Living through a recession is hard for anyone, especially for those with kids. The most recent economic recession has cost millions of families their homes, jobs, savings and a way of life many took for granted. Because people have lived through these challenging times, their views of money and security have changed.
Not only have adults been effected by the recession, so have the children in these families. Many children don’t realize why they have the lifestyle they do. They notice when they aren’t able to do the things they have become used to doing. Most adults try to hide their financial troubles from their children. While it’s an understandable reaction, it’s not always the best thing to do. Many children can adapt to things easier if they understand what is happening. During these troubled times, it may be time for adults to teach children about money and how to save.
Teaching Good Financial Habits
It’s always a little awkward to talk to children about money, especially if the family is having financial difficulties. When adults decide to use their current financial situation as a learning opportunity, they don’t always know how to do it.
1.Explain and Discuss
Kids notice when things have changed in their home. When they are no longer able to do the things they are used to doing, they often notice and some have questions. When these questions happen, it’s time to explain the reality of the family’s financial situation. It doesn’t have to be in great detail, discussing all the debt that is owed. Many children just want to understand why their life is changing and have a chance to ask questions.
Many parents don’t realize their kids NEED to ask questions about their changing lifestyle. There are some families that have had to move from a huge home to a tiny apartment and children don’t understand why. These unasked questions create stress for the children and they sometimes internalize the situation and blame themselves.
2.Talk About Saving
When a family is in financial distress, it’s important to tell children about the need to save as much money as possible. It’s important to show kids how to save money and redirect it those monies to something more important.
Many parents found that giving smaller children a piggy bank makes them feel better about contributing to the family’s efforts to save money. Allowing small kids to put money into the piggy bank so they can save for a toy they want teaches them the value of working for what they want as well as saving.
3.Show Kids What Saving Looks Like
Parents have to show children what saving money looks like. Instead of allowing kids to wonder what it looks like, actively involve them in decisions. When a luxury is taken away to save money, it’s okay to tell kids that it was taken away because it was not the best financial choice right now. When adults don’t buy what they want because it’s too expensive, it’s okay to tell kids why it’s too expensive.
With these three simple steps, kids can learn from a recession and become better prepared for financial problems in their adult life.