How to talk to your children about tough money matters

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Has your family discussed money concerns?

Clinical psychologists note that when kids don’t have enough information about something, they may become anxious, make up their own explanations — which can include blaming themselves for a perceived problem — or seek information from other, potentially unreliable sources. They recommend talking to your children about financial concerns, keeping in mind that the level of detail shared should be based on your child’s age.

Preschool and elementary age

Experts suggest limiting financial discussion with very young children to the basics. If the economy is struggling, you might tell them that this can happen when businesses spend more money than they have and have to pay back what they borrowed, which means those businesses don’t have money to spend on other things, like employees. You might also explain that when money is tighter, they may need to wait a little longer to get certain items such as new toys. Psychologists emphasize the need to be honest, but reassuring, letting children know that tough financial times are only temporary and that you will always provide them with everything they need.

Tweens and teens

Children in this age group are old enough for you to explain what financial terms mean and why the economy doesn’t always perform well. You might also provide an overview of how credit works, introducing terms such as interest, risk and liability.

You could also engage your kids in family budget decisions, particularly should you feel a financial pinch. If they want to go on a vacation or buy that new video game system, ask for their ideas on how to save up the money. If you can’t afford to eat out as often, let them pick a favorite restaurant for a special monthly or quarterly meal. You might also consider encouraging older children to get jobs so they can earn their own spending money.

College kids

Experts say that at this age, families should be open and straightforward when discussing finances. In addition to helping college-age kids understand a change in the economy or other financial development, explain what it could mean for your family’s financial situation and whether it could impact them. Tell them how you’ve been spending and saving, describe struggles you’ve faced, and outline the steps you’ll take to shore up finances. You can also help them build their own budgets and saving plans. Being honest about financial mistakes you’ve made can help your children avoid them in the future.

For more tips on teaching kids about money, visit

Explaining your family’s financial situation will not only help your children make sense of what’s happening, it will provide them with confidence and a foundation of financial knowledge that will carry them into adulthood. (StatePoint)

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