long as they feel safe, protected, and informed.

Whether your kids have been budgeting since age five or have no idea about money, financial hardship is a great time for everyone to learn some important lessons on how to manage money.

Take this time to teach your kids financial responsibility and introduce key lessons that will help them in the future. Your own situation may even serve as a prime example here, either showing them things to avoid in their own adult years or teaching them how to adapt to changing circumstances.

Are you learning how to prioritize your bills and cut monthly expenses? Show your child what you’re doing and why. This will help them to understand needs versus wants and teach them to cut costs as needed in their own lives.

Adjusting your household budget? Invite the kids to help. They can add up past months’ expenses, recommend some changes, and even track spending in the weeks to come.

You don’t need to share all the nitty-gritty details with your child. Instead, find the right balance for these talks so your child has some understanding of what’s happening without being overwhelmed.

For instance, you probably don’t need to let kids know if you’re worried you can’t pay your bills next month. However, explaining to them that money is tight right now and everyone will need to make some sacrifices in order to stay afloat may be sufficient.

It’s also important to understand that this probably won’t be a single conversation (so don’t throw too much in at once). Just as the pandemic will inevitably shift over time, so will your financial situation. 

Be prepared to have many small conversations over the coming weeks, months, and years, some of which will be more in-depth than others.

Money struggles can be a source of stress and worry for anyone without the added presence of something like a worldwide pandemic. 

Your kids may be concerned or even scared about the future, so it’s important to let them know you share many of the same feelings.

Talk about your feelings, future goals, and how you plan to improve the situation soon. Learning how to handle these emotions in a healthy, productive way rather than avoiding them might be the biggest lesson your child learns from the entire situation.

Nearly every family will encounter some form of financial struggle, whether it’s figuring out how to pay for college, paying for an unexpected home repair, or navigating a job loss mid-pandemic. 

When that tight spot arrives, it will be important to keep the lines of communication open in your home about how to manage your money, even with younger family members.

Talking to your kids about family financial struggles is a great way to soothe their worries and teach them important money lessons. Just be sure to tailor those conversations to not only your unique situation but also your child’s age and personality.