How to talk to your children about money when you're on a budget

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Trying to stick to a budget when you have kids to look after is tricky. Expenses can pop up at anytime and it's good to talk to your kids properly when money gets tight. It'll help you to budget, and can act as a great learning curve for your children for when they need to deal with money in the future.

talking to your kids about money

So how do you manage expectations if you're struggling with your finances?

With adults, it’s a little easier. Yes, having a conversation around money can be tricky, but they'll always understand.

With kids, it’s not that simple. It’s very easy to fall into the trap of wanting to keep up with their peers, have the latest gadgets and must-have toys, or the latest label on their clothes.

My husband and I talk about money with our daughter, not the detail of what we earn or anything like that, but more around the cost of things and the importance of saving for things you want.

It's good to just open up a dialogue and be honest with your kids. They're also not stupid and will generally be able to sense when you're stressed.

We have a rule in our house. As her parents, we will buy all the necessities; everyday shoes, trainers, school items, clothing for clubs and a standard wardrobe of clothes.

Anything else she wants, be that something with a label (normally something sporty as that's what she likes), or anything special – she has to save her pocket-money and buy them herself.

She earns pocket-money from grandparents by helping out, as they are elderly and need things doing around the house. She earns money from us by putting extra effort into succeeding in something she is struggling with at school and generally helping with chores or cleaning.

Now it’s fair to say it takes her a while to save her money, but that’s ok with us as it's a great way to teach her the value of money.

When it comes to Christmas and birthdays

By taking this approach, it makes it easier for us to have conversations when it comes to birthdays and Christmas.

She will, like so many kids I’m sure, look through the Argos or Smyths catalogues and will cut out things she likes to put on her list. But, at the same time, we will have a chat about how long it would take her to save for that toy if she were to buy it herself.
This can be really eye opening. The doll that she wants might take her 3 months to save for – that’s all the time from going back to school after summer right up to Christmas.

If there is something a little more pricey that she would like, we do a little test with her. We ask her, as it’s a lot of money, how would you feel if that were the only gift you got? Or would you prefer to have something less expensive but have a couple of other gifts too?

This allows us to test whether it’s something that she really wants and how much she wants it. If she says she would prefer a few more gifts of less value, then we know the desire for it isn’t that strong.

We may also suggest that we speak to relatives and maybe a few people could club together as a joint gift – quite often that’s what she chooses.

Again, don’t be afraid to have that conversation, they would much rather you have a happy and enjoyable Christmas with them rather than having you stressed or worried about money.

Lets face it, most kids (and adults) won’t be able to tell you all the things they got for their last birthday or Christmas, but they will be able to tell you who they spent the day with.

We spend too much time beating ourselves up and pressuring ourselves to spend more than we can afford when actually, just ask yourself ‘does it really matter, do I really need to spend all that money?’