When it comes to parents and children, financial stress can spread.
That’s what Amy Weimer, director of the School of Family and Consumer Sciences at Texas State University, discovered when she and a colleague examined 60 children last year. They were more likely to express concern if their parents were dealing with prolonged financial stress.
“As a parent, if I know I’m in deep debt, I would want to take action to address that issue so it doesn’t affect my child’s mental well-being,” Weimer says. Parents may want to seek financial counseling to help with debt management, for instance, if they are facing financial strain, she adds.
According to researchers and financial professionals, there are also other actions parents can take to help educate their children about money without burdening them with their financial worries.
TALK ABOUT MONEY EARLY
Discussing money with children during neutral times can help establish a comfort level with financial conversations, says Justin Rush, a certified financial planner and founder of JGR Financial Solutions in Canton, Ohio.
On a recent drive with his son, a seventh grader, and father, the trio began discussing the price of a McDonald’s Big Mac, which led to a conversation about inflation. These types of conversations can lead to discussions about budgeting and other financial lessons, Rush says, which sets a baseline for speaking about money with ease.
“Some parents think they are doing kids a service by not talking about adulting stuff early on,” says Kimberly Watkins, assistant professor in financial planning at the University of Georgia, who adds that you can start talking about money with children as young as age three. But the reality is, she says, avoiding the topic can create a “generational cycle” of financial unawareness, which can ultimately lead to more money stress.
LEARN TOGETHER
Sometimes, Watkins says, learning about finances can be a family project that benefits both parents and children. “Be comfortable with letting kids know you don’t know everything,” she says. If your child asks you a question about money you can’t answer, then you can find out together.
Watkins suggests using the “Money as You Grow” website from the Consumer Financial Protection Bureau for ideas on topics to explore together, such as the financial implications of buying a pet or moving to a new house. Your bank or credit union might offer additional online resources to help your family, she adds.
CONSIDER LANGUAGE CHOICES CAREFULLY
Because children often interpret words so literally, using phrases like, “we don’t have the money for that” in response to requests can be confusing, says Pam Horack, a CFP at Pathfinder Planning in Lake Wylie, South Carolina. Instead, she suggests saying something like, “That’s not in our budget right now.”
That slight language adjustment helps a child understand that parents are constantly making choices and trade-offs when it comes to money, she adds, which can ultimately be an empowering realization.
Megan McCoy, a faculty member in the personal finance department at Kansas State, also recommends being careful about how you talk to your sons and daughters differently about money, even if it’s unintentional.
“One old study discussed how daughters tended to receive messages about saving, while sons tended to receive messages about earning,” she explains. “This could affect their willingness to take risks or choose a job with good earning potential. It could have a significant impact.”
BE HONEST ABOUT FINANCIAL DIFFICULTIES
For parents experiencing a particularly stressful period such as a job loss, Weimer recommends communicating the news in a way that is suitable for their age instead of trying to hide it. For example, you could tell a young child that you lost your job but are working hard to find a new one, while a teenager could understand the details of layoffs and job searching on LinkedIn.
“It might seem counterintuitive, but by sharing more about money, your children will feel less worried,” says Gregg Murset, a certified financial planner and CEO of BusyKid, a debit card and chore app for kids. He suggests reassuring them that some things will remain the same, such as your ability to feed and house them, while explaining that other expenses, like going out to dinner, may need to stop, at least for the time being.
GET KIDS INVOLVED
Sometimes, children can help the family more during a difficult financial time such as a job loss, and this can help them feel more in control. For example, a teenager can reduce the emotional burden of a parent handling multiple jobs or working long hours by taking on extra chores at home, Weimer says.
“It helps them understand that they also contribute to the overall well-being of the family, whether by cutting back on expenses or just easing parental anxiety in other ways,” she says.
