Talking to Your Kids about Money Problems

This week, it was reported than 6 million Americans missed their rent or mortgage payments in September. That news gave us pause, and reason to elevate this previous post once again.

As unemployment continues to linger, families are facing similar conversations — about trimmed budgets, canceled vacations, and uncertain futures. Such topics can feel defeating, but they aren’t without precedent.

In fact, most of us have them: vivid memories of a dinner table discussion about financial difficulty.

Dad lost his job.

The bills are past due.

You can’t go to camp this summer.

For some of us, the memories are marked by sadness and fear. For others, a sense of unity and closeness. When rainy days arrive, communicating clearly and peacefully is essential. And following these guidelines is a great place to start.

Have a Goal

First, know why you’re bringing the family’s financial situation to your kids’ attention. A bad reason: to vent your worry. A good reason: to provide understanding surrounding cutbacks and ask for kids’ participation in the family’s season of frugality. Before you begin your meeting, channel your inner Oprah Winfrey. Oprah? Yes, Oprah. It’s been reported that the Queen of Media begins every meeting with the same question: “What is your intention?” Defining yours will help keep you focused and rational if and when your children respond emotionally.

Offer Assurance

When I was nine or so, my mom was driving our car down a spiraling offramp when she said, “Oh gosh, we lost the power steering.” Not having any experience with driving myself, I assumed this meant we could no longer steer at all, and would soon be slamming into the curved concrete wall. To my young mind, the options were binary: steering or no steering. And my lack of experience brought immediate fear.

A child’s understanding of money is typically simpler than yours. You either have money to spend or you don’t, right? When bringing up your family’s financial situation, it’s important to rein in their wild imagination by speaking clearly about what is not happening. Perhaps, “We have plenty of money to pay for our rent and electricity, but we just need to cut back on eating out this month” or “We have plenty to eat, but we’re choosing to finish our leftovers so we can afford to pay for your soccer cleats.” In other words, no son, we’re not about to hit the wall.

Ask for Help

Kids don’t need to be included in every ebb and flow of your financial life. When you do include them, their role should be clear. Perhaps you’re explaining why they’ll need to make some money of their own in order to pay for camp. Or why you need them to pack their lunches for a few weeks. When your chat has concluded, your child should understand their role and know how they can contribute to the family’s success.

Follow Up

Some kids are natural talkers: the ones who repeat our hasty comments at the most inopportune moments. And others are internal processors — more likely to stare out the window than chat about their feelings. The first type will likely voice their evolving thoughts on your conversation, while the second may not. In the days following your heart-to-heart, ask questions to probe if there are any irrational fears or misunderstandings still lingering. Make space to clear the air, even while the situation is still at hand.

If your money problem is a temporary one, call another family meeting when it’s been resolved and explain how the issue was tackled and what role the family’s contributions played in bringing it to a close. Naturally, your kids will be happy to know that the money freeze has thawed. But another emotion will arise, as well: the satisfaction of knowing that they played a meaningful role in the family’s finances.