10 Secrets to Help Your Children Handle This Financial Crisis

These are tough times for us all, but they can be especially hard if you have kids.  After all, a big part of parenting is about wanting our children to be happy and shielding them from the more painful parts of life. So when our child’s face crumbles because we can’t afford their birthday party, it’s hard. When our kids tear up because we have to say "no" to the sports gear, instrument or shoes they wanted, it’s tough. But when you lose your job, car, home, savings, or your child’s college education, it’s heart breaking because you know that your kids’ lives will change, too.

This financial crisis will affect each family a bit differently, but the key concern is: How will these tough times affect our kids? And for that we need to look at research:

Rond Conger, a psychology professor at the University of California, Davis and others conducted a 20 year study of 450[i] families with school-age kids hit hard by the severe Farm Belt Recession in 1980. They found that the emotional affects of financial woes on children can be considerable triggering depression, anxiety, adjustment problems and poorer peer relationships in the kids. But the researchers also found one critical nugget:

The parents’ constant conflicts, irritability and hostile exchanges over money matters was what greatly increased the likelihood of their children's emotional and behavior problems.[ii] The parents’ constant stress over their money matters also reduced their parenting abilities so the kids’ problems remained with them through adulthood.

There is an important parenting secret here: Recognize that how you act and what you say these next days, weeks or even months can affect your children’s emotional well-being not only now but long-term. While you may not be able to save your job or house, there are ways to help your family get through these tough times.

Here are my 10 Secrets to help your children handle this financial crisis:

1. Don’t hide the truth.  Kids are perceptive and know something is up, so trying to cover up a harsh reality to protect them only fuels their worries more. While you don’t need to tell kids all the facts, you owe them an explanation tailored to their level of understanding. For a young child: “Daddy and Mommy are a little worried about work right now but we’re doing what we can so everyone will be all right.” For an older child: “I know you’ve heard about how bad the economy is right now. Things will be tight at home for a while but we’re working hard to try to make it through this.” If you are about to lose your home, job, etc. make sure you are the one to tell your child.

2. Acknowledge your worry. Your child is picking up your worries so own up. Begin with a simple: “I know you’ve noticed that Dad and I have been upset lately, so we wanted to let you know what’s going on.” Your child may not seek you out, so go to your child.

3. Keep an open dialogue.  Over the next days kids are going to hear all kinds of rumors and misinformation from other kids. So keep an on-going dialogue with your child. Be there to set them straight about the facts and tone down those doom and gloom reports. You can also ask, “What have you heard?” or, “What are your friends saying?” By the way, a big concern for tweens in particular is what their friends will say about your family’s financial situation. Let your kids know they are not alone. Foreclosures are everywhere. Unemployment has never been this high. There are other kids who are suffering as well.

4. Set a budget.  Sit down with your kids and explain that you need to cut back. Don’t go into details about your finances. Instead, explain that you need to set a budget. Enlist your kids to help you prioritize your spending. It’s a great way to teach financial planning. Add up your expenditures and figure out ways to cut back, then take a pledge to stick to that budget for at least for a month. Dozens of American families are taking the “Frugal Family Challenge.”

5. Reduce conflict.  I know you’re stressed and irritable and your temper may be on edge, but please don’t yell in front of the kids. Studies show that during tough economic times the constant parental conflicts cause kids the most emotional damage. Call a truce. Go to a counselor. Sleep in separate bedrooms. Set a "no yelling" policy.

6. Stick to routines.  Sticking to a routine helps reduce worries because it boosts predictability and security. During tough times those routines are crucial for kids. While everything else around them may seem to be crumbling, those bedtime rituals, nighttime stories, hot baths, hugs and back rubs remain the same.

7. Monitor the news. Limit viewing those stressful news stories or better yet, turn the TV off during the news hour. Kids admit those stories are scaring the pants of them!

8. Reduce stress as a family.  Children mirror our moods and if they see us upset their worries only escalate. Staying calm yourself is the best way to reduce your children’s worries. Whenever you’re upset take a few deep breaths or walk away until you can get back in control. But also find no-cost ways to reduce stress as a family. Meditate with your kids, do yoga with your daughter, ride bikes with your preschooler, listen to relaxation tapes with your kids. Not only will you reduce your stress but you’ll also help your kids learn healthy ways to minimize theirs.

9. Tune into your child and ask for help.  Tune in a little closer these next weeks. Watch for stress signs or behaviors that are not typical for your child. Enlist a relative or friend who cares about your child to spend a bit more time with him. Call the guidance counselor or school psychologist, go to your minister or talk to your doctor for advice. If at any time your child’s emotional or physical well being is at stake, pick up the phone ASAP.

10. Offer hope. Your family may be hurting and your devastation may be severe. But remember kids are resilient and what they need most is reassurance that you will make it through this together. Stay honest, “I don’t know how things will turn out, but I’ll do absolutely possible.” Above all, give your kids a message of hope, “Whatever happens, we’re together.”  When all is said and done that really is what matters most.


[i] R.D. Conger, K.J. Conger, G.H. Elder, F.O. Lorenz, R.L. Simons and L.B. Whitbeck, “Family Economic Stress and Adjustment of Early Adolescent Girls,” Developmental Psychology, Vol 29(2), Mar 1993, 206-219.

[ii] R.D. Conger and others, “Economic Stress, Coercive family Process, and Developmental Problems of Adolescents,” Child Development, v65, n2, Apr 1994, pp 541-561.



12Secrets_Borba.jpgDr. Michele Borba is the author of over 22 books including 12 Simple Secrets Real Moms Know .

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