When teaching children about financial literacy, experts often advise parents share their own financial journey in an age-appropriate way. What parents may often be left wondering is how much to divulge to their children about their spending and earning. Should you tell your children, for example, about your commercial debt? Do they need to know you might be living paycheck to paycheck, as is the case with nearly 80% of Americans, according to CNBC? And how might parents’ financial stress impact kids?
If you’re experiencing financial woes, the truth is your children are already picking up on it. A recent American Psychological Association survey reveals 91% of children say they know when their parents are experiencing stress. Conversely, only 18% of parents believe money is a source of stress for their children. Outside of having difficult conversations with your children, your number one priority will be mitigating the stress, anxiety and blame they might feel as a result.
The impacts of this stress and anxiety can be vast. A report from the National Center for Biotechnology Information (NCBI) stated, “Economic hardship increases risk for behavior problems, mental disorders, and physical health problems and thus represents a significant public health concern. Indeed, growing up in an economically disadvantaged household places children at risk for a range of adjustment difficulties.”
So how can you approach financial stressors touching your family? Being transparent with your kids about your financial problems will depend on you, your children and the severity of the issue. Money mentor Miata Edoga recommends that you keep the following in mind when initiating a conversation:
What to do:
Let them know your money issues aren’t their fault: Children internalize everything, whether you’re aware of it or not. If they’re navigating their own emotional minefield with their peers, or struggling at school, it might not be ideal to share certain information that could add to their stress.
Choose your words carefully: Be mindful of how you frame the situation, and consider the age of your audience. “Very young children probably won’t have the capacity to understand big, scary adult words such as ‘debt relief’ or ‘foreclosure’,” says Edoga. You can omit the gory details (and spare their fragile psyche in the process) and focus instead on how you’re going to arrive at a solution.
Keep calm: Don’t incite fear, worry or panic. Keep your descriptions brief and solution-focused.
Allow them to respond: This isn’t a monologue for unloading your feelings. Create an environment where they feel encouraged to express their own fears and feelings, and be prepared to answer any questions.
Carry on: Get outside and do something together as a family that doesn’t cost money. Have a picnic in the park, go to the public library or on a nature hike. Let them know your time together isn’t predicated on what’s in your bank account.
Let everyone pitch in: While you should never (ever) accept money from your children, it’s OK to let them find different ways to cut costs and contribute. For example, they can gather old household items and hold a yard sale, or help clip coupons for your next trip to the grocery store. Younger children can offer hugs (which are free) to parents who’ve had a rough day at work.
When parents involve their children in a positive and proactive away, talking to them about financial difficulties can actually foster bonding and teach a valuable lesson about the pitfalls they can avoid when they become financially responsible adults. Maintaining a positive attitude is critical in those moments, and identifying what truly matters — family, friends and health — will go a long way toward improving your family dynamic.