Get whole family involved in finances

  • April 24, 2009
{mosimage}TORONTO - When it comes to family finances, parents should include their children in discussions on how to cut costs, says Cynthia Kiy.

Negative talk about finances can put children in a very dangerous mindset where hopelessness and desperation can even drive them from the home, said Kiy, a social worker with Covenant House in Toronto.

Covenant House, the largest privately funded agency providing shelter and other services to homeless, runaway and throwaway youth, has been seeing a huge increase in the number of youth coming through its doors in the past year — consistent with the growing financial difficulties of the country.

“Young people need reassurance and they need to feel they can be a part of helping the family get through difficult situations,” said Kiy, a mother of two teen girls. “They don’t need adult worries; they have enough teen worries and instead of seeing how worried or angry their parents are should be asked how they can contribute.”

This could include anything from giving up junk food on Saturday to contributing a fraction of earnings from their part-time job. The level of contribution depends on the age and maturity of the child. But the key is to sit down as a family, show that you are making a plan to regain financial stability and discuss a plan to move forward that includes them. Otherwise, families move from simple anxiety to having a difficult time, to putting more pressure on the family as a whole. So parents need to calmly discuss options, while making their children feel like they are not part of the problem but part of the solution.

“Sometimes they’ll overreach and say ‘I’ll get a job and give you all my money’ but you need to help them come up with something they can do, realistically,” Kiy said. “Just hear out their ideas first, even if you know that some of them won’t work.”

Even if a family isn’t in dire circumstances, discussing finances and learning to sacrifice things can help kids learn important skills early while keeping anxiety at bay.

“It’s a chance to pull back and look at our priorities, and to some degree, it won’t hurt in some ways to learn that not everything is possible and that cutting back on things is not going to hurt the kids,” she said.

But how much information about the family financial situation should parents give their children?

Celia Hayhoe, an associate professor at the Department of Apparel, Housing and Resource Management at Virginia Polytechnic Institute and State University in Blacksburg, Va., said children as young as eight can help make decisions on how to spend money during the family vacation, for example, given certain guidelines. But parents should avoid turning their discussions into gloom and doom or blame sessions. She suggests a teaching activity that uses play money in the amount of the income that comes in each month.

Hayhoe said children learn best from modelling, but they don’t see their parents saving when it automatically comes out of their paycheque and they don’t see you pay the credit card bills and balance the bank statement.

“They think as long as you have cheques or a credit card, you can spend; they don’t learn limits and get into debt when they are on their own for the first time,” she said.

Tony Diniz, executive director of the Child Development Institute in Toronto, said historically, the family has faced many problems but research shows that the family works best based on the quality of the relationship parents have with their children. If they feel loved and feel like their parents are in control, that can make all the difference.

“There’s always a sense that the family is strong, the relationships are strong, if things are talked about,” he said.

As kids become more exposed to world issues, through the media and the Internet, the level of discussion should grow. But if the parents follow the right parenting style, they shouldn’t have to worry about how the kids will take that information.

“Kids do best in an authoritative parenting style, where parents are in charge but still give their children a voice,” he said. “If the message is clear, open and not hung on them, there’s no problem.”

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