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How To Break Bad Financial News To Your Kids

Sophia Surrett  |  August 6, 2021

If you’ve fallen on hard financial times, you may need to explain to your children why the family needs to move, or cut back on certain expenses. Here’s how to have those conversations.

Job loss. Tight budgets. Tough times. These things are never fun when you’re an adult, and the news of a difficult financial situation can be hard to process and understand when you’re a child. But we’re all faced with the need to tighten our budgets at some point in our lives, and it’s important that our children understand the basics without being frightened by the uncertainty. 

If you’ve had to make budget cuts or move for a new job over the last few months, you’re not alone. 70% of parents say their family has struggled since the start of the pandemic, according to data from ParentTogether. But these circumstances don’t have to make for daunting discussions — your kids are much more resilient than you think, and if you approach the conversation from the perspective of “we’ve got this, and we’re all in it together,” you can make these times seem more like a bonding experience than a disaster. Here’s a rundown on some of the best ways to break bad financial news to your kids. 

Figure Out Your Own Emotions First 

You’re stressed. We get it. There are few things more stressful than facing difficult financial  times when you’ve got a family depending on you. That’s why processing your own emotions about the situation first, before you talk to your kids is the best way to ensure that your discussion is calm, cool and collected, and that your child feels that this is just a “bump in the road” rather than a full-on disaster. If you show stress, then they will absorb that stress. But if you explain things to them in a factual manner, they will be much more receptive to the conversation. One way for you to prepare is to practice some deep breathing before the conversation, and keep mindfulness in mind, says Nathan Astle, a board member for the financial therapy association. Taking some time for silent reflection will help you get in the right headspace — not just worrying about your child’s reaction, or the millions of things on your to-do list. 

Age And Understanding 

There’s a chance that your financial situation will impact your child in a major way, such as leaving a private school and going to a public school, moving cross-country, or giving up a sport or activity they enjoy, such as ballet, softball, or piano lessons. Start by telling them that your family isn’t earning as much money as they were before, and then go into how it’s going to impact them, says Bonnie Harris, Founder of the Parent Guidance Center and Director of Connective Parenting. When you tell them about the change that they’re facing, also talk about the cut backs that you and your partner are making, so your child knows that they aren’t alone, and they aren’t being penalized — the family as a whole is tackling this problem, and everyone is doing their part. Also, keep your child’s age in mind when having this conversation. Kids under the age of five don’t need to hear specifics on numbers. But for teens and tweens it’s fair to spell it out for them and explain how, if a lost job is involved, the family went from earning $100,000 annually, to earning $60,000 annually, which means radical change is necessary. For all children, bringing the issue up over a family dinner is preferable to sitting them down for a special one-on-one “we need to talk” kind of chat, which might scare them. 

Gentle Reminders = Eventual Comprehension

Your children — especially young children — might not grasp the concept of financial insecurity after the first discussion you have. But thankfully, gentle reminders can help. For example, if one of your kids finds a toy that they want while you’re out shopping, you can tell them that the family can’t afford it at this time. Kids often stay in a “want, want, want” mindset, so reminders are necessary to drive home the point, and keep those money conversations flowing. And if you’ve never addressed money or finances in conversation with your child, like, ever, it’s not too late to start. You can explain what a job is, how money comes from what you earn at that job, and how you, as a family, live off that income. You can frame the discussion initially as being about “teamwork,” and tell them how you will all work together as a family to get past this hardship.

Be Honest + Stick To Facts

Talking to the kids about “adult” things like earnings + financial hardship might seem overwhelming at first, but with your guidance, they will understand as much as they need to. Rather than highlighting your emotions around the financial difficulties, try to stick with facts. So, instead of saying things like, “This makes me so sad, and I’m so sorry,” you can say, “I know this is difficult for all of us, but we will get through it.” The most important thing you can do is promise them that you’re there for them, always, and that they can come to you for reassurance whenever they need it. 

Remember one of your main goals as a parent is to ensure transparency and open communication with your kids… As long as you validate their feelings and are there to answer their questions, you’ll have a successful discussion. You got this!



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