How to approach financial uncertainty with your children

Guiding your family through uncertain economic times is a challenge that many people face at some point. It may be your high school graduate having to defer college or adult child moving back home in response to the job market. You might even be dealing with employment challenges of your own. These are times when your advice, guidance and open communication will be more important than ever. So, we’ve put together a few tips to help you navigate any period of financial uncertainty.

Establish open communication

Discussing household economics is challenging for many families. A study cited by CNBC noted that 47% of individuals struggled to talk about financial matters with their loved ones.¹ But having these talks may actually help ease tension and bring families closer together. Addressing finances head-on can make the subject feel less taboo and paves the way for an ongoing dialogue. When your children see how you directly deal with these challenges, they will be better equipped to tackle their own potential financial issues down the road.

Set ground rules

Times of financial instability can lead to major changes in family dynamics, such as adult children moving back home for a period of time. In fact, a 2020 study conducted by the Pew Research Center found that 52% of young adults were living with their parents.² While there are many benefits to having your kids back under your roof, it can also be a major adjustment.

Family sociologist Michelle Janning offered some practical advice for multi-generational families living under one roof on episode 15 of our podcast Friends Who Talk About Money. “Don’t make assumptions—things that may seem obvious to you may not be obvious to everyone in the household. Spell out clear expectations early, and revisit often.”

Is your child allowed to have their significant other stay over? Will they be contributing to any household expenses? Discussing everyone’s expectations when they first move back in will help you avoid conflict later on, especially if more than one person is working from home.³

Have clear terms for financial exchanges

If your child (or close relative) is struggling to pay their phone bill, student loans, etc., you may feel inclined to step in. Before offering to pay, make sure you’re both clear on the terms. Is this a one-time offer or open-ended? Will you provide ongoing assistance for a fixed amount of time? Is there an expectation that the money will eventually be paid back? Be intentional about this exchange to curb any potential issues and to encourage future independence.⁴

Emphasize the importance of setting financial goals

You can use this time together to talk about budgeting, saving habits and what your financial goals are. For children who’ve moved back home, prioritize open discussions with them on the importance of financial goals and the different aspects of their financial lives such as saving for retirement, living expenses, debt management, and exploring the stock market. Developing an open dialogue around these topics can assist them in developing good financial habits and can help them feel more confident in their financial journey going forward.⁵

Creating a plan and communicating openly and honestly with your family will help strengthen your relationship with money and each other during a time of financial instability. As Michelle Janning advises, “try to think about money conversations with your family as an expression of love and respect rather than something difficult or awkward.”