Chances are, you know someone who has lost a job, a home, or a way of living due to a pandemic, economic downturn, or other circumstances. Perhaps it is you or your parenting partner. When a money crisis happens, it may be tempting to shelter your kids. But is it wiser to find ways to help them understand an economic tsunami?
The answer to that depends on a child’s age and anxiety level, says Kirsten Jensen, a Seattle-based licensed marriage and family therapist specializing in counseling for parents.
“Very young preschoolers may not realize when their family is experiencing financial struggles, as they tend to accept what they experience as a normal part of life,” says Jensen. “Be careful about projecting your own worries onto your child. We don’t want to introduce anxiety where there is none, so if they don’t express worry, there’s no reason to go there with them.”
On the other hand, says Jensen, “Kids in elementary school and older very likely sense that something is stressing parents out when there are financial struggles.”
Curious words
Of course, children are not oblivious to headlines, car radios, or television sound bites telling us, “The sky is falling.” They hear words like recession, crash, and depression and notice parents huddling and discussing money. And, they certainly read the worry lines on parents’ faces.
“It’s generally not a good idea to keep financial challenges a secret from [older] kids,” Jensen says. “They can pick up on tension in a room and will feel better with some explanation.”
Jensen and other parenting and financial challenge experts say parents should consider the following when approaching kids to talk about financial troubles:
1. Don’t keep secrets.
It makes children afraid when they sense grief, worry, or fear in their parents and don’t know the source. While you don’t need to give many details, you will likely lessen your child’s anxiety if you explain why you are concerned.
“I recommend being careful not to make scarcity the day-to-day focus in your home,” Jensen adds. “Instead, find ways to engage with your kids that don’t cost much. Go to a lake or beach, have a family game night. Kids love and need to laugh, so make connecting with them a priority. It can also be helpful to share what you’re grateful for and encourage your kids to share what they are grateful for, as a way to feel good and move the focus away from the things you don’t have.”
2. Be age-appropriate.
Your 16-year-old needs to understand how a bank account works and how that bank might get sold to another. But your 8-year-old is likely not ready for that kind of information. Most kids want to know how the situation will impact their daily life.
“Kids turn to us to learn how to make sense of the world,” Jensen says. “Because they don’t have the context or perspective that we have regarding finances, they can become scared if they frequently hear us talking about money concerns. To them, the message is simply that things are ‘bad.’ They may wonder how the situation will affect them, and since they have very little influence over finances, they can feel quite helpless.”
Stacey Black, Lead Financial Educator at Tukwila-based BECU (Boeing Employees Credit Union), points out that most families experience financial road bumps at some point: “It’s usually a matter of when, not if.”
“While we don’t want to overburden kids with adult problems, this can be an opportunity to model good financial behaviors and talk through mistakes and learnings,” Black adds.
3. Let them feel helpful.
Talk to your older kids and get their ideas on how you might weather the storm as a family. If you need to reduce allowance, for example, talk about it. Are there things you might go easily without as a family?
“Talking to your kids about money and financial stress can give them a chance to share their fears and anxieties, ask questions, and even be involved in a solution at an appropriate level,” says Black. “You are also helping them build resiliency for future financial challenges.”
4. Welcome questions.
Jensen cautions: “Share information within reason and based on age. Keep explanations simple, especially for younger kids. If you go into too much detail, you run the risk of losing their attention or confusing them. Older kids understand more, so explain with more nuance, but remember that they are still kids too, and they don’t need all the details.”
“Moments of financial insecurity, either in the economy or within the family, provide an opportunity for parents to broach financial topics with their kids and teach them valuable money management skills,” says Black. “Be a sounding board for your child. Let them know they can ask you any questions they have, and if you don’t know the answer, you can research it together.
Black encourages parents to talk about saving for economic downturns and unexpected emergencies.
“If the pandemic taught us anything,” Black adds, “it’s crucial to prepare for the unexpected and save as much as possible for better peace of mind. That’s why establishing emergency savings should be part of any financial plan, both now and in the future.”
There are “why” questions that few of us can answer, so remember to keep it simple. For example, a simple explanation for a stock market concern is that people take risks and guess wrong about where to put money, leaving less money for everyone else.
“I think many parents may avoid these conversations because they might not understand them themselves,” says Black. “It’s ok to say, “‘I don’t know, but let’s research it together.’ It’s not guaranteed that your child will learn about personal finances in a school setting, so having these conversations at home is important to ensure your kids are learning valuable financial lessons at an age-appropriate level.”
5. Be clear on your overarching message: We’re taking care of you.
“Kids may express frustration for not getting things they want. Do your best to focus on their emotions and let them know you wish you could get them the things they want if you, in fact, do,” says Jensen.
“Just knowing you’re on their side while letting them know there are spending limits can be very helpful,” she says. “The overarching message, however, is that parents are going to take care of the family. Kids need to be the kids and not take on adult worries.”
6. Validate their feelings.
Jensen points out that younger kids may bring up feelings of sadness or worry about money during play and that play can feel like a safe place to share.
“If they do, validate their emotions and just listen to them,” Jensen says. “It can feel as though you want to do more, but creating a safe place for your child to feel heard can actually be quite helpful.
“Our calm, listening stance, in the face of their turmoil, helps them process their feelings and regulate their emotions,” Jensen adds. “In the long run, when our kids’ upsets are repeatedly met with empathy and understanding, it helps them develop resilience.”
7. Try not to react but instead make space for older kids’ feelings.
“Sometimes when a little bit older kids feel uneasy about financial struggles, they make comments that inadvertently hurt their parents’ feelings,” says Jensen. “When this happens, try to look below the surface of their comments, find your compassion for them, and make space for their feelings. Later, when everybody feels calm again, it can be helpful to gently remind kids of your family’s core values and emphasize the importance of being kind to one another.
“Kids may not have control over financial matters, but we all have control over how we treat each other,” she stresses.
Black suggests reframing the can’t-haves: “Remember, your child watches every move you make – even with money. Demonstrating healthy financial habits helps ensure you’re setting them up for a life of financial security and freedom. Instead of saying things like, ‘We can’t afford this,’ let them know there are other, more important things that need to be paid first.”
8. Along those same lines, don’t use distraction as a fix.
It’s hard to see your children experience discomfort or unhappiness. I can feel easier to simply to avoid talking about a tough financial hit and distract them with other things.
But, says Jensen “It is more effective to focus on feelings and not solutions or distractions.”
“Distracting is not helpful in the long run because when kids express unhappiness or act out, they are actually trying to clear out their upsets with the people they trust most — their parents.
When we distract, the feelings stay locked away and will find a way to come out,” she says.
“This could look like whining in younger kids or pulling away in older kids. When kids are given a chance to offload their feelings to a trusted person, it lightens their emotional load and makes both kids and adults feel better.
9. Find stories to read together.
Sometimes, it helps to read fiction about other people’s struggles. For example, sisters Laura and Mary in “The Little House on the Prairie” experience hardship, and “The Boxcar Children,” an orphaned group of kids find joy even living in a boxcar. For a great list of current children’s books about financial hardship, check out Insider’s “13 children’s books that encourage conversations about financial hardship.”
10. Find an adult to talk to about your feelings.
Jensen notes that it can be challenging for parents to hold it together for their kids when the parents themselves are feeling dread or anxiety due to their financial situation. In those times, the best thing a parent can do is find a trusted friend or therapist with whom they can express their fears.
“It is important that parents work with their own triggers, so they can stay regulated when their kids need them to provide support,” she adds. “When we don’t take care of ourselves, it can be too painful for us to hear our kids’ comments or help them with their upsets. When this happens, we can get down on ourselves, become defensive, or yell at our kids.”
Above all, Jensen says, parents need to remember that they’re human and don’t need to be perfect. If you share a bit too much or become defensive, remember you can always regroup, apologize, and try again tomorrow.
Says Jensen: “When we aren’t perfect, it sends the message to our kids that they don’t have to be perfect either, and that can make life easier for everyone.”
Start teaching before a financial crisis
Black believes it’s never too early to start teaching kids about finance.
“Think of age-appropriate ways to introduce money concepts to your kids and teach them valuable money management skills, like the importance of having emergency funds and managing debt,” Black says. For example, she suggests that parents teach preschoolers to sort coins into pennies, nickels, dimes, and quarters, which will help them identify denominations later on.
“As my kids got older, I started talking about comparison shopping and unit prices,” she adds. “I looked for every opportunity to have conversations about money, especially when we were out shopping. Which shoes are the best price? How much change should we get back? Is this a want or a need?”
Surveys show that many parents don’t discuss money with their children even though their kids want to learn about managing money.
“Having these conversations can be difficult, but they are important building blocks for future success,” Black says. “Finding appropriate moments to talk with your children about money will benefit them long-term and prepare them to handle financial challenges. Check with your financial institution to see what free tools and resources they may offer to help you kickstart this important conversation.”
Where to do for information
Your local financial institution may have resources and tools to support conversations with kids about money. Ask your local branch manager what’s available.
The Consumer Financial Protection Bureau offers excellent resources for parents with activities and conversation starters for kids of all ages.
BECU offers a variety of free tools and resources for parents to help get their kids off on the right financial foot. The credit union’s Next Big Talk conversation guide is a great place to start.
