Subscribe to blog via RSS

Search Blog

How to talk to kids about money during tough times

Categories: Hacking Life, Parenting, The Juggle


Our kids are 15, 13, 10, 4, and 2 years old. We can’t really sit down and have a family discussion about finances — two out of five of them don’t even know what that word means. But in this economy, and when both my husband and I work in print journalism (a field that’s not exactly a. lucrative or b. thriving), it’s imperative that the kids understand that we have to cut our budget back right now, and why.

But how do you talk about money to kids who range in age from “Oooh, something shiny! Can I eat it?” to “But all of my friends have new 8GB iPods” to “What car will I be driving when I get my license next year”?

Throw into the mix the fact that we’re a blended family, and have no idea or control over how money is handled in our biggest kids’ other household, and the discussion can be quite a minefield. Here is what’s working for us, so far.

1.) Be open and honest. Sharing household budget constraints can make it easier to save money and lets kids feel like they’re helping, Myvesta Foundation president Steve Rhode told Reuters recently. “It’s not a matter of them getting a job to help pay the mortgage,” he explains, “but rather not asking for things all the time, or when you say we can’t afford it, they understand why you’re saying no.”

2.) Keep it brief. We keep financial discussion short, for two reasons: The little kids have the attention spans of sugar-fueled gnats, and the older kids have active imaginations and a finely tuned sense of the dramatic. As a family, we need to be frugal, not insecure or fearful, in order to get through tough economic times. Staying positive and optimistic is a good way to go, says Yahoo finance writer Laura Rowley. “Ideally, an optimistic approach will teach kids that while we can’t control everything that happens to us, we can control our attitude about what happens to us,” she says.”

3.) Don’t over-explain. Jamie Woolf, author of Mom in Chief, suggests that parents should answer kids’ questions and respond to their concerns, but not delve into all the details. “For example, you may be worried about your college savings, but your ten year-old daughter is not likely to lose sleep over it,” she writes on her blog.

4.) Be consistent. Kids crave stability, and you’re not doing them any favors by deciding to splurge “just this once.” If you do, when the next splurgeable moment comes around, you won’t have a leg to stand on. Instead, embrace inexpensive or free activities and homemade gifts, and find ways to make your entertainment dollars do double duty. (For instance, buying a family membership to a local museum is a tax-deductable way to enrich your kids lives and help the community at the same time.) Teach your kids about money in general before you focus in on crisis issues.

5.) Show them how to budget. This can be as simple as deciding — together — how much of their allowance to spend and how much to save, giving older kids a set amount of money for clothes shopping and challenging them to stay within the limit, or having kids do extra chores to earn “points” that they can spend on the things they want (Handipoints has a great system for this). A few years ago, we started teaching them about budgeting by letting our kids each pick out a small bag of their favorite candy and then telling them it had to last a week; now, we  set our 13- and 15-year-old girls loose in H&M with a $25 gift card and they make it last for armloads of bargains. 

6.) Be willing to compromise. A little. If you budget $25 for jeans and your teenager wants a much more expensive pair, tell her that you’re willing to pay for part of it. According to Chick Moorman and Thomas Haller, authors of The 10 Commitments: Parenting with a Purpose, saying so “defines your limit. It also invites the child to take responsibility for coming up with the difference. It curbs feelings of entitlement and allows children to take ownership for achieving their desires.”

7.) Remember that, as a parent, your job is to set limits. “You’re not depriving your children” points out Dr. Michelle New at, “you’re teaching them important lessons about delaying gratification, earning treats and rewards, and about family finances.”

How do you talk to your kids about money in this economy?

Subscribe to blog via RSS
Share this on:

2 comments so far...

  • Lylah, this is great. I’ve been slowing working with the 4 y.o. to get her to understand money value. I never thought I’d be a chart mom but now we have one. She has to do her “chores” (get dressed, brush teeth, make bed, clean up toys) in order to get money. Right now the money is going right into the piggy bank but soon we’ll let her keep some and save some. We are only a couple of weeks into this and I already see a difference in her understanding.

    Hmm, I want to earn an H&M gift certificate! Will you be mom?

    Mandy Nelson  |  January 12th, 2009 at 4:32 pm

  • Most kids do not worry about money for they never thought that it’s not that easy to get some. Showing your kids how valuable they are to you and that you work hard to earn money to provide for their needs will surely be a great way to teach them the importance of money. Now during hard times, it’s not hard to talk to them about financial things of life.

    box24  |  May 27th, 2010 at 1:30 am