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Fulton Bank

Living on less? Here’s how to talk to your kids about budget changes.

When you lose a job or face mounting debt, it's wise to make cuts to your household budget. And in today's environment, when circumstances are changing almost daily, it's prudent to revisit spending even if you're gainfully employed. These adjustments will mean less ordering out, fewer indulgences, and maybe even moving to a new house or city — all of which will affect your children.

This is a good time to gather your kids for a family meeting and talk openly about your new reality. After all, they will sense that something's changed. If you aren't up front about it, they could imagine a worse situation than you're actually up against.

Before the meeting, make a plan, even if it's incomplete. Your kids will be comforted to know you're taking control. Also, save expressions of panic or worry for when you're alone or with your partner. Although you shouldn't sugarcoat your problems, you also want to be calm and optimistic. Finally, keep your conversation age-appropriate. A five-year-old won't understand what it means to be in a recession, but a teenager will.
Here's our guide to talking with your kids, at every age, about downsizing your budget to account for life changes (especially those that are out of your control).

Young kids (3–6)

Little kids have a limited ability to master financial concepts – but that doesn't mean they should be left in the dark. Instead of talking about the details of income versus expenditures, keep the terms simple.

  • Read a book. Look for a picture book that shows a relatable character who has to cut back on getting new toys, visiting their favorite restaurant, or going on family trips.
  • Bring out the puppets. Your child might express worry or sadness to a puppet that they would be uncomfortable expressing to you directly.
  • Emphasize doing over buying. You're likely around the house more while you look for another job, get your kids excited about activities you can do together. Maybe you can't buy a new stuffed animal, but you can plan a backyard picnic or family bike ride.

Big Kids (7–11)

School-age kids can be more involved in the conversation, especially when it comes to budgeting. They might be the most likely of all the age groups to see saving as a game, which gives you an opportunity to frame the situation in positive terms.

  • Play a board game. Monopoly, Pay Day, the Game of Life – these classic games help your child understand costs, savings, and how decisions affect the future.
  • Identify needs vs. wants. Kids this age can begin to grasp the concept of a need versus a want. For example, you can explain that while everyone needs shoes, an expensive pair is a want.
  • Make short-term goals. Is there an activity or expenditure your child can work toward? Brainstorm ideas together. For instance, you could set up a savings jar and when it's full, then you can order that trampoline.

Tweens and teens (12–15)

Although kids this age can be moody, they're also more capable of understanding complexity. This means you can be more honest with them than with younger kids – but you still need to find the right tone.

  • Keep it social. For a lot of tweens and teens, friends play a central role. Ask if any classmates or buddies are going through a similar situation. This can make their sacrifices feel more normal.
  • Relate to their feelings. Did you, or your parents, have experiences like this growing up? If you don't have firsthand knowledge, share a book, movie, or documentary about a family's financial struggles.
  • Gamify financial lessons. At this age, a lot of kids are interested in technology. Try video games like Stardew Valley or Minecraft to teach them how economies work. If they have a smartphone, suggest they track expenses with a free app.

Drivers (16–18)

Older teenagers are soaking up information that will help them go out on their own (even if it doesn't always look like it). This makes it a perfect time to model responsible behavior during a crisis.

  • Go over the numbers. Driving-age adolescents are old enough to hear specifics about your budget. Share some of the details with them, such as exactly what you'll need to cut from the budget to make ends meet.
  • Ask for their help. While you're recovering from a financial blow, can your teen cover some of their own expenses, or even save for college? Doing so might help them feel grown-up.
  • Trust their input. Believe it or not, your child is almost an adult. They might offer solutions you haven't considered.

Above all, remember that your kids are just that: kids. It's natural for them to be concerned about what the cutbacks will mean for them. But when the crisis has passed, you might find the experience has made them more mature—once again proving that every cloud has a silver lining.

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