Cutting Back? Ways to Help Kids Cope

While some parents feel satisfied providing their children with life’s necessities, many parents feel guilty when they can’t give their children what the neighbors’ kids have. During these difficult economic times, many parents are re-evaluating their spending habits and trying to please their children with what they've got. For many children, distinguishing between a want and a need is tricky enough, but confronting changes in their family's financial situation can be downright frightening. Here are eight tips to help your family deal with the toughening economic times:

1. Take this opportunity to reflect on your spending habits.
A crisis can also create an opportunity for change. Consider this a chance to gradually teach your children about the value of money by modeling wise spending and careful budgeting – even if you have plenty of money to spend.

2. Keep in mind that children are easily frightened by sudden changes and can quickly jump to the worst conclusions.
A young child, for example, may worry about not having a house to live in if they hear you talk about not being able to throw them the usual birthday party. The key is to cut back gradually and to not make an issue of not being able to afford something. Instead of focusing on what you can no longer afford, consider emphasizing how you are spending your money more wisely.

3. Avoid saying, “we can’t afford this anymore.”
Say something like, “I’ve been thinking that since you already have so many games and toys at home, that buying more is just adding to the clutter. Let’s go through the cupboard, give away what you don’t need, and see if you really need another game like this. Maybe we’ll even find something similar to it tucked away somewhere.”

4. Help older children understand the value of money.
Have them contribute part of their allowance or wages from part-time employment to items that are not necessities. You can also gradually include them in some simple budgeting for the household. If you can do it without alarming kids, this can teach them how to be money savvy. (It also reinforces math skills – don’t tell!) Lay bills out (use real or Monopoly money) representing what you would spend each week on household expenses, and ask your children what they think you spend on the necessities. By showing your children how to budget and allocate, they may be more sensitive about frivolous spending.

5. Watch how you model buying habits.
If you buy on impulse, it may be difficult to help your children learn delayed gratification. Reflect and wait a couple of weeks to see if it is still at the top of your must-have list; kids will learn to do the same.

6. Help your child understand the difference between a need and a want.
Remember that kids are more likely to listen if you have this talk at a quiet time – waiting until you are at the toy store probably isn't the best approach.

7. Compromise.
If your child insists that the item is really important to him or her, say something like, “I know that you really want it. I know what that feels like. Unfortunately buying that toy wasn’t on my shopping list for the week. Can you think about it? If you really want it as badly in a couple of weeks, we’ll think of a way to make it happen.” Plan on how to save the money to get it: “If you put aside your allowance over the next two weeks, that’ll mean that you’ll have half of what you need. I’ll put in the other half.”

8. Try to remain optimistic, even during tough times.
Even if you can’t afford something right now, talk about how you can make it happen by working together as a family, or discuss if there might be a cheaper alternative that will leave you just as happy.

Sara Dimerman is the author of Am I a Normal Parent? and founder of the Parent Education and Resource Centre in Thornhill, Ontario. She holds a Master's level diploma in Assessment and Counseling from the Institute of Child Study, University of Toronto.