How to Tell Your Kids about Your Debt

    All parents struggle with the question of how much to tell their children about the trials and tribulations of life. Most of us tend to feel protective of our offspring and try to shield them from bad news. We tend to think that childhood is a time to remain blissfully unaware of the worries and complex concerns of real life. The problem, of course, is that children are very good at picking up non-verbal cues and information from their parents anyway, and will often be fully aware of the emotional upheavals that their parents may be trying hard to hide.

    Debt and Your Children

    Being in debt is often very stressful and can trigger a slew of negative emotions, including worry, fear, paranoia, anger and sadness. If you are in debt and struggling to get out, you are likely not immune to these feelings. And inasmuch as you may want to guard your children against the harsh realities of your situation, your silence about it may actually do more harm than good, because your kids probably can sense your discomfort about debt.

    So unless you keep your debt problems from affecting your mood or behavior in any way, you need to consider how to communicate to your children what is bothering you and how you intend to fix it. In doing so, you may discover that your kids are quite capable of supplying you with much needed emotional support as you tackle your debt difficulties.

    Kids May Blame Themselves for Your Debt

    If your children are under 12, you don’t need to give them all the lurid details about your financial situation. However, once you begin to share your circumstances with them, let them know that whatever debt problems you are having, none of them is their fault. Children have a tendency to internalize their parents’ issues — such as divorce — and blame themselves for their parents’ unhappiness.

    Also, young kids have very active imaginations and may inflate your debt problems into a scenario that has you all living on the street, begging for food. So the information you give them must be measured and tailored to their age and character. Younger children can be told that money is bit tight at the moment, but that there is no danger of the family splitting up or going hungry. Their need for reassurance is paramount.

    School-aged children will be able to understand a lot more, so they can be given more specific information. For example, if you have lost your job, your kids need to understand what has happened and why you are at home instead of work, but that the situation, while difficult, is temporary.

    Older children should be enlisted into the family’s plan to manage its debt. Begin by telling them how you got into debt, even if it means admitting that you’ve overspent or failed to pay attention to your bills. Remind them that parents are not perfect, and everyone makes mistakes. Then explain to them that the whole family will need to pull together and rein in spending for a while. That may mean limiting the number of Christmas gifts, or going out to eat less. If you have to put off or curtail some of their pastimes and activities, show them how you are planning to sacrifice as well, for the sake of the family’s fiscal health. You may also want to go over the family budget with them.

    Teenagers, in particular, need to become part of the solution. If they are old enough to work, suggest that they contribute some of their pay to the household. They may surprise you in their ability to rise to the occasion.

    Kids Cannot Fix the Family Finances

    With all of your children, remember to focus on the positive. Let them know about any encouraging events or good news concerning your situation, and be careful not to use them as emotional crutches. Don’t speculate on negative outcomes that may or may not occur, e.g. layoffs, foreclosure, repossession of the family car, etc. Tell them that you’ll deal with whatever happens at the appropriate time. Also, use the unwelcome but unavoidable situation as an opportunity to stress the most important things in life, which have nothing to do with money.

    Hard times may also be the best time to teach your children about money, saving, frugality, wants vs. needs, and all the ins and outs of financial responsibility. Older children can also be tutored about the economy at large — business cycles, downturns and slowdowns, what causes a recession, and how the family is part of a much bigger economic picture. As they get older, the world will continue to present them with economic challenges. How you deal with your debt problems will have a profound impact on their ability to manage their own financial futures.

    As you share more and more with your kids, don’t give them the impression that they are accountable for fixing the family finances. No child has the ability or experience to take on that kind of responsibility. It is up to you to have a plan, enlist their help and support, and exhibit concrete ways in which you are putting the plan into action. Children always feel better in a crisis when they know that their parents are facing the situation head-on and doing all they can to keep the family safe and secure.

    Bill Fay

    Bill Fay is a journalism veteran with a nearly four-decade career in reporting and writing for daily newspapers, magazines and public officials. His focus at is on frugal living, veterans' finances, retirement and tax advice. Bill can be reached at

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