Is Your Family in a Financially Tight Spot?

So many of us feel that we must safeguard and protect our children from any hardship, including financial difficulties. You are not necessarily doing them a favour, and if you want your kids to be secure, informed and contributing members of your family, transparency is essential. Parents must discuss money openly with their children—especially if there is changes in income levels or unexpected expenses that put your household finances under pressure. Yes, instead of allowing this dark cloud to hang over the family, rather inform the kids what is going on. Kids are extremely observant and they will know something is wrong. An open discussion will put everything into perspective and reduce the anxiety of not knowing. You can also use the opportunity to teach your kids valuable lessons in proper proactive financial management. Approach the subject directly, explaining things in simple terms.

With younger children: Explain where money comes from (by working) and sometimes we have more money than other times. Tell them that things have changed, and that for a while the family will have to make some changes and that things might be different. For example “we won’t be going out to the movies on Friday nights—instead, we’ll rent a DVD and watch a movie at home”. Young children are very adaptable and all they actually need is to feel secure and be loved. If the situation is asking for more severe changes, like moving to a smaller house or townhouse they may get upset, but will accept it, just like everyone else in the family. Reinforce the fact that being part of a loving family is more important that material possessions. Make sure that you believe this as well.

With older children: They can understand the nuts and bolts of a situation like this much better and can even participate in finding solutions. Lead the discussion with them on how each family member will help get through the tough times: Who will give up which extras and who can earn extra spending money or help with additional chores so the parents can focus on resolving the situation. Make it clear that everyone, including parents, has to sacrifice some things for the good of everyone. Your teenagers might think it is the end of the world, but I can assure you they will survive and end up more appreciative, content and balanced individuals.

You as a parent has nothing be ashamed off. We live in tough times and many of the economic realities that we are confronted with are not by our own making. If your situation is as a result of poor financial decisions – rectify the situation and use this as an opportunity to teach invaluable lessons to your kids.