When your family is struggling financially

When things are tight ... How much should you burden your kids with?
When things are tight ... How much should you burden your kids with? Photo: Getty

As parents, we may find ourselves saying 'no' more often than we would like. 'No, don't touch this', 'No, don't do that', 'No, you can't have that'. But what if your family were under financial stress and you had to say 'no' for an extended period of time? Would it be appropriate to tell your children about your financial difficulties? There is a line to be drawn between what is and isn't appropriate. The good news is - talking to our children about our financial struggles, with delicate care, can have some benefits.  

The cost of raising children

Parenting, on the whole, is a very rewarding experience. But the reality is - it comes at a financial cost.

In a 2013 report from AMP and the National Centre for Social and Economic Modelling (NATSEM), it was found that the cost of raising children in Australia has risen dramatically in the past five years. The research looked at the cost of raising children in Australia across all income groups.

The report found that middle-income families have had the biggest increase in costs. Middle-income families are spending up to $458 a week to raise a child, 50 per cent more than in 2007. According to Ben Phillips, a NATSEM researcher, "The cost of (raising) two children to the age of 21 is about $800,000.”

The estimate for low-income families, however, was much lower at about $450,000.

While the cost of raising children has risen since 2007, the average household income has only grown 25 per cent.

Most families are likely to struggle financially at some stage or another. 

Sharing your worries

Warren Cann, psychologist and CEO of the Parenting Research Centre, says if you're questioning whether to discuss money problems with your children, you need to reassess why you feel that way.

“When you're thinking about talking to your children about money, the question - first - to ask yourself is, 'Why?',” says Cann.


Sometimes parents may feel a need to unload on their children, but this could do more harm than good.

“If you're worried about your financial situation then it's far better to find another adult to share that with. Otherwise, what you're just doing is transferring worry to a child and they can't really do anything about that worry,” says Cann.

Dr. Justin Coulson, parenting expert and author of What Your Child Needs From You, says if we do choose to talk about it, we could use our financial situation as a learning opportunity for our children.

“It gives us the opportunity to teach them about priorities, budgeting, needs, and wants.”

“It helps them reset their expectations,” says Dr. Coulson. 

When to talk to children about financial difficulties

Cann says it's all about timing.

“The time when you might talk to your kids about financial worries or financial issues is when they ask, or when you might want to engage them in some action to address the problem.”

Sometimes families are suffering due to a unexpected job loss and this might be worth explaining.

Jo Lamble, resident psychologist on Channel 10′s Studio 10, explains: 

“If there is a financial crisis in the family, for example, retrenchment, then [money problems] can be talked about, but only in terms of changing the budget with less to spend on the luxuries and highlighting the important expenses,” says Lamble.

“If money problems necessitate moving house or changing schools, then more explanation is needed - without worrying them.”

“Perhaps something about why the money problems have come about (global financial crisis, illness, unemployment etc) and the responsible way you're dealing with the reduced income.”

How to talk to children about financial difficulties

Cann says if a younger child is repeatedly asking to buy something and you're experiencing financial difficulties, it is acceptable to simply say 'no' as “it is okay to be okay with saying no”.

However, alternative responses are okay too. As long as you're careful about your wording.

“It might be a simple response that says, 'I can't afford that right now, but we could get this ...' or 'We might have to wait until we can afford that.' or 'We might need to save before we can get that.'”

If, at other times, you are in the middle of discussing your financial situation and your child asks further questions, then follow their pace.

“You keep providing the information until you get to the point where the child seems satisfied. It is important to do that otherwise the child might just worry. If they're thinking about it and we don't give them the information, they might just fill in the gaps themselves.”

Cann says that it's also important to make sure that your children understand what you've told them. “After explaining you could say, 'Do you have any questions?' or 'Do you have any thoughts about this at all?'”

Dr. Coulson says that your children don't need to know the specifics. What they need to know is that 'right now things are not as good as we'd like them to be financially. We're working hard to change that.'”

Always remember to show empathy towards your children too.

According to Dr. Coulson, an empathetic response would be:

"I know you'd love to do that, but right now there is enough money for this and this. We hope we can do that in the future, but we're not sure when we can."

Teaching children to save

We could also use this opportunity to teach our children the value of saving.

Cann says, “It's a good thing for parents to talk to their kids about their spending decisions. If money is a little bit tight, when you're shopping you might use this opportunity to be talking to your kids about what is on special, smart shopping, the amount of money you spend and the quality of the product.”

Cann says that you can discuss ways your family could save more money around the house. For instance - turning lights off, walking rather than driving. Your children can help come up with new ways to have fun, whilst still remaining within the new budget.

“You can involve them in that kind of talk and in doing that, you're educating them about money decisions without filling them with worry. You're engaging them in the problem solving component,” says Cann.

Valuable life lessons

As dire as your financial situation may be, remember that what you teach your children now could benefit them greatly in the future.

“I encourage parents to help kids get into a savings pattern early,” says Dr. Coulson.

“Saving money is a valuable discipline. Kids feel great when they've saved all their cash and can independently buy something they've wanted.”

“Similarly, it teaches them the value of money - some kids save and save to get something, and then realise that what they want to buy isn't worth it after all.”

“The sacrifice of saving makes them really appreciate how hard it is to get money together to buy something.”

Thuy Yau is a freelance writer and mother of three. She is passionate about giving children the best start in life. You can follow Thuy on Twitter, join her on Facebook, or read her personal development blog at Inside a Mother's Mind.