I came across this article below, purely by accident, but then again maybe it was more of a divine on purpose? Who knows.
Talking to your kids about debt when you are living though problems has always been something I feel is very important.
from wikiHow – The How to Manual That You Can Edit
Perhaps you find yourself living in a country undergoing major financial upheaval. Chances are you yourself are worried, and are making moves to protect yourself. Or perhaps you are so emotional and are not sure what to do. Whatever the situation, pay attention to your children during this difficult period, as they may be scared and worried. Children will hear frightening stories from their friends and the information they get will be very incomplete and troubling to them. Give your child full support during any financial crisis and let them know that you have things under control. Do not make the mistake of letting your child suffer in silent worry.
- Learn about what is happening and why so that you will be able to share the facts with your child. If the crisis is a complete mystery to you, it is going to be hard for you to put your child at ease. Conversely, if you have a good grasp of what the facts and the dangers are, you will be able to allay many of your child’s fears.
- Explain to your child that economies are cyclical. Things are good for awhile, and then the economy will hit a downturn. Then things get better again, though it may take time. Downturns and slowdowns are a normal part of any market and things will get better.
- Talk to your child about what is happening and why. Give plenty of time for the child to tell you what the child is hearing at school and from friends. Maybe there is worry about a friend who is going through a foreclosure, or who is unable to attend dance lessons because they have lost the family car or can’t get the financing to replace a car which is no longer functional.
- Let the child ask you questions and explain what these things mean, and why they happen. Use terms which are simple and understandable to a child of that particular age. Your child may not know what a mortgage is, or may not know why a foreclosure would occur. Explain the best you can in terms they can grasp. Inevitably, if the child has a friend who faces foreclosure or eviction, your child is going to worry that your family will might lose your house or apartment. Don’t let your child suffer in needless worry. This is a time for full communication. Put your child’s mind at ease by explaining that foreclosure or eviction is unlikely for you. Or, if you do fear foreclosure or eviction could occur, explain what your plans would be for alternate living arrangements. You may know that you can go and live with grandma for a few months, or with a good family friend, but your child may not realize this is an option until you say so.
- Explain a little bit about your family’s financial plan if you have one. You can go into as much detail as you like, or you can speak in general terms. The important thing is to let the child know that you have a plan and that your plan is very likely to get you through the crisis. If you have a lot of money in bonds, then by all means say so, and explain that this gives you a very high level of security. Or if you have a good mix of stock funds, you can explain that you have chosen to accept a certain level of risk, and that your family can tolerate losing some value in stocks, so that there is no need to worry. Explain that you are going to hold on to the shares you own, and that stocks do recover after a downturn. Talk about the stability of your job. If you are a little uncertain about things, maybe you have started cutting back on extras, like meals out of the home. Explain that you are holding down spending because it is prudent to watch your spending more closely when things get rough in the economy. The child will probably feel better that you are taking action if he or she knows you are doing it in order to keep the family secure financially. The child will be more likely to support your decisions, and that will help the family stay in harmony through the financial crisis. It is important that you all pull together and support each other in order to get through this period.
- Take action to establish a financial plan if you don’t already have one. Speak to friends who know more about money management than you do, and start reading some good basic financial books. Educate yourself about finances. Learning about money is easier than you might think, and you must know about the basics so that money managers you go to will be less likely to take advantage of you. Be smart so that they will not be able to sell you things which are not good for your longterm financial health. Once you start establishing a plan, bring your child into the process so that the child will learn the basics of good financial planning. It is important, too, for the child to know that you have started to take control. Children always feel better in a crisis when they know that the parents are facing the situation head on and doing all they can to keep the family safe.
- Keep the lines of communication open all the way through the crisis. Stay on top of the news, and let your child know about any encouraging events in the markets, or in your own situation. If you have bad news, explain it early, so they will be aware of the situation, and will have time to digest the information. If you have good news, don’t hesitate to share that and put their minds at ease.