Should You Talk to Kids about Money Problems? Yes. Here’s How.

Parents strive to protect their children, and this often means hiding family financial issues.

But should you talk to kids about money problems? The answer is YES.

Shielding them may actually be doing more harm than good. 

Consider these results from two important studies:

  • “In 2010, the American Psychological Association (APA) found that during the Great Recession, 91% of kids were aware that their parents were stressed by how their parents behaved.”¹

  • “A study by Action for Children found that 30% of children worry about their family having enough money to live comfortably (a figure that rises to 47% of those from low-income backgrounds).”²

Not talking to kids about money is the norm.

“According to a 2017 T. Rowe Price survey, 69% of parents have some reluctance when it comes to talking about money with their children. And only 23% of kids say they talk with their parents frequently about money.”³

But, if you do not talk to kids about money problems, they may feel stressed or make the problem bigger than it actually is.

Amy Morin, psychotherapist, host of The Verywell Mind podcast, and author of 13 Things Strong Kids Do: Think Big, Feel Good, Act Brave explains, “While you don’t want to burden a child with adult-sized problems, kids pick up on stress. So, pretending things are great when they’re not isn’t helpful. […] It’s healthy to share the situation with kids so they understand what’s going on, but it’s important not to give them more information than they can handle.”⁴

Use the following 10 tips to talk to kids about money problems without overwhelming them.

1. Understand the Issue Yourself

talk to kids about money problems

Yes, you need to talk to kids about money problems. But you absolutely should not start the conversation until you have a better idea of the issue yourself.

For example, if all you know is that you never seem to have enough money at the end of the month, you need to figure out why that is happening before you try to talk to your kids.

If you are struggling with debt, you need to be honest about why…because your kids will ask. 

2. Get on the Same Page

talk to kids about money problems

One of the main ways kids can tell their parents are dealing with money problems is because they overhear their parents argue about money.

Before you start to talk to kids about money problems, it is important to be on the same page as your spouse or partner about what you want to share.

3. Explain the Problem and the Plan

talk to kids about money problems

When you talk to kids about money problems, it is best to be honest and direct.

This means you explain what the problem is and discuss your plan.

However, avoid over-explaining.

For example, you may say, “Inflation has made prices go up, but mom is still making the same amount of money. That means we will need to choose a less expensive place for vacation this year” or “Dad lost his current job, so we have to watch our spending until he gets a new job.”

4. Keep the Conversation Age-Appropriate

talk to kids about money problems

When you talk to kids about money problems, it will vary significantly according to their ages.

For instance, your seven-year-old doesn’t need to know (or understand) all your worries about your retirement investments.

Your high school senior may need to be aware because it may affect how much you are able to help with college. 

5. Talk about Positive Solutions

talk to kids about money problems

Money problems are stressful, which is why you should aim to be as positive as possible.

Kids need reassurance.

When you talk about money problems, reassure your kids of the ways you plan to address the problems.

Tell them that you plan to use money from your emergency savings. Discuss new ways of budgeting and saving.

Encourage kids to be part of the solution.

For example, ask kids if they can think of free or inexpensive things to do on the weekends to help reach family savings goals. 

6. Focus on What You Can Do Financially

talk to kids about money problems

Another way to reassure kids is to focus on what you can do financially instead of what you can’t do.

Parents tend to say, “We can’t afford to buy this or do that.” 

Instead, try saying, “We can save up to buy those shoes next month” or “We can make sure to add fun snacks to our grocery budget.” 

7. Let Kids Ask Questions

talk to kids about money problems

Earlier we suggested not saying too much or overwhelming your kids when you try to talk to them about money issues…

But how do you know where the line between too little and too much is?

The key is to let kids take the lead.

Begin the conversation with the basic problem and then open the conversation to the kids.

This is a great way to see what they already know and discover what they are feeling.

For example, you may discover your youngest children are most concerned about Santa whereas older children may be worried about getting their first car.

8. Discuss Needs Versus Wants

talk to kids about money problems

When you are trying to buckle down on your spending, one of the things your kids need to recognize is the difference between needs and wants.

Spend some time differentiating between the two.

Young kids are often surprised to learn we have to pay for power and water. Explain that these are needs for your family, whereas treats at the checkout lane are wants. 

Older kids often just need the reminder that they want something, but they don’t need it.

9. Choose Your Words and Tone Wisely

talk to kids about money problems

If your tone or words convey stress or fear, kids will pick up on it.

For example, if kids see you get frustrated when you can’t buy something, they may grow anxious.

If they constantly hear, “We can’t afford it” or “We don’t have enough money,” they may live in fear of money and living without it.

Instead, try to use more positive words to express your money problems, such as “Let’s save up to buy this later” or “Is this the best way to spend our money, or should we keep adding our extra pennies to our savings?”

10. Use It as a Teaching Opportunity

talk to kids about money problems

While it may feel unnatural and uncomfortable to talk to kids about money problems, you are actually doing them a favor. 

According to a study conducted by Personal Capital, “respondents whose parents did talk to them about financial crises or recessions were more likely (72%) to be in good financial standing now than those whose parents did not (65%). Only 40% of respondents say their parents talked to them about potential financial crises or recessions.”⁵

The same study found, “About 62% of respondents whose parents did not talk about crises currently had emergency funds, compared to over 72% of those whose parents did discuss these downturns.”⁶

Use these struggles as learning opportunities for the whole family. 

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