Talking to children about spending cutbacks — April 2012, reviewed January 2013

Money can be a complex topic — when money is tight. It can be tough to explain to children why you can’t buy them what they want or what they’ve always had.  How can you share with them that the family needs to cut spending?

Here are some ideas for getting the conversation started.

Start by explaining it’s not just us.  Explain that families everywhere are trying to cuts costs.

Be honest, but appropriate.  Telling a child ‘no’ to a request to buy something without explanation won’t help but you shouldn’t place the burden of worry on your child, either.

Answer their questions.  Avoiding the conversation might lead to your child to imagine things are far worse than they are.  If you are worried about a job loss, tell them – but at their level.  Help them understand that you are taking steps to improve the family finances and encourage them to help.  Enlist the entire family in coming up with ideas for saving money.

Teach by example. It’s not fair to tell your child they can’t have a candy bar because it’s not in the budget as they observe you buying a latte every day.

Let them earn their own money.  If your child is old enough to get a job, encourage him or her to work to earn their spending money.

And finally, watch your words.  When discussing money troubles with your spouse, don’t assume your kids are tuned out.  If you need to speak privately, wait until you’re truly alone or until the children are asleep.

When money is tight, life can get complex for all family members, for both parents and children.