How to talk to your kids about the cost of living crisis

The cost of living crisis is spreading, and young people are also being impacted. We share tips on how to talk to your kids about the cost of living crisis and get them involved in a positive way.

The impact of the cost of living crisis is finding its way into every nook and cranny of our lives, including the highly perceptive minds of our sensitive kids. That can make us as parents feel guilty and anxious, as we seek to cushion them from the impact. The guilt is piling on the pressure and adding to the 'financial anxiety' that many parents are now living with.

This guilt often stems from feeling that you can’t provide for or protect your kids. Parents want to know how to shield innocent kids from the cost of living crisis, but don't know how to explain why they can't afford things, or how to talk to kids about their money stress without affecting them.

What parents say about the cost of living crisis

Our survey of 1,345 UK parents shows that 71% of you think there will be a negative impact on your child’s future prospects and over half of you are worried about ongoing and long-term effects on your children's mental health.

Many parents may ruefully admit that when you have kids, guilt comes part of the package, but during this cost of living crisis, we can feel all the more helpless. How do you cope with amplified levels of guilt due to something that feels totally out of your control?

We’ve talked to our experts from the Netmums Parent Supporter service about some of the most common worries that parents are facing right now when it comes to talking to their kids about money. We found some creative ways to help you talk to children about the cost of living crisis and get your kids involved to making positive money decisions at home!

The Netmums expert Parent Support team provides daily advice, support and referrals on our Forum -- all completely free. (See how it works and where to post to get personalised advice for our team!)

How do I tell my kids I can’t afford something?

'Parents may feel guilty about not being able to provide the activities, clothes, food, and experiences that they'd like for their kids,’ says Ashley Duncan, one of our expert Parent Supporters from the Netmums Drop-in Clinic.

We know how hard it is to say 'no'. But during this time of rising prices and inflation, changes have to be made. How do you explain it to your young ones and manage your guilt at the same time?

Stepchange, the UK debt advice charity, advises being honest and direct when talking about money. 

• Don't give in to ‘pester power’. It can increase the risk of getting into debt and add to household financial stress. It may feel good in the short term but it could actually hurt in the long term.
• Keep your language simple and straightforward when children ask for things. It’s fine to say ‘no’ or 'not right now'.
• Use the opportunity to have honest conversations about money. We're not saying to, ahem, look on the bright side. Rather, kids will be dealing with money for their entire adult lives. Teaching them lessons now about how to avoid debt, make good choices and save for the future will help your family now and be powerful tools for your children as they grow.
• Be a good role model. It can help children to see you sticking to your own rules when buying things for yourself, says Stepchange. Leading by example and showing your kids how to adapt to financial hardship in a positive way will help them to accept the decisions you make make about what you can and cannot afford to buy for them.

Is it bad for my kids to be aware of financial struggles? 

It's your instinct as a parent to protect your kids from everything and that includes adult worries such as money shortages as well as sacrifices they might have to make when it comes to treats and outings.

According to our survey:

• 44% of parents think their children haven’t noticed the cost of living crisis
• 44% think their children are unaware they are missing out on things
• 40% think they understand why they can't have things they are used to having, like toys or days out. 

Many children may not have felt the effects of tighter budgets, especially as parents get more creative with making delicious budget meals and planning family days out that don't cost money. But we all know that kids are perceptive. No matter how stealthy you think you’re being, children can pick up on your worries about paying for things like housing and food. Also, our kids worry about us when they see that we're stressed or anxious.

A recent Bloomberg study showed that 9 in 10 11-to-18-year-olds are aware of the cost of living crisis, and

Our experts tell us that research shows children may feel guilty about not being able to help their parents with money worries. In time this could impact their confidence and self esteem.

Will the cost of living crisis affect my child for long?

Our survey shows that 51% of you think there will be a long-term negative impact on your child’s mental health – showing this is weighing on at least half of our readers' minds. Thankfully, there are ways to help children.

‘Financial education is a good way to explain to children why you can’t afford something,’ says Stepchange. Just like with adults, understanding the challenges can give them a sense of control.

And let's not forget our teenage kids, who are only a few years away from managing their own finances. Research from the London Institute of Banking & Finance (LIBF) says, "a staggering 81% of young people feel anxious about money and finance – an increase of 14% on last year", according to their latest Young Persons’ Money Index. 'Anxiety about money, combined with a lack of financial knowledge is a perilous mix,' it says.

You can help by having positive conversations about money with your children from an early age.

How to get kids involved in saving money? 

So we've established that it's okay for kids to know about what's going on, and it's okay to tell them that you can't afford all the things they want. But how can we make it even easier for them to understand and accept?

There are lots of fun and creative ways to nurture your kids’ understanding of the cost of living crisis. Getting them to muck in and help to make a positive difference is a great idea. They'll enjoy being involved and appreciate feeling useful. (A lack of money knowledge contributes to anxiety in young people, according to the London Institute of Banking and Finance.)

Tips for teaching your children to cope with the cost of living crisis:

• Teach your children about the difference between wants and needs. For example, you can get them to make two picture lists of the things they 'want' vs. the things they 'need' and talk about how they are different.
• Give children real money choices. If they have to decide between an ice lolly or a sweet from the shop, they'll learn to prioritise spending.
• Give your kids pocket money so they can save up for things they want.
• Get your kids into jam-jar-budgeting so they get to see money building up.
• Let your kids pay for things using real money, so they see the change they get.
• Get your kids to draw wish lists to help teach them about delayed gratification.

We also have some great tips on how to teach your kids good saving habits and advice on how much pocket money to give them.

Resources

• Visit our Netmums’ Drop-In Clinic and Parent Supporter Service
• Feed your family for £25ish a week
• Try some of these budget-friendly family recipes
• Learn to spot the signs of anxiety in children
• Promotion: How to teach your children good saving habits

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