A Perfect Guide to Tell Kids about Financial Limitations

Should you show your kid your financial limitations?This age-old question is highly debated. Its answers depend on a multitude of factors.

What should you never do when you face financial limitations?

  • Talk about your financial situation in a stress-filled and emotional way in front of the kids.
  • Make your kids answer the phone of creditors or us them to deflect calls.
  • Make them lie to others about your financial situation.
  • Blame the situation on ex or spouse.

Guide to Tell Kids about Financial Limitations

What are the positive effects of telling kids about financial limitations?

positive effects telling kids financial things
  • Fewer worries:

Kids have an uncanny ability to sense stress and uneasiness at home. If you have been worried about your financial situation, chances are your school-going children have already understood that something is wrong. Telling them affront, in a way that they will understand, will help to clear their confusion and worries. 

  • Learning opportunity:

Parents with school-going kids can use this as an opportunity to explain the importance of saving, expenditures, and value of money. For older kids, parents can start discussing budgeting, cost-cutting, student loans, and the importance of dealing with credit with caution.

  • New outlook: 

Telling your kids and showing them that you are still happy as long as you have your family can greatly impact your kid’s outlook on life and priorities. Money is not everything. Living a happy and healthy life with the family is what matters the most.

Once your kids know about your financial situations they will start thinking of lesser expensive ways to have a good time. The right information will assist you to grow great families. 

What are the negative effects of telling kids about financial limitations?

  • Mental burden 

Learning about parents’ financial limitations, if not handled properly, may induce fears, worries, anxiety, and insecurities in kids. Sometimes no matter how well parents deal with the situation and despite reassurance, kids go through such feelings for some time.

  • Blaming

Children tend to blame themselves for all their family’s problems. Kids tend to assume that the financial limitations are somehow their fault and that your stress is actually due to them.

  • Imagining the worse

Sometimes kids imagine the worse. They misconstrue the severity of the situation and starts imagining that they won’t have any food or shelter, that the parents will divorce or that they won’t be able to go to school anymore.

  • Privacy 

Young kids may tell the other family members, friends, teachers, or even neighbors about your financial situation. 

Negative effects telling kids financial things

What is the appropriate time to speak about troubles?

  • Your mental state

If you can conceal your worries or emotions about your financial limitations then your kids may be better off without knowing anything. However, if you find your temper or emotions or behavior is changing due to financial pressures, your kids will be benefitted by knowing about financial limitations.

  • The age of your kids

Generally, children below the age of six should not be told anything about financial limitations. Children below the age of 12 should not be given vivid details about your financial limitations. 

  • Your kid’s mental state

Evaluate your kid’s present mental state and their lives before telling them anything. If your kid is having a hard time at school, it would be better to not further bother them with such information. Consider how your kid handles changes or difficult news.

  • The severity of your financial situation

If the limitations are forcing you to make drastic changes that will affect the kids, then you should tell them. However, if you can make things work as usual but with minor setbacks and adjustments, you don’t need to tell your kids anything right away. This will help in developing their personalities.

How to tell the kids about financial troubles?

  • Tell them that it’s not their fault

Your kid should always be reminded that none of it is their fault and that they should never blame themselves.

  • Clear misunderstandings

Always be careful of how you say things and how you phrase them. Your kid should not develop any false notion of things being worse than how they are. 

  • Limited details

Don’t burden your kids with details or the extent of your limitations. They don’t need to know your salary of about your stock market failures. Just tell them how you will have cut back on some expenses like shopping or expensive gifts.

  • Be calm and reassuring

Prepare beforehand what you will say and how you will say them. Try to refrain from using words that can cause fear or insecurity. Calmly and reassuringly, tell them briefly about the situation and remind that that everything is okay.

  • Open lines of communication

Help your kids to express their feelings about the situation. Tell them that they have nothing to worry about and they should always share if it is bothering them. If your kids ask questions, patiently and briefly answer them.

financual situation kids want understand

What should you keep in mind?

  • Continue fun family activities

It is important to show the kids that money isn’t everything. Come up with inexpensive ways to have fun as a family. Teach them that happiness isn’t expensive things. Go to libraries, attend free events, have adventures in parks, and take road trips or go cycling.

Instead of going out to have dinner at expensive restaurants, have a themed dinner night when you make dinner with the kids. This will also help kids to develop self-esteem.

  • Look out for stress

Ensure that your kids continue to get enough sleep and exercise. Maintain a routine and let them engage in stress-reducing activities. Monitor changes in your kid’s sleeping, eating, moods, and behaviors. If your kid suddenly starts having nightmares, seek therapy. 

  • Don’t have adult conversations about money in front of kids

Parents think that kids won’t understand what they are talking about but kids can always sense problems and they start to worry.

  • No mixed signals

Both parents should be on the same page before discussing anything with the kids.  

Frequently Asked Questions on Whether or Not You Should Show Financial Limitations to Kids

1. Should I tell my kids that we can’t afford a holiday trip this year?

Yes. Tell them that even though the highly anticipated trip is not affordable this year, there can still be fun and adventurous road trips during the vacation.  

2. What should I do if I can’t pay for my kid’s extracurricular activities anymore?

Tell your kids to choose one of their favorite extracurricular activities or tell them that they can choose one activity for every season.

3. Should I encourage my kids to start earning if I am having financial troubles?

While some think that it’s okay, some feel that it’s unnecessary. If your kid is dying to buy that new expensive trendy shoes or is very keen on helping out, you can help them get tutoring, babysitting, dog walking, or lawn mowing job so that they can earn some money and save up for the things they want.


Every parent wants to shield their kids from the stress and unpleasantness of dealing with financial limitations. But sometimes being transparent with the kids and letting them know at least a little bit about such limitations is the best way to go. If handled properly, knowledge of such limitations will instill in your kid a sense of fiscal responsibility right from a young age.

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