There are a lot of questions parents struggle to answer: Is Santa real? Where do babies come from? Why can’t I get a tattoo? But one question that’s on a lot of parents’ minds and doesn’t get as much air time: should we tell our kids we’re in debt?
As adults, there can be a lot of shame around debt. When it comes to telling kids, a whole other slew of issues seems to arise, most of which you worrying about disappointing or stressing out your kids. On the one hand, you don’t want to leave your child anxious about her security. On the other hand, if obvious changes are made due to a new financial situation, it may actually make her feel less anxious to understand the bigger picture.
That being said, there are ways to approach these conversations without overburdening your kids. The truth is that this is a personal decision based on a lot of factors. Before making a decision about whether or not you will let your kids in on any financial struggles, and how much you will or will not tell them, consider these questions:
Are you so stressed that your kids are noticing?
If so, it might be better to explain where your anxiety is coming from rather than leaving kids to wonder. If you don’t provide an explanation, she could assume anything from her parents are fighting to somebody is sick. Being kept in the dark may not be the best solution.
Is the debt affecting your kids’ day to day life?
If your financial hardship is causing your family to cut back in noticeable ways—canceling extracurricular activities due to cost, or missing out on field trips, vacations, or extra treats at the grocery store—it may be time to explain why. This shows that everybody is on the same team. Plus, it may even decrease tension—if your child knows why changes are happening, she can see that it’s not just about being a strict parent, or something she did wrong to “deserve” the cutbacks herself.
Can your kids maintain as much privacy as you would like?
Some kids will go and share family news with classmates, teachers, or family friends no matter how much you emphasize something is private. If keeping your debt private is important in your particular situation, consider this issue carefully. You can use this as an opportunity to teach your child about being selective about who and how much you tell. Explain that there’s a difference between “safe” and “unsafe” secrets—they should never keep a secret because somebody is doing something bad, but we don’t owe other people information about our lives. It’s up to us to decide how much we share.
Could this help teach valuable financial lessons?
You may feel ashamed of the circumstances that brought on your debt; perhaps some less-than-great decision-making was involved. On the other hand, you might be in debt because you took out student loans for a degree that will pay off in the long run. No matter how the debt came to be, you probably want to help your kids avoid hardship however possible, and only take on debt when it’s manageable and for the right reasons. You can explain the difference between good debt and bad debt. Financial sacrifices are part of being an adult; at the same time minimizing those sacrifices is essential to a healthy financial life.
Can your kids handle it?
You know your children better than anyone. Is she going through other stressful times like difficulties at school or social problems? If so, it could be too much to loop her into your family’s financial issues at this time. Or, would she be understanding of the situation without taking on too much stress? Some kids tend to take on blame for family issues, or have overactive imaginations and overreact to any difficult news.
If you’re satisfied with your answers to all of these questions, telling your kids about your debt is probably for the best. At the end of the day, the most important thing is that your child feels secure within her family. Whether or not you tell her about your debt is ultimately up to you.