How to Talk to Your Kids About Financial Hardship

How to talk to your kids about financial hardship?

talk about financial hardship

Photo by Karolina Grabowska from Pexels

As a parent, there are many things that you want to protect your children from for as long as possible. There’s a natural desire to try to stave off the harsh realities of the world so that you can allow them to enjoy a carefree childhood for as long as possible. However, the problems of the world tend not to listen to your wishes, and issues can disrupt lives, forcing you to break that bubble. 

This can be particularly difficult when it comes to finances. Sure, you’ve probably instilled some sense of the value of money into your children. However, it is likely they don’t fully comprehend how much of their lives it can dictate, and just how difficult things can get when you’re forced to tighten your belt significantly. During times of austerity, you may be quietly working away to improve your family’s financial stability, but there is going to come to a point at which you have to explain the situation to your young ones. 

Let’s take a look at a few of the effective ways to gently inform your kids of the financial challenges your family faces. 

Explaining the situation

Financial issues can be frightening for everyone involved. Since the start of the recent pandemic, many parents have found themselves facing long term unemployment. This can understandably lead to a great deal of emotional turmoil, with rejections during the job search adding to the stress alongside the need to tighten up on finances. It can be very easy to inadvertently pass on this panic to your children when explaining the extent of the situation, but that will only add to their fear, which in turn could create an even more stressful environment for you all. 

Instead, approach discussions in the following ways:

Simple but honest  

Don’t overly complicate the situation by trying to explain the various socioeconomic factors that have led to the situation. Rather, outline the key facts in a way that they will understand — you know your children and their level of comprehension better than most. However, don’t overly sugar coat it with euphemisms; children are savvy, and half-truths just make things more confusing for them. With clarity and honesty, your children can have the confidence that the situation may be bleak, but you can be relied upon to help them navigate it.


Encourage questions


Too often, children feel as though they are shut out of adult conversations. This can leave them feeling isolated, and even more powerless than usual. When children don’t have the information they need to explain disruptive events, often fears will simply fill in the gaps. Encourage their curiosity. Make it clear that you will answer any questions as best you can, whatever they are. When you don’t know the answer to questions, make a point of working to discover the answer together. 

Talking through the practical impact

Once you’ve explained the circumstances surrounding financial hardship, the next issue is how it is likely to impact your family. For kids, even when you’ve explained that you are going to have less money around, there is still a disconnect about why this means they won’t always be able to have the pricier things they ask for. Therefore attention needs to be paid toward imparting the practical consequences. 

Try to avoid bigger picture financial explanations. If you have savings or investments, it’s both likely and wise that you’ll be moving these around to reflect those assets that perform better during periods of recession. The reallocation of these investments and capital can have a significant impact on your family’s practical ability to weather the storm. However, this is likely to be an abstract concept to your kids that they will have trouble relating to. Instead, you should shift perspectives to the way children experience the world — on a day-to-day level, dealing with the immediate issues. 

Talk about how each day you will be prioritizing family needs over individual wants. Define what you consider to be luxuries, and help them to understand why these are classified as such. Studies show that money management habits can be cemented at age 7, so instilling this idea in young children can help them become frugal in the long term. Explain to them how, when you’re out at the store together, it might not be possible for the time being to get as many treats as they are perhaps used to, and that this isn’t a reflection of their behavior or your desire to get nice things for them, but that for the time being, they aren’t a priority.   

Using it as a learning tool

You can use this period of struggle to help your children to better understand the world, and enrich their personal development. The aim being, when you do emerge from this issue — and you will — they can take those lessons with them to better inform their behavior. 

Some areas of focus can include: 




Budgeting can be stressful for anyone, so you should avoid using this if it puts additional strain on your children’s experience. However, for those children who enjoy math, involving them in creating and maintaining the family budget can be useful. Talk them through how to create a realistic weekly budget based on income and guide them in utilizing spreadsheets or online tools to track various expenses. This not only a great route toward a firm understanding of what it takes to run a household, they gain an appreciation of where expenses can be cut and why this is important.  




The development of their empathetic skills is vital. However, from a child’s perspective, it can be difficult to understand the experiences of those who are experiencing difficulty when they haven’t been through struggles themselves. During this time, talk to them about the level of compassion that they would want to experience from others, and how this should reflect their approach to people who have their own varying challenges to deal with. If possible, get them involved with projects that help with marginalized or poverty-stricken communities — help them to understand the value of diverse perspectives. 


You can’t protect your children from every problem, but you can guide them through difficulties. At times of financial hardship, approach the matter with simplicity and honesty, and provide them with practical information. Where possible, frame both the problems and the solutions in ways that enrich their personal development. 

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