Financial TMI

Elizabeth Berger, MD, mom of two, child psychiatrist, and author of Raising Kids with Character, provides valuable advice for parents wondering how to talk to kids about money.

The heart of the matter

When money is tight and finances are stressful, the family dynamic suffers, often because an uncertain financial future breeds destructive behaviors. "When times are economically rough, there are always increases in family crises such as domestic violence, child abuse, and use of drugs and alcohol," says Dr. Berger. "These are serious issues which families need to face openly and constructively." While it's common for parents to have heated discussions (or fights) over money, it's important that children are not asked to shoulder the financial stress.

The honesty policy

It can be tempting to keep financial problems a secret, but, truth be told, secrets have a way of surfacing through emotional outbursts and/or palatable anxiety. "If there is a change in the family finances, I think parents do better by sharing this information with their children in a calm, dignified, friendly way," says Dr. Berger. "People with money worries feel helpless anyway, so taking charge of the family communication proactively will give the parents a sense of being more in charge of their own lives."

Being honest with your kids, without giving them more information than they need, will help them feel secure in a potentially out-of-control situation.

Avoid casting blame

There's no question that raising kids is extremely expensive, a fact that can be exacerbated by tough economical times. Still, kids should not feel responsible for their parents' money problems, even when they are asking for something expensive. "It doesn't cost a parent anything to express generosity to the child as an emotion, even if the parent doesn't have the cash right now to be generous with money," says Dr. Berger. "Being generous with feelings is really all the child needs, anyhow. It is hard for the stressed parent to have faith in this sometimes, but it's the truth."

The silver lining

Nobody wants to experience financial hardship, but the reality is that many of us do. Depending on how you handle the situation, it can be an exercise in family communication. "The kids are being informed because the parents love the children and being honest about the pickle that you're all in together is part of loving someone," says Dr. Berger. "All such conversations need to be pitched to the level which is appropriate to the child's mind. Details, casting blame, and long explanations are not necessary. The family has money problems, that 's all."

Want to read more about family money and budgeting?

• 5 ways to raise a money-savvy teen
• 5 ways to stretch the family budget
• Budget & saving tips