How to talk to your children about money during the pandemic
BATON ROUGE, La. (WAFB) - The outbreak of COVID-19 has vastly changed normal life for American families.
With schools closed and parents working from home or out of work, families are spending a lot more time together.
The financial experts at NerdWallet say now is an opportune time for parents to teach their children about money.
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“Whenever there is scarcity, it is an opportunity to talk to kids about needs versus wants and the concept of limited resources. That makes the current pandemic a great opportunity to explain budgeting and how we can’t always have what we want,” Kimberly Palmer, a financial expert with NerdWallet says.
She says it’s a concept even young children can grasp when it comes to a family’s spending habits.
“In addition to [the] loss of income and needing to cut back on spending, many items are simply out of stock or unavailable right now, so we have to get more creative,” Palmer says.
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Of course, this conversation might be easier for some parents than others, whose hours have been reduced or jobs lost due to the COVID-19 pandemic.
The U.S. government said April 23 nearly 26 million Americans, or one in six people, have filed for unemployment after losing their job because of the coronavirus since March. Those unemployment numbers are the highest seen in the country since the Great Depression in the 1930s.
Here in Louisiana, the state’s unemployment office, the Louisiana Workforce Commission, said over 302,000 Louisiana residents whose job was impacted by the COVID-19 crisis had received unemployment benefits, as of April 22.
For families who are experiencing financial hardship due to the pandemic, Palmer says you can still have the conversation with your children about money but it’s important to reassure them that the parents are in charge of figuring things out.
“So even as we explain the need to cut back and make difficult choices, children shouldn’t feel that this burden falls on them,” Palmer says.
Dr. Mary Lou Kelley, who specializes in child psychology and is a clinical psychologist for LSU, agrees with Palmer and adds that everyone has been impacted by the coronavirus.
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She says you want to let your child know their family is not alone and the situation is going to get better sometime in the future.
“Many, many families are in the same situation, needing to cut back on expenses because their parents are not working,” Dr. Kelley says.
She also adds it’s important to let your children know government officials at the federal, state, and local levels are working to help people recover and get people back to work.
Once the money conversation has been started, Palmer says the most important aspects of finance that kids need to know about are:
- needs vs wants
- comparison shopping
- saving for a rainy day
- giving to others in need
- saving and investing for future goals
Since most of your meals are probably being cooked and eaten at home during the pandemic, Palmer says now is actually a good time to get them actively involved with the family budget.
“Children can understand that we have a set amount we can spend at the store for groceries for example, such as $50 for the week. Then, they can help select items within that budget and make trade-offs -- buying a gallon of milk and Ovaltine mix is less expensive than buying a gallon of milk and two gallons of chocolate milk, for example. Involving kids in these decisions helps them understand how to make trade-offs and how we cannot have everything we want,” Palmer explains.
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She says making the grocery list is also a good time to encourage them to think about how they can reuse what is already in the house instead of buying new things.
“Perhaps because of the shortage of paper goods, the whole family can switch to using reusable napkins. Those kinds of habits can last well past the pandemic,” Palmer says.
If you’re looking for a way to help you start the money lesson, she says cooking is a great way to spark children’s interest in the idea of personal finance.
“We can show them that grating our own cheese is much cheaper than buying packaged shredded cheese, for example. We can also show them that cooking a meal at home is much cheaper than ordering take-out,” Palmer says.
What about summer jobs? Right now, it’s unclear if traditional summer jobs like those at restaurants, movie theaters, or summer camps will be around this summer.
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Palmer says despite the uncertainty you can get creative online.
“A crafty teen could create face masks and sell them on Etsy, for example. Or create a virtual summer camp for younger kids for an hour a day. It’s a great opportunity to think about e-commerce and how you might turn your skills into cash,” she says.
When the economy finally does “get back to normal” hopefully sooner rather than later, Palmer says you want to use the pandemic as a teaching point for your children.
“The pandemic and extensive job losses reminded us all how important it is to have an emergency fund. Even when things ‘get back to normal,’ we can remember that lesson and maintain an emergency fund so we are better prepared for the unexpected,” Palmer explains.
You can view more money tips from NerdWallet including how to make a budget and lower your bills by clicking here.
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