How to Talk About Budgets with Your Kids

How to talk tightening budgets with your kids

How to Talk About Budgets with Your KidsMaybe you lost your job. Or maybe your son’s project on fossil fuels simply has you rethinking that second car. Regardless, everyone’s tightening budgets these days — and many of us are wondering how to break that news to our kids.

Experts vary on specifics regarding the money talk, but several lessons consistently surface. The most important? Scaling back needn’t be a big deal. Kids just need you to be happy and love them. (Really!)

check your own attitude

Be consistent and gradual.
Financial discussions can be prickly for parents. Sara Dimerman, psychological associate and author of Am I a Normal Parent? (Hatherleigh Press) believes parents should confer among themselves first. Sort out your differences well before talking to the kids. Dimerman also suggests cutting back gradually. Abrupt changes can frighten children of all ages.

Remember that everyone’s feeling it.
“Isn’t it interesting that parents are even nervous about discussing cutbacks?” observes Alyson Schafer, psychotherapist and author of Honey, I Wrecked The Kids (Wiley). “That’s disrespectful to our children — like we think they can’t handle it.” This recession is universal. Cut yourself some slack.

Spare them your grownup issues.
Even when times are tough, don’t lay adult worries on kids. Bring your grownup stuff to your pastor/therapist/credit counsellor. Be the loving parent, not a needy friend.

seize the teaching moments

This is a blessing.
“There are so many opportunities for growing character, it blows my mind,” says Toronto-based parenting coach Terry Carson of “When we teach, we learn. Here’s an opportunity to learn to manage our finances and teach our children.”

Teach kids about costs.
Help kids to understand when and how your family spends money. Dimerman likes using Monopoly money to demonstrate some everyday costs, such as groceries, eating at a restaurant or snacks at the convenience store. “It’s fun. Kids won’t even know they’re learning math.”

Live the lessons.
“This is a fabulous time to start kids on an allowance,” says Schafer. They learn money management and feel independent. You spend less. Everybody wins. “Start modelling good spending behaviour,” Dimerman says. “Identify the difference between needs and wants.” At the mall, try delaying gratification. Your daughter still wants those jeans next week? Great. She can use her own budgeting skills to buy them with her allowance money when she’s saved enough.

watch your words

Be age-appropriate.
Experts agree: the younger the child, the harder it is to understand finances — and process bad news. Kids under seven are likely to jump to wrong conclusions and blame themselves for changes in the family’s financial picture. Be conservative and positive with what you say. Schafer believes that Grade 8 and up is safe for sharing more. Even schools are using the current economic situation to teach about finance.

Speak honestly but optimistically.
With kids, tone trumps content. “If we come off as a pillar of support — not scary — chances are your kids won’t even react,” says Schafer. Even the heaviest news can be delivered lovingly and positively. Always let them know they’re loved and you’ll look after them, regardless. “Daddy lost his job but we’ll live with Uncle Steve for now and everything will be fine. Promise!”

make it a family adventure

Brainstorm activities you can all do.
Hiking, bike riding, stargazing: kids still understand the best things in life are free. Carson says, “Some of the ideas our kids used to come up with were brilliant. And when you involve them in finding solutions, you’re providing great life skills.”

Think creatively about spending.
Remember, things needn’t be expensive to be valued. Example? Go ask your kids whether they’d prefer mac and cheese or salmon tartare.

Steven Bochenek is a marketing writer and also writes editorial stories that are relevant to his life (lately to his children’s dismay).

cash confessions

Being totally truthful about your family’s financial situation depends on your child’s age and maturity, but you want to be straightforward and provide relevant information based on what you believe your children need to know (without scaring them), says Debbie Ammeter, vice-president of Advanced Financial Planning Support at Investors Group.
So what do you say if your child asks why you are scaling back? Ammeter has these suggestions.

1 “As parents, our job is to make the best financial decisions for our family.”

2 “We pay attention to our financial situation and plan for the future.”

3 “We want to keep the lines of communication open about important family matters, including finances. If you’re worried that we won’t have enough money, let’s talk about it.”

Are you being honest with your family about your finances?

Here’s what some moms had to say:

“Our five-year-old understands that things cost money and that if we want to go on a family vacation, we won’t be eating out or going to the movies for a while. If only mommy could cope with the reality of fewer trips to Winners…”

Emily Rieder, Toronto

“We have been open with our kids, aged seven and nine. We keep them involved in the “saving’ as we are in the midst of a shopping embargo except for the essentials and groceries. They know we live in unstable times and we’re trying to save. We just don’t know what’s around the corner.”

Natalie Boyd, Ottawa

“Our son is in kindergarten and he’s learned so much about saving money lately (especially how it relates to environmental impact) that he reminds us that we’re wasting money every time we leave a light on when we leave a room. He also insists on walking to the store to save gas. Not sure how long it’s going to last but it’s a refreshing little reminder that small things add up and it allows us to have conversations with him about bigger financial issues including throwing a smaller birthday party for him at home this year.”

Anna Rossi, Toronto

Looking for more money solutions? We’ve got the low-down on allowance dos and don’ts, a family finance quiz and the best money lessons for your kids.


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