Family Finances: How Much Should You Tell Your Kids?

Rising gasoline and electric prices, increased costs of college expenses and tuition, and potential job loss are just some of the items putting stress on today's family budget. Add the increased cost of school supplies, after school activities, contact lenses, braces and it's easy to understand why many families modifying existing budgets.

Most children are aware of changes in the economy. They watch tv and hear the news in school. Our kids hear us as parents talking about saving for vacations, holiday gifts and layoffs at work. Kids see prices in the mall changing. Yet many of us parents wonder what or how much we should share with our children.

There are several concepts involved. Does your child understand the relationship between earning money, saving money and spending money? It's very easy for a child to become confused when the news is constantly talking about foreclosures, layoffs and money problems. One 12 year old son of a friend became deathly afraid of living on the street when he overheard his mother talking about the mortgage payment being overdue because of a mix-up in military pay.

Here are some tips to consider when discussing money and family finances with your children.

1. Gear your language to your child's age and understanding.

Explain taking everyone to the movies with popcorn and drinks is the same as a week's worth of groceries, or the family cell phone bill is the same as getting two DVD's.

2. Keep the explanation simple.

My friend's son who was afraid of foreclosure was reassured when told the mortgage company knew about the military pay mix up. By explaining the mortgage company dealt only with military families made him realize he and his family would not be living on the street.

3. Explain finances and money issues at the proper time and place.

If you're not comfortable discussing the issue at the mall or during carpool, let your child know you'll explain it later at home.

4. Let older children and teens understand what expenses are parts of having a home.

Having children especially teens know about electric, phone, cell and food bills is part of developing awareness and also a child who is prepared to live on their own later.

You don't need to develop guilt just awareness. Knowing that leaving a light on when no one is there means a difference in the electric bill is great preparation for their own place later in life.

With the changes in the economy children are more aware of the stress outside. Having them develop an awareness of how your family is coping with the changes can let your child feel secure in the knowledge your family will deal with changes as they happen.