Money Savvy Parents' Corner: The Financial Crisis at Home
by Darla Kashian
I got a phone call a few weeks ago from a friend asking for advice on how to talk with her kids about the financial crisis. She was shocked when her seven-year-old came home asking if they were going to be foreclosed. She didn’t get it at first, and then she figured out that her daughter was talking about the foreclosure crisis. Several of her child’s classmates in her suburban school had already moved because of home foreclosure, and one of her daughter’s good friends had said she was worried that her family was going to be homeless.
Sometimes we forget that between overhearing their parents talking, seeing or hearing the news even in the background, and confronting reality in their everyday lives, our children can be overwhelmed. Consider the trying subject of the current economic crisis an opportunity to learn how to talk with your children about difficult issues. This likely won’t be the last time, and hopefully it isn’t the first.
Be Proactive
Ask your kids what they’ve heard about money, the foreclosure crisis, unemployment, and other issues that are prevalent in the news. Give them the first opportunity to express their concerns, letting them know that the subject is on the table for discussion.
Answer Their Questions Honestly
Keeping age and ability to understand in mind, answer your children’s questions as honestly as possible. Here are a few sample answers:
“I lost my job because my company has fewer customers than it used to, so they don’t have enough money to pay me. The good news is I’m looking for another job, and we’re optimistic about our future.”
“We have to move because we found a less expensive place to live. The good news is we’ll all stay together as a family, and that’s what really makes a house a home.”
“Yes, we’re trying to spend less and save more, but the good news is we’re finding ways to have fun without spending money.”
Come up with real life examples and success stories that make sense to your kids. If you’ve been out of work before, talk about how you found a new job. Talk about conserving and scaling back in a fun way, rather than with dread. Most importantly, think about the messages you send to your kids when you speak, in terms of both your words and your tone of voice.
Preventative Measures
By now, those of you who have been reading my column will know that I am an advocate for turning off the TV. But I’m the worst when it comes to the radio. I need to take my own advice and turn off the all-news radio along with doling out advice to turn off the TV. Kids absorb what they hear, particularly if there is quiet time in the car while commuting. A friend’s two-and-a-half-year-old pointed to a picture in the New York Times of Mahmoud Ahmadinejad of Iran and said, “Daddy.” They do bear an uncanny resemblance. It’s sometimes hard to remember that their tiny minds are keeping track.
Empower Your Children
Our temptation as parents is to shield our children from our challenges, but it might be beneficial if our kids feel empowered to help out in some way. If there is an opportunity to engage the kids in helping, either by cooking more at home, conserving energy, or finding ways to have fun without spending money, ask them! Kids are innovators.
On a recent weekend, I witnessed a gaggle of kids playing for hours on what had been a dog platform. Not a fantastic swing set or climbing gym, but a bunch of scrap wood turned into hours of enjoyment. Our children don’t need to know all the details of the family finances, but knowing the generalities will likely make them more cooperative and less demanding in money matters and, in the long run, better prepared to be financially savvy adults.
Disclosure: The opinions expressed are those of the author and are not necessarily the same as those of RBC Wealth Management. RBC Wealth Management did not assist in the preparation of the material and makes no guarantee as to its accuracy or the reliability of the sources used for its preparation. RBC Wealth Management, a division of RBC Capital Markets Corporation, Member NYSE/FINRA/SIPC.
