11 Oct
2010

Many families are having to make key changes to their finances in this economic climate. However, if you are making changes or are being put into a new financial situation and you have kids, you have an added challenge: you need to explain to your kids what is going on. Here’s how to have that frank discussion about money with your kids:

1) Stay reassuring and note that you will still have money for necessities. Many kids don’t really understand where money comes from and how it is spent. Younger children, especially, can be confused about what less money can mean and can feel frightened because they are very vulnerable when it comes to money. List exactly what changes will take place but make sure you list which necessities will still be covered. Let kids ask if they’re not sure what will still be covered.

2) Create a simplified kid-friendly version of your budget or financial plan and share it with your children. This will help prepare your kids for the changes that will be taking place and will help them understand what is going on.

3) Ask your children for their input. Ask your children if they can think of ways that the family can save money. This lets kids take part and also lets you gauge how frightened they are. If kids start suggesting eliminating necessities, it may be time to gently reassure them that there’s still plenty of money for those.