Talking to Your Kids about the Economy

By: Byna Elliot, Senior Vice President, Community Development
Fifth Third Bank, Eastern Michigan
248-603-0415

If you’re worried about the current economic conditions and what it means for your family, chances are your kids are too. Even young children pick up on your cues and maybe dealing with fears of their own. Below are some tips for talking to your children about finances and how the current situation is affecting your family.

1. Remember that kids live in a black and white world. It’s a common reaction for people to joke about their economic predicament. Unfortunately, kids don’t often understand the difference between a joke and reality and may literally think your family will end up on the streets even though you mean it in jest.

2. Be honest. Give your children a basic understanding of your financial situation, but only provide them the amount of information appropriate for their age. Reassure them that while you may need to cut back in places, you’ll still be able to provide for their needs.

3. Different ages require different approaches. While younger children are mostly looking for reassurance, teenagers are likely talking about the economy in school and need a greater level of detail from you. Take a proactive approach and ask them if they have questions about how events in the news are affecting your family.

4. Add context to financial conversations. Showing older kids your monthly bills can help them gain a better understanding of your situation and identify ways they can contribute. Seeing the actual bills and how you pay them is a good way to bring financial discussions to life.

5. Allow your kids to help. Doing so gives your children some sense of control of the family’s situation. Encourage your kids to help you find ways to cut costs or possibly save money. Even young children are looking for ways they can pitch in.

6. Use this as an opportunity to teach. If asked how much something costs, don’t take the easy way out by saying, “a lot” or “too much.” Go a step further and teach your kids the importance of money by illustrating how much allowance must be saved or hours worked to purchase what they want. Additionally, older family members may be able to share reassuring experiences from previous economic downturns.

7. Give kids a chance to manage money. A great way to build your children’s financial foundation is to open savings accounts in their name. They’ll be able to see the value of savings as the account grows and will feel empowered by contributing to and managing the account.

8. It’s okay to say no. Telling your children that they can’t have something isn’t neglectful parenting. In fact, it’s the opposite. Setting limits or saying no reinforces the concept of delayed gratification.

9. Look for signs of stress. If you notice changes in your children’s appetites or sleep patterns, among other things, they might be feeling the effects of your financial stress. Help them to manage and reduce stress and consider getting professional counseling if needed. Many companies offer employee assistance programs that can direct you to the help you’re seeking.

10. Set a good example. If you’re doing a good job taking care of yourself and managing stress, chances are your kids will too.