Debt problems are stressful. They are difficult to deal with as an individual and can tear apart adult relationships; so it’s pretty obvious why it may be tempting not to talk to your kids about your money problems. While your instinct may be to protect your children by keeping them in the dark about a difficult financial situation, it’s not in their best interest. Children are incredibly perceptive, and likely know that something is going on long before you decide to tell them. Keeping secrets may actually cause them to be more stressed and anxious.
Keep these tips in mind when talking to your kids about debt:
Making excuses for why there are suddenly fewer television channels or why the annual family vacation isn’t happening or why they can’t have the new laptop they’ve been asking for is a bad idea. You teach your children to be honest with you and that they can trust you, so you need to show them that it works both ways. Having said that, kids don’t need to know everything. So tell the truth, but spare the gory details for adult conversation.
Keep it Age Appropriate
If your children are elementary school aged or younger, use simple terms that they can understand. To them, the most important thing to know is that they’re still going to be loved and cared for and that it’s not their fault. To a young child, a family crisis such as a job loss or layoff may actually be good news as they get to spend more time with their parent while they look for new work. Try to avoid having emotional discussions or falling apart in front of your young children – save those moments (which you are entitled to have) until after bedtime.
Tweens and teenagers have a much better grasp on money and will be better able to understand cutting back. Don’t spend lots of time drawing their attention to things they can’t have or things they can’t do, instead, focus on ways the family can work together to balance the household budget. If you currently pay to have services performed such as mowing the lawn or babysitting for younger siblings, this is an opportunity for an older child to step in, do these tasks and “earn” some money (albeit less than you had been paying) – this not only helps to reduce the family budget, but also allows your child to feel like they are contributing and still able to have some spending money of their own. A big concern for older teens is going to be their ability to attend university or college. A frank discussion about what you will or will not be able to help them pay for is best for everyone and will help them to set realistic expectations for what their post-secondary education will be like.
Young adults are beginning to live at home for longer and they are apt to figure out there is something financially amiss. In this age category, it may be time to insist that they start to contribute to the household as well. Young adults look to their parents as financial role models, so let them learn from your debt troubles along with you so that they don’t end up in the same situation in the future.
Use it as a Teachable Experience
No matter what age your children, telling them about debt problems can be a wonderful chance to engage them and teach them about family finances. You may decide to implement spending jars so that everyone can see exactly how much is left to spend in any given jar at any time. You may suggest that a teenager look for a part-time job to help pay for the new jeans/shoes/video game/phone that they just have to have. It’s also a great opportunity to discuss the differences between want and need (a concept many adults still struggle with!).
Our children are woefully under educated about finances from the current education system. Coming together as a family to talk about and address debt problems can help to set them up with tools that they will use for the rest of their lives such as budgeting, accountability, and structure. This will significantly reduce the odds that they will experience financial distress of their own in the future.
Assure Them You Have a Plan
At any age, your kids are going to want to know one thing in particular – that it’s all going to be okay. A time of financial difficulty can be a chance for a family to pull together and meet challenges head on as a unit. And this is where we can help.
If your family is dealing with financial uncertainty or is having trouble meeting your minimum payments, you may benefit from having a free meeting with one of our trustees. We can review your debt problems and financial situation with you and help you to come up with a plan – the right plan for you and your family – to get you back on track.