How to Answer Questions Kids Ask During the Financial Crisis

We’re all feeling the effects of these “uncertain times.” There are a lot of unanswered questions about COVID-19, the future of the economy and our own financial lives.

Keep in mind:

Our children have questions too.

Below are real questions kids have asked about working from home, hearing the word “no” and recognizing noticeable changes in spending. Look over these Q&A’s to see recommended ways to respond as a parent, bonus parent or guardian. Some children may not have any questions at all and it’s up to you to start the conversation! These Q&A’s can help guide those discussions.

Why aren’t you working anymore?

If you’ve left your job, your child may be curious about why you’re not going to work every day. First, don’t hide it, and then you could calmly say with reassurance:

“There are really bad germs outside, and it’s not safe to go to work right now. But it will be safe to go to work again soon. Now that I’m not working, we have to shift what’s most important to spend money on. But it’s going to be OK because we have a money saved for unexpected times like these. It’ll just be different. That’s why it’s always a smart idea to have extra money on the side for the “what-if’s.’”

How many hours do you have to work? How much money do you get?

Now that working from home has become so widespread, children get to see firsthand what their parents do “at” work. While observing you balance your job with homeschooling, your family and the household, your children may wonder how many hours you have to devote to working daily and how much you earn.

This is a great opportunity to introduce the financial side of working — and some math. After sharing how many hours you work, break your salary down into an hourly rate. You can follow up with a chat about how much groceries cost each week, for example. Together, you can determine how many hours you have to work in order to put food on the table. Openly sharing how much you earn per hour can help your kids appreciate the amount of time you have to work, in order to pay for groceries and other expenses.

Why do you have to work? Why do you have to work as much as you do?

Explaining the why behind working, and how much you have to, helps children understand the concept of how money has to be earned by working, and during a set period of time, in order to use it to get things we need or want. You can teach that:

“We can’t buy anything and everything we’d like to because we have a set amount of money we can spend, which is determined by how much I make at my job. I have to work X hours each a day to earn that amount. This amount allows us to live in this house, eat good food, do fun things, etc…”

You can even encourage your child to “work,” or do chores, (just like you do) to earn his own money that he can save and spend on something he likes.

Why do you keep saying NO to activities we always do?

These days most of us are spending cautiously, which means you’re likely saying “no” to activities that your kids are used to enjoying regularly. Let’s say you and your daughter have fun baking together. But now, you have to explain that you both can’t bake as much because you’re only buying essential groceries. Baking ingredients are scarce or marked up as well as a result of the coronavirus and rationing. So now you and your daughter can’t get all of the necessary ingredients. Make sure to say that eventually you two will bake together again. Suggest another activity too: “We used to do this, but now we can do this. It’s just as fun!”

I want this! Why can’t I have it? I always get a treat at Target!

I want this! Why can’t I have it? I always get a treat at Target! Your answer is really no different than pre-COVID-19 times when you teach the difference between needs and wants. Just because a child wants something, doesn’t mean he needs it, and he can’t always get what he wants right now.

On the other hand, if your child is accustomed to things being a certain way, he may be confused about the abrupt change. What’s the best way to say “we can’t buy that like we usually do?”

Michele Clark, founder of Shake Your Money Tree and financial coach, emphasizes the importance of using words like, “we have certain priorities for where we need to spend money right now, and this just isn’t a priority” — rather than saying “we can’t afford…” or “we need to make sacrifices.” This way, you’re not instilling a fear of “not having enough,” which can potentially cause a child to develop a complex about money. Also involve your child in determining if a purchase is a priority. Making the decision can help them understand a need from a want.

Today’s economy is being compared to the Great Recession. How did you handle the 2008 financial crisis?

It’s more likely that older kids would ask this question, and it’s best to respond with honesty and optimism. Share your experience, and what you did right 12 years ago and/or lessons you learned. You don’t have to reveal every detail about your past mistakes and current financial situation; however, it’s beneficial to be upfront with a teen. Explain how your family’s managing financially amid the current state of the economy, and how you’re preparing for what may lie ahead. The sentiment could be something like:

“We are not going to restaurants or traveling as often, but we can make cooking and staycations at home fun. We’re taking the right steps and making a plan in case an unexpected event happens, like I get let go from my job. We were resilient once before and we will get through this no matter what happens.”

The financial crisis is a “silent big deal.” Kids may not notice anything at all or get confused over subtle changes at home. It’s tough for children to understand the economic fallout, the scale of it and how it impacts them and their family financially.

This difficult time is an opportunity for you and your children to really dig deep into the concept of money. To help soften the severity of the issue, let your kids know that so many other families are going through this too. There’s a lot of support and help going around, and everyone’s going to get through this time together.

We’re here to support you!

Visit our Financial Support Center where you can find resources to help you manage and protect your finances in our changing economy.

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The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.