When is it OK to tell kids that you’re deep in debt and may have to file for bankruptcy? They are 15 and 17 and know that we are having hard times, but they don’t know how bad they are. I lost my job last November and we are living just on my husband’s salary. Erica, we are barely scraping by. I don’t want to add to their burden, though. What are your thoughts on telling kids about your financial problems? – Jane
There is no rule book that spells out exactly when and how children should be made aware of their parents’ financial troubles. So much depends on their maturity level and what tends to make them anxious.
However, there are some guidelines I can offer. Here are my do’s and don’ts when it comes to involving children in such pressing personal finance problems.
- Be realistically positive. Are you a pessimist or a worrier by nature? If so, it’s time to turn your attitude around. Debt can be miserable to deal with, but there are often solutions, and that’s what you must convey. If you do declare bankruptcy, that should provide a massive relief. The children need to see you take smart, businesslike moves — not see you be rocked by the problems that led you to make them.
- Let them offer solutions. As teenagers, your children almost certainly know it all! If so, I see no reason why they shouldn’t help come up with ideas for the entire family to use the income you do have the most effectively. Ask them what they think can be done to become more efficient shoppers and savers. Maybe they are more willing to cut back than you think they are. Brainstorm — but again, in a very positive, upbeat way.
- Use this time as a teaching opportunity. The recession has taken a toll on countless individuals and families across the nation — not just you. Talk about the economy, the fluctuating nature of jobs, how lending works and what credit management is all about. Did you make mistakes? Share some of them, as well as what you’re doing to avoid them next time.
- Lie. Whatever you do, never pretend that all is perfect. Your kids will pick up on false smiles and fake behavior, and that alone will make them more nervous. If they’re asking for things you can’t afford, practice saying, “Money is tight. Right now we have to focus on the things we need — not the things we want.” Yes, that is hard, but maintain perspective. As long as you’re covering your basics, their essentials are met. Feel proud of that.
- Over-share. Now for whether or not to discuss your possible bankruptcy. I lean toward not dragging your kids into the fray of this legal process. As beneficial as I think discharging debt can be for the overburdened borrower, it is an immensely personal decision. All the kids need to know is that you have a financial issue and that you are dealing with it appropriately. And never make them your therapists by crying to them about how hard it all is. They are not there to make you feel better.
- Argue about money in front of the kids. This is a terribly stressful time for you and your husband, and if you’re like many couples, you may be snapping at each other. However, one of the worst things you can do to children is fight about money in front of them. It’s terrifying and ugly. They need to see their parents coming together as a unified force, not tearing each other apart, blaming and accusing. So if you must hash it out, step away and do it in private.
Good luck to you and your family, Jane.
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