Improving Your Relationship with Money: Talking Money with Your Children

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You should be honest about your family's finances with your children. They don't need to know all the details, but if your children are old enough to sense money-related tension and anxiety in your household, you need to tell them what is going on and what you are doing to improve things.

If you're like a lot of parents, your initial instinct may be to protect your children from your family's financial problems. Usually, that doesn't end up a good idea. Even very young children are amazingly perceptive about negative changes in their environment. They may not know exactly how things have changed or why, but they can sense the change and may develop problems as a result unless you help your kids understand and deal with what is going on.

Help your children maintain a sense of security by explaining your family's financial situation and what they can expect in the months ahead. Take their ages and maturity levels into consideration when you decide what to say and how to say it. Tell them as much as you think they need to know and can process intellectually, being careful not to scare them.

You probably need to go into greater detail with a preteen or teenage child than you do with a younger child. Teen and preteen kids generally have more financial needs and wants than young children and are more subject to peer pressure, so they need a clear sense of how they may be affected by your efforts to get out of debt. For example, they may have to start bringing their lunches to school, or you may need them to get part-time jobs to help pay for their gas, auto insurance, or nonessentials.

Compared to younger kids, preteens and teenagers are most apt to have difficulty accepting the fact that they can't do and have all the things they have become used to. Peer pressure can be a powerful thing.

Regardless of the age of your children, reassure them that things may be different for a while, but you love them and everything will be okay. Help them feel safe by letting them know that you and your spouse or partner are putting a financial turnaround plan together, by keeping their day-to-day routines as unchanged as possible, and by doing fun things together.

Be alert to signs that your family's financial problems are creating a lot of stress in your children's lives or that they are becoming depressed. Signs of trouble include crying, angry outbursts, withdrawal, behavior problems at school, headaches, stomachaches, not wanting to go to school — just about anything out of the ordinary. Try to get your kids to talk about what is bothering them. If they won't, or if their symptoms get worse, they probably need to meet with a mental health professional. Contact the psychologist at their school and consider letting their teachers know what is going on so they can look for signs of trouble as well.

As you help your children cope with your family's financial circumstances, bear in mind that your money troubles offer you an opportunity to teach them important lessons about managing money and the dangers of too much debt. When they become adults, they may be able to use those lessons to avoid financial trouble. One good way to help them master these lessons is to involve them in creating a monthly household budget.

This article was authored by Ted Benna, Stephen R. Bucci, James P. Caher, John M. Caher, N. Brian Caverly, Peter Economy, Jack Hungelmann, John E. Lucas, Sarah Glendon Lyons, Margaret A. Munro, Brenda Watson Newmann, Mary Reed, Jordan S. Simon, Kathleen Sindell, Deborah Taylor-Hough, John Ventura.