Tips on Helping Your Child Understand How to Deal with Financial Crisis as a Family.

Financial crunches are an inevitable occurrence in the present times as we try to keep up with the never ending demands in terms of education, technology and material comforts. But these are a by- product of trying to accommodate everyone’s needs and wishes and so do the parents have to go through the grind alone? No…it is an issue for the whole family to sit together, and discuss a way out of and keeping your child privy to the situation is a wise idea.

Here’s how you can get your kid involved and help him understand how to deal with the situation.

  • The first thing parents need to do is to be very honest with their kid. The child needs to understand the gravity and reality of the situation to cooperate with the measures decided and so a family meeting to break the news about the crisis is almost mandatory.
  • Your kid will wallow in confusion as most of the details of the situation may be above his/her understanding capacity. Hence it is extremely important to keep the lines of communication always open. Put your child’s mind at ease by talking to him about what exactly has happened and why. Terms like mortgage, bank loans and interest may be perplexing for the kid but explaining in simple language will take a huge burden of worry off his/her shoulders.
  • The child then needs to be reassured that problems are a part of life and are never permanent. It could be the country’s economy or some unavoidable expenses piled up at the same time but it has nothing to do with one’s capability or self-esteem or future and with proper planning it can be sorted out. Children usually feel comfortable when they know that their parents are in charge of the situation and know how to bail themselves out of it.
  • Obviously there has to be some cost cutting and budgeting. And everyone has to do their bit. The child cannot continue living his/her life without any alterations while parents struggle to make ends meet. There has to be a collective effort to cut personal expenses and a short /long term list has to be prepared with individual inputs. Parents can learn more about prudent financial planning by reading, talking to friends or money lenders and device a plan and then talk about that plan to the kid and speak about what he/she will be required to do.
  • Values and habits like saving money for a rainy day have to be spoken to about openly in the family. There is no harm in admitting if parents have erred before and that they will be more alert in future. Also important is talking about values like perseverance, optimism, honesty and hard work. This helps to gear the kid to accept the situation and also learn lifelong lessons for the future. Kids can be encouraged to realize the value of money and earn a little pocket money for small jobs. There is a book called ‘rich dad poor dad’ that has some vital info for teens to read up to help them accept the financial status of their family and move on cheerfully without harboring the inferiority complex.

It is very easy to view a financial crisis as a life changing problem but I would see it as time for the family coming together as one and bonding like never before if we work around this situation in a positive and intelligent way.

Click here to know how to teach your child to manage expenses and money.

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