Explaining Money Problems to Your Kids

It can happen so quickly. The office has a round of layoffs, or an illness strikes out of nowhere, and suddenly even the most fiscally responsible family can find itself facing dramatic lifestyle changes.  

Financial reversals create stress for everyone in a family, especially if they come with changes such as relocating for a new job, canceling vacation plans or having a stay-at-home parent return to work. Accordingly, experts recommend that parents who find themselves in this situation talk to their kids about any changes on the horizon. After all, says Kate Wechsler, a clinical social worker who serves as a psychological consultant at schools in Brooklyn, NY, you don’t want to panic your children, but “it doesn’t serve anybody if the parents don’t tell their kids the truth and keep on going like everything's the same, and then suddenly the bottom falls out.” 

Here are some strategies to make a tough conversation go smoothly.
 
Plan the Conversation
First, set the time and place for the conversation. Whatever the news, it shouldn’t be delivered as a surprise announcement over dinner, says Wechsler. 

“The unknown is a formula for anxiety,” says Wechsler. And while you may be working on resolving the uncertainty for your kids, she says, “parents don’t have all the information instantly.”

Wechsler recommends that before having the chat with your offspring, you and your partner begin with a comprehensive evaluation of your fiscal situation and what it may mean for your lifestyle in the near and long term.

Yes, it’s stressful to comb through your finances and think about cutting back on your spending. “But it's the parents' job to discuss the situation first and actually do what they can to manage their stress, so that they share less of their anxiety with the kids,” says Wechsler. “That's very important.”

For both single and divorced parents, having sounding boards are no less important, so seek out trusted loved ones with whom you can discuss your situation. And although it may be challenging to connect with an ex, divorcees should share their financial news with their former spouse, as appropriate, to make their kids the priority. 

Your Goals: Information and Comfort
The aim of the conversation is to share information with your kids and explain the next steps in your plan. Keep your tone positive. “If you communicate anxiety for your kids, you can’t take that moment back,” says Wechsler.

You wouldn’t say the same things to a four-year-old as you would to a 16-year-old, of course, but regardless of your kids’ ages the idea is to provide comfort. Let your kids know that there may be changes afoot, but balance that reality with a reassuring message of togetherness, love and perseverance.

Having the Conversation
Wechsler advises parents not to make a huge deal out of sharing the news—no drum rolls and fanfare required. Simply be sure you have their attention, she says. 

Next, stick to your script. Discuss, briefly, why your family’s finances are in flux. You want to make everyone aware that there may be changes, such as a new budget or spending cutbacks. But then stress that your number one goal is to take care of the family. 

“I counsel parents that it’s good to create an atmosphere in the home where children feel they can ask any questions,” says Wechsler. “That being said, if a child asks a question that's difficult to answer—‘Oh my god, does that mean I have to leave school or I can never go back to camp?’—you can say, ‘Mom and Dad are figuring it out. We don’t have all the answers yet, but we’re working on it. Whatever happens, the main thing is we will all be together and we’re going to get through this and do what is best for our family.’”

The information could be a lot for kids to process emotionally, she says. Some may simply retreat, while others may panic and demand answers. Help ease the tension by transitioning after the conversation into a normal family ritual—dessert, playing a game or watching a movie together. 

And go ahead and give yourself a pat on the back for opening a pathway for communication during a difficult time. While there is hard work ahead, you’ve taken a positive and useful first step. 

Seth Kaufman is a journalist and ghostwriter based in Brooklyn. His work has appeared in The New York Times, The New Yorker online and many other publications.

Financial changes can be stressful. Read about how to have productive money talks with your partner.