GoHenry's latest research shows that 71% of kids are worried about the cost of living crisis. So, even if money isn't openly discussed in your home, your kids are likely concerned. Here's how to help them cope with any money worries they might have.
Is it normal for children to worry about money?
It's normal for kids to feel anxious about different things at different ages. Many of these worries are a part of growing up, but some concerns result from what's happening around them. Current talk of rising costs and cutting back on spending can filter down to kids through media reports, playground chats, and any conversations they overhear at home.
How can family financial issues affect a child?
Children can feel anxious and worried when financial issues are hidden or expressed in confusing ways. Many start imagining the worst, letting their fears grow out of control because they don't know how to handle this information.
Reasons kids worry about money
Hearing arguments at home about money
Hearing daily conversations about money and money saving
Not having the same things as friends
Hearing you say you have no money
Not understanding families' finances
Being told that you can't afford stuff without explanations
Watching your behavior when out shopping
Not understanding why their lifestyle has changed
Having a friend talk about money and family worries
Knowing that money is a taboo subject at home
12 tips to help your child with their worries
Here are our top tips for helping your children with their money worries:
1. Talk honestly about money
The most effective way to combat your kid's fears about money is to make talking about money and finances in an honest and open conversation at home. It doesn't mean burdening them with your worries, but more about saying, "We are cutting back and trying to spend less money right now. If you have questions, ask us."
2. Make conversations age-appropriate
Start by finding out what your kid knows about the cost of living crisis (keeping in mind they will have picked up on certain aspects at school). This allows you to reassure them about their specific fears in a way that's appropriate for their age.
3. Keep serious financial information between adults
Honesty is good, but keep more serious conversations away from children. Hearing that you are worried about losing your job, or can't pay your bills will worry them unnecessarily. If you need to cut back, explain what's happening and get them involved in fun alternatives to takeout or days out.
4. Be a good financial role model
Kids are like sponges, soaking up everything they hear and see. So make sure you model what you say around money, spending, and budgeting.
5. Start early with their financial education
Financial literacy is crucial right now because it gives kids the ability and confidence to understand what's happening and make informed future financial decisions for themselves.
6. Listen to their fears, no matter how small
It's easy to dismiss kids' money fears, especially if the worry seems small. Instead, acknowledge their anxiety and reassure them that it is not something they need to focus on.
7. Make sure they understand what you are saying
Some worries and fears stem from not understanding what you say about money saving. Always ask younger kids to reflect back on what you have said to ensure that misunderstandings don't happen.
8. Let them manage their own money
Giving children an allowance and the power to manage their own money can reduce their anxieties around money management.
Louise Hill, COO, and co-founder of GoHenry agrees. She says, "If there's just one thing you can do for your kids right now, I'd say it's giving them an allowance, even if it's just 25c. It doesn't matter how much, but if you can give them money they can control and make decisions over, it will empower your kids. It lets them make decisions, make mistakes, and help them better understand what's going on now – and in the future."
9. Teach them about needs versus wants
Explain what needs are compared to wants. Then show them they have everything they need, but if they want something, they must save their pocket money. Beth Zemble, VP for Education, GoHenry, agrees, "Research from the CFPB (Consumer Financial Protection Bureau) has shown us that kids start to develop the values, skills, and attitudes surrounding money and financial habits in childhood. They also begin to develop skills like planning and can understand the concept of delayed gratification."
10. Remind them of everything you have
All children compare themselves to their peers, so it's important not to make light of their emotions around this. However, also remind your kid of all that they have. Make it a game and see who can come up with the best list of everything your family has to be grateful for.
11. Get kids involved in money-saving tricks
Get your kids involved, from going around the house and switching all the lights off to turning off gaming consoles and phone chargers and finding budget items in the supermarket.
12. Encourage kids to earn money
Data from our latest Youth Economy Report shows that GoHenry kids in the US earned $27.2 billion in 2021. Encouraging your kids to do chores for an allowance or get a part-time job is also a great way to show them the benefits of earning and the value of money.
How GoHenry can help
All the skills you teach your child about financial literacy can be put into practice with a GoHenry prepaid debit card. It's key to helping children from the age of six onwards become financially responsible. Money Missions on the GoHenry app takes this further by taking kids through key lessons around spending, saving, budgeting, and more with fun quizzes and videos.