Protect your kids from your money worries

Children can pick up on your money worries. We get advice from a child psychologist on how to ensure they don't suffer as a result.

Children are amazingly perceptive – every parent knows that. The chances are that if something’s worrying you, your kids know about it.

And that’s of real concern during a downturn that has dragged so many people into financial difficulties. Could we be raising a generation of anxious, frightened youngsters?

Family finances

A new survey carried out by Halifax found that nearly nine in 10 children aged between eight and 15 believe their parents worry about money.

Worse, more than half (58%) worry about money themselves. The pocket money report even found that some children have lent money to their cash-strapped parents.

Richard Fearon, head of savings at Halifax, said: "It is concerning that children are becoming anxious about their parents' money worries, but this highlights that children are really aware of the financial behaviour of the people around them.”

That’s a good point. If children are this aware of adults’ financial behaviour, then that’s another good reason to take control of your money.

But how can you communicate with your children so that they understand why they can’t have an Xbox, but don’t lie awake at night wondering if it’s all their fault?

Angst avoidance

Emma Citron is a consultant clinical psychologist who specialises in anxiety in children. She thinks that being hyper-aware of a parent’s money worries may cause real distress and even self-blame in a sensitive child.

She says it is really important to adjust what you say depending on the age and temperament of the youngster in question.

“You have to know your child. If your child is an anxiety-prone 10- or 11-year-old, keep it brief. Say ‘No dear, we can’t have the same holiday as your best friend but we're going camping instead because that’s what we can afford.’

“It’s almost never desirable to go into a detailed discussion about the adult pressures unless they ask and they are over 14. Under 14 it will just worry and stress them, and that’s unfair.”

Reality bites

That’s not to say that children should exist in a bubble where they don’t understand that money is tight. Citron continues: “As parents, we want to give them as happy and carefree a childhood as we can. But they also need a low-key, firm reality check from time to time.

“You know your child best but as a rule of thumb, if they are under 10 then give a simple one-line explanation. Say ‘I know you’ve seen it advertised and it does look lovely, but we can’t afford it’. Say it in a way that doesn’t stress or emotionally burden the child.”

Citron warns that if you don’t keep the tone reasonably light, a sensitive child might become burdened with worries. “Pull back if the child worries and tends to take things to heart or take them personally. Sensitive children, which most are, try to make their parents happy and then you get into a wrong balance.

“You get what we call a parentified child, where they are dealing with an unhealthy emotional burden. Tailor what you say so that it’s not emotionally burdensome.”

Pinching the pocket money

She’s particularly upset by the idea of children lending parents money, which the Halifax survey found a significant minority had done.

Citron says: “I think it’s appalling for the parents to be taking that money, with or without permission. I think it’s emotionally unfair of the parent because you’re not really giving the youngster a choice.”

In fact, she says it can cause considerable damage to families. “I’ve come across older teenagers who’ve accrued a significant amount of money, perhaps from jobs or a major birthday. I’ve seen cases where parents have borrowed that money and been unable to pay it back, and that puts a terrible rift between the parent and child.”

Suddenly scrimping

Perhaps the hardest thing is for parents who have been financially stable, but find themselves suddenly unable to afford things they have done before. In the current climate, redundancy has made life much harder for families who had previously been quite affluent.

They may need to cut more than just the expensive holidays and Christmas presents. It could be that clubs and social activities that their family take for granted are suddenly unaffordable.

In that situation, how can parents explain the change? Citron says most children want to do their bit to help, but communication is absolutely vital. “Ideally sit the children down as a group so they have the support of each other and you’re not just targeting one child. You don’t want one specific child to feel it’s their fault.

“Then explain the situation - not in a heavy way, just that this is the reality. ‘Mum’s lost her job therefore we are going to have to make some cutbacks’. Keep it general, for example ‘We’ll have to make cutbacks in several areas. We won’t be eating out anymore; we won’t be able to go to the cinema for a while.’

“Then give them as much choice as possible. Go through every paid-for activity that everyone does and let everyone keep doing one or two things, whatever you can afford. Let them choose what they keep doing if possible.

“They have to have a sense of fairness, so include yourself in this. Explain ‘I am going to give up the gym’, that kind of thing. Listen to the children and get their input. Give them as much choice as possible in the circumstances.”

The bright side of broke

Finally, while Citron acknowledges that money worries can be really debilitating for adults, she does urge families to see the positives.

Where parents might often shower their children with expensive presents, pocket money and paid-for classes, suddenly they have nothing to give them but their time.

“It’s actually that time and attention that children really want,” she explains. “Often the material stuff is a very poor substitute for the real thing, like going out to the park with mum or dad.

“Going to the park, sitting around playing monopoly; either of those are far better than sitting in silence at the cinema. Use this change in circumstances to make positive changes.

“After all, it’s not money they want; it’s time and attention that children really crave. And really need.”

What do you think? How informed are your children on your financial situation? How have you told them about cutbacks that you've made? Let us know your thoughts in the comment box below.

More on family finances:

How to claim your Tax Credits

How to untangle joint finances

Pre-nuptial agreements: rise of the pre-nup

The importance of arranging Lasting Power of Attorney

How to have a baby on a budget!