Many parents that find themselves struggling financially usually never mention debt in the presence of their children. But today’s kids are smarter than you think, and they can usually sense what’s going on at home. What they can’t understand is why.
A study by the American Psychological Association found that only 18 per cent of parents believe money is a source of stress for their children. However, the study revealed that as much as 30 per cent of children say they are worried about their family having enough money. Furthermore, an astonishing 91 per cent of kids say they know when their parents are experiencing stress.
So, if your kids can pick up on your money troubles, should you come right out and tell them what’s going on? Or will that make them worry even more?
The answer really comes down to a number of factors, including how well you think you can hide your money stress from them, how old they are and whether or not the child will be able to handle the truth.
Children under the age of six probably won’t understand debt at all, so it is wise to not try and explain it to them. In fact, children as young as five years old have shown an increase in depression and anxiety stemming from their parents’ unemployment and financial problems, according to the BBC.
If your kids are between six and 12, they may understand a bit more, but you likely don’t want to go into too much detail to cause them unnecessary worry. It also depends on the severity of your debt. If you’re going to lose your house and have to move, then you won’t be able to hide it from them for long so it’s best to be truthful. However, if you have a plan in place to steadily pay down your debt, you shouldn’t need to worry them too much since you’ll have it under control.
Only you can determine if your child is mature enough to understand and whether or not sharing this kind of news will be bad for their mental health. If you do decide to tell your children about your debt, follow these tips.
- Choose the right time to talk. Something as important as a debt problem should not be discussed at just any time or anywhere – you should choose the right time to talk. Create a comfortable and casual environment to sit down and actually have a family discussion about debt and finances. Let your children know that you welcome any questions or concerns about the situation.
- Start by talking about your financial difficulties. Although your children probably already realize that you are stressed financially, start the conversation by talking about it. Tell them how you have not been able to give them the things they want and then go on to discuss the debt. You don’t have to give them the exact figure; it’s enough for them to know the approximate amount.
- Explain to them why you are in debt. Once they understand that the family’s difficulties are because of debt, explain to them why you are in debt. This is an important part of how to talk to your children about debt. If the kids are young, it’s not necessary to give them the nitty-gritty details. But older children may want to know the full details and you should answer all of their questions truthfully.
- Tell them how you are going to solve the problem. After they understand the reasons why you’re in debt, tell them about the steps you’re taking to solve the problem. If you are planning to sell your home or make other major lifestyle changes, then be honest about it. Explain to your kids how they can help out and be involved in managing money properly. Once they’ve fully grasped the situation, they will be more than willing to help.
- Be cheerful and positive. Do not make the mistake of talking and acting like all is lost and there is only darkness ahead. This could have a negative effect on the children. Be positive about working towards becoming debt free. If you are confident, they will feel confident.
- Don’t make it sound like they are to blame. Many parents mention school fees and other expenses related to the children. While you may mention these casually, you should never make the mistake of emphasizing them. Children often blame themselves for their parents’ financial problems, so you should make it clear that they are not to blame.
Remember, your children will feel better during a time of family crisis when they know that their parents are facing the situation head-on. Explain to your kids that you are doing all you can to keep the family safe and secure. Contact Credit Counselling Services of Atlantic Canada to get started on a personalized debt management plan that can help you and your family achieve debt success.