Monday, January 12, 2009

How do you talk to kids about money when times are tough?

My husband and I both work in print journalism, a field that's not exactly thriving right now. We're facing some tough financial decisions in the next few weeks, and have been racking our brains to figure out how to talk to our kids about money in a way that won't make them feel fearful or insecure.

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. Over at The 36-Hour Day, I discuss what's working for us, so far. The details are there, but here are the basics:

1.) Be open and honest. Sharing household budget constraints can make it easier to save money and lets kids feel like they’re helping.

2.) Keep it brief. As a family, we need to be frugal, not insecure or fearful, in order to get through tough economic times. That means not harping on finances 24/7.

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.” Also, teach your kids about money in general before you focus in on crisis issues.

5.) Show them how to budget. 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 “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 are you talking to your kids about money right now?

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