Hundreds of thousands of Americans are reconfiguring their budgets right now.
Major employers like Amazon, Target and Nestle have all announced layoffs and the government shutdown is now in its second month. Impacted workers must focus their resources on long-term survival.
Tightening budgets could mean the holiday season looks a little bit different this year. And it will be an especially challenging time for parents.
“Children are exceptionally perceptive,” says Wendell Clarke, an Atlanta-based behavioral wealth specialist.
If you’re navigating financial hardship, you may be wondering how forthcoming you should be with your kids. In his practice, Clarke helps clients with financial planning, including looking ahead to challenging times.
Here’s his advice on how much your kids should know.
3 tips for talking about financial hardship with your kids
1. Be honest
To start, just be honest, Clarke says.
If there’s going to be very noticeable changes in how you spend money, like not ordering takeout as much or if a parent has been laid off and is spending more time at home, tell them why.
“I wouldn’t make it long and complex,” Clarke says. “I would create space for them to understand and not understand and to ask questions.”
2. Support them in their emotional journey
Whether they start asking questions immediately or take time to process, make sure to support your kids’ emotional response to the situation.
“Remember, they are kids,” Clarke says. “They should be allowed to feel and to be reassured.”
If your kid expresses sadness or anger, tell them you understand how they feel and that their emotions are warranted.
Most importantly, reassure them that the situation is temporary. “Kids don’t necessarily do well with the indefinite,” he says.
Let them know things will only be different for “a little while longer.”
3. Model the behavior you want them to exhibit
Finally, it’s important to model the behavior you want your kids to one day exhibit themselves.
For example, if you spend lavishly on clothing, travel, groceries — both in a time of financial strain and when money’s not so tight — that’s the relationship you’re teaching them to have with money.
“Communication is both verbal and non-verbal,” says Clarke.
“Use experiences to share financial strategies with children so they can learn your money messages and financial values,” he says.
Then show them how you’re implementing those very lessons yourself.
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