Since the beginning of COVID-19, many parents have put in place measures to protect kids physically, mentally, and emotionally. That's why we filter our responses when our kids ask why they can't visit grandparents, go to school or play with friends. But when it comes to financial questions, you may want to think again. How should you talk to your kids about money when you have little?
Studies show that even in good times, a significant number of parents rarely talk to their children about money. So when the waters get rough, that level of protection increases. And it doesn't take rocket science to see why.
The majority of parents want to protect their loved ones from the financial stress they're going through. But is it the right approach? Are we protecting or exposing our children by avoiding money conversations during difficult times?
One thing is certain. Hard economic times are unavoidable. Our kids will most probably experience them in the future. And how you handle the situation right now has a huge impact on how they will manage theirs when that time comes. That’s why it is important to talk to your kids about money even when they are young.
According to a recent study by Personal Capital, 72% of adults whose parents did talk to them about money during challenging times are more likely to weather the financial crisis today. So if you want to prepare your kids for financial success, it's important to borrow a leaf from them. But if you don't know how to go about it, don't worry. Here are a few strategies to consider.
Keep It Calm And Positive
Regardless of your financial situation, an optimistic approach will help reduce anxiety in your kids. It will give you a good time to even teach your children about budgeting and financial discipline.
For example, if you lost your business or job, explain your state of affairs calmly to your children. Ask them for ideas on how to reduce spending or how they can help during the crisis.
Parents who simply vent their frustrations about tough economic times tend to pass their stress to the kids and offer no solutions. So keep your talks positive and calm.
Be Transparent, Not Alarming
By the age of 12, most kids can detect money-related issues. As such, it is not wise to hide financial challenges from them.
Be open about what you're going through. Assure them that the problem is just temporary and it will be resolved once the crisis is over. This will help put your kids at ease.
Being transparent will also help you introduce budgetary restrictions without having to spend so much time explaining why. And most importantly, it will help them learn how to deal with difficult financial situations.
Don't fight, Talk
This is one of the most important tips when you are ready to talk to your kids about money. Different people deal with issues differently. It is not uncommon to see spouses who fight or blame each other when they face financial challenges.
But if you want to educate your kids about money, avoid fights and the blame game. As mentioned, kids see how you're dealing with problems. Fighting sends out negative signals on how to manage a difficult situation.
The best strategy is to talk to them as a team. Explain what you're facing and how you're trying to resolve it as a couple.
Don't Forget Your Kid's Abilities
As a parent, you know your child's ability to tackle an issue. You can decide what to disclose based on their age, level of maturity, and their abilities. You don't want your kid to misinterpret, exaggerate, or blame themselves for what you're going through. So choose your words and examples wisely.
Talking to kids about money in a crisis can help them develop and nurture great financial habits early. And since we're in the middle of it right now, don't let it go to waste. Use these tips and more to prepare them for financial success.