Hundreds of thousands of Americans are currently restructuring their budgets.
Major employers such as Amazon, Target, and Nestlé have all announced layoffs, and the government shutdown is now in its second month. Affected workers must focus their resources on long-term survival.
With tighter budgets, the holiday season could look a little different this year. And it can be an especially difficult time for parents.
“Children are very sensitive,” says Wendell Clark, an Atlanta-based behavioral wealth expert.
If you’re going through financial hardship, you may wonder how proactive you should be with your children. In his practice, Mr. Clark assists clients with financial planning, including financial planning for difficult times.
Here’s his advice on how much your kids should know:
3 tips for talking to kids about financial hardship
1. Be honest
First, let’s be honest, Clark says.
If you’ve noticed a big change in how you spend your money, such as ordering less takeout or spending more time at home because your parent was laid off, tell them why.
“We don’t want it to be long and complicated,” Clark said. “Create a space for them to ask questions about what they understand and what they don’t understand.”
2. Support their emotional journey
Whether you start asking questions right away or need time to process, try to support your child’s emotional response to the situation.
“Remember, they’re kids,” Clark says. “It should make them feel and feel safe.”
If your child expresses sadness or anger, tell them that you understand how they feel and that their feelings are valid.
Most importantly, reassure them that this situation is temporary. “Kids don’t always respond well to uncertain situations,” he says.
Let them know that things will only change “for a little while.”
3. Model the behavior you want them to exhibit.
Finally, it’s important to model the behaviors you want your children to exhibit someday.
For example, if you spend lavishly on clothing, travel, and groceries, whether the economy is tough or not, that’s teaching you about your relationship with money.
“Communication is both verbal and nonverbal,” Clark says.
“Use your experiences to share financial strategies with kids so they can learn money messages and financial values,” he says.
Then show them how you put those lessons into practice yourself.
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