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How to Talk to Your Child About Family Financial Difficulties

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In recent years, we’ve learned that almost no family is immune from financial difficulties. We live in a global economy where things can change overnight—jobs are lost, prices rise and adjustments must be made. And whether we realize it or not, our children are keenly aware of the stress on the faces of their parents as they work to make ends meet.

You may think that protecting your children from bad financial news is the right thing to do. But the tension they pick up on may cause them even more anxiety than necessary. You—and your kids—are better off if you have some age-appropriate, but honest discussions about what’s going on, and about how your family can work together to overcome the obstacles. The following bits of information are vital in helping you get the conversation going.

Talk to your children about what caused the change in family finances, and what you are doing to address it.

If you lost a job, explain that you are currently looking for another but that the process may take some time. If you’re self-employed and business is down, tell them in broad terms, that you’re exploring ways to increase business again. They don’t need lots of details, just an assurance that you’re addressing the issue.

Discuss lifestyle and spending changes that may be necessary.

Family vacations may have to be downsized or cut, and spending on extras like clothing, dining out, and entertainment might be scaled back dramatically. Present these as solutions to a problem, rather than unfortunate outcomes. Explain to the kids that cooperating with these adjustments is one way they can help the family.

Let older children sit in on planning the family budget.

Let them see the cost of housing, groceries and other essentials so that they can realize how far your income must stretch each month. This gives them a more realistic sense of the finite nature of a dollar, and an appreciation for any money that does make it to the “extras” category.

Accentuate the positive.

Some families find that when they tighten their belts financially, one of the unexpected outcomes is that they spend more time together doing the simple things: checking out books (for free!) at the library, playing at the park, or having a family board game night instead of a trip out to the movies. Simplicity is a good thing in this harried world. Savor it, and you may find that your children do the same.

Assure them that you’re in this together.

Even if you have to move to a new house, change schools, or move to a whole new city for a new job—your family is going to stick together and be OK. What makes you a family is your love for one another, not the stuff you have or the place you live. And that, they need to know, won’t change no matter what.

Tell us! What tips can you offer when talking to kids about finances?


What is one thing you would like to buy right now? What are you willing to do to earn the money?

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