Cutting Costs, Telling the Kids

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From DVD late fees to ATM service charges, it’s the little things that can add up.

Just ask Denis Cauvier , Ph.D. and co-author of The ABCs of Making Money and The ABCs of Making Money for Teens. He says families feeling the crunch in a lean economy can slim down their budgets by identifying and eliminating extraneous expenses. This may be the perfect time to educate your kids about the value of money and get them involved in the process of cost cutting.

Tell the Truth
Cauvier recommends being honest about your overall financial situation with your kids. “The sad reality is that most parents find talking about money with their kids as awkward as talking about sex and drugs,” he says.

Create an environment of safety and confidentiality by agreeing that anything discussed stays within the family circle.

Location Matters
Choosing the right time and place to discuss cost-cutting measures with your kids makes a difference, Cauvier explains. The best place to have the discussion is at the kitchen table, he says, because sharing food provides a nurturning environment and allows 10 to 20 minutese of family "tune-in" time. And if there are teenagers involved, consider hosting the conversation at night.

“Teenagers are nocturnal,” he says. “That’s when their ears are open and that’s when they’re more likely to talk and listen.”

Consider Their Ages
Implement different language for breaking the news to kids of different ages, suggests Sharon Williams,Ph.D., associate professor in the Department of Psychiatry at Stanford University School of Medicine, Palo Alto, California.

“Older children and teens are exposed to more information through newspapers or in their social studies and economics classes,” she says. “They will have a greater understanding of a bad economic situation and can put it into context.”

Younger kids who are not exposed to such information or cannot fully process it only need to know the basics. For a good, basic explanation, Williams suggests: “Dad doesn’t have his job anymore and is going to be looking for a new one. During that time, we may need to spend less money on things.”

Reassure your kids that as a parent you are working on the situation and will continue caring for the family as a whole, she says.

Communicate Family Values
Tell your kids that while money is important, it doesn’t supersede your health, friends, loved ones and the family's core values, Cauvier says.

Develop a Savings Plan
Help your kids develop a better understanding of the family’s financial situation by asking for their ideas on how to save money.

“You can make the kids feel like they are mini consultants,” Cauvier suggests. You could encourage the kids to come up with ideas for cutting family costs and give them 10 percent of the net savings.

“That’s a pay for performance mindset,” Cauvier says, adding that the strategy has staying power with older children and teens.

Watch Your Language
Sometimes kids can pick up parts of conversations that are inaccurate, Williams observes. “They may overhear a term such as ‘We’re going to the poor house’ and think that’s what you literally mean,” she says.

Williams adds that parents should talk with their children using age appropriate language and not give them more information than they can understand. "Misinformation may be driving fears or anxiety about what may happen,” she says.

Ask Questions
Cauvier and Williams agree that encouraging your kids to ask questions is the best way to ensure they have a full understanding of what changes might occur in the family as a result of money issues.

“Ask your kids what they may have heard about the economy,” Williams says. The constant flow of media and information may bring up new questions. “Just because you talked to them once doesn’t mean you shouldn’t ask them again.”

Visit Your Library
What’s the best way to cut family costs during lean times? Visiting your local library! With a wide variety of fun and educational programs, as well as thousands of books, music and movies, you can ensure family time stays intact — for free!