Explaining Financial Troubles to the Kids

Hannah Tennant-Moore — Mon, 13 Oct 2008 14:57:00 GMT

With disappearing 401(k) savings, exorbitant gas prices, and piling up medical bills, many families are being forced to make serious changes in their spending patterns. This can be a shock for teens and preteens who grew up in the 90s, during affluent times in which the prevailing wisdom in the U.S. extolled making your kids happy. Average teen allowances nationwide are upwards of $100 a month, and many high schoolers have credit cards.

But last week, a survey found that teen spending had dropped by 27 percent. Considering that much of this spending money comes from allowances or gifts, we can be pretty sure the kids are not being thrifty out of choice.

As parents struggle to explain the crisis to teens freaked out by dire newspaper headlines and cutbacks in family expenditures, parents may see their kids as spoiled or bratty, while teens may see their parents as unreasonable or over-anxious. One mother interviewed by the New York Times started showing her confused and upset teenagers the monthly bills. Another father threatened to charge his kids’ friends rent for sleeping over.

Some families have found the crisis to be a good opportunity to become close with their children in new ways. Asking your kids to brainstorm about ways to cut back on family spending makes them feel valued and useful, and helps prepare them to find their own way in less than optimum economic times. Some parents have stopped hiring lawn cutters and housecleaners, choosing instead to pay their kids (far less) for the same services.

How have other parents changed your families’ spending patterns? Have you talked to your kids about the changes?

Photo: New York Times

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Explaining Financial Troubles to the Kids