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What to do When Children Worry About Money, Finances, or the Economy

Your family doesn’t have to be struggling financially in order for kids to worry about money. “Tweens and teens know what’s happening in the economy,” says Simon Rego, Psy.D., associate director of psychology at Montefiore Medical Center, “and it can make them feel insecure.” (Graves, 2010) Just as children can turn on the TV and hear about terrorism, they also pick up ideas about the larger economy from the media and from friends. If they know of a friend who lost their home to foreclosure or hear about unemployment numbers on the newscast, they may secretly worry that their own family is in jeopardy, especially since they have little context for the information they’re absorbing. What does it mean when the nightly news warns that “unemployment numbers are soaring!”? To an economist this might mean they went from 8.5% to 9.2%. To a child hearing the same message, it may mean this: “Everyone’s losing their job, the financial apocalypse is coming!”

During the height of the 2008 financial crisis, 71% of children ages 6 to 16 said they recognized that the financial crisis was bad (Konrad, 2011), and an ABC News poll found that 6 in 10 teenagers worried about their family’s financial situation. These worries often translate into irrational or misguided fears. Mary Alvord, a psychologist in Rockville, Maryland, describes seeing a couple whose 6-year-old daughter accidentally overheard her parents arguing about money. The panicked girl burst into tears. A fuller explanation of the situation eventually came out, Alvord says: the girl had misinterpreted her parents’ argument and thought that it meant they could no longer afford to buy food. (Horovitz, 2008)

While money worries can arise on their own, the most severe cases of financial anxiety often develop in response to a money crisis in the home. Even after the family recovers and gets back on their feet again, children can carry around the fear that catastrophe might strike again at any time…a type of post-financial stress disorder.

Helping kids cope with financial anxiety

No matter what the source of your child’s anxiety, here are some ways to put their mind at ease.

  1. One thing that can give rise to financial phobias is the fact that from a child’s standpoint, they appear to come out of the blue. Things seem fine one day and then all of a sudden they’re not. This unpredictability elevates the stress response. To counter this, reassure kids that if anything does come up in the future, you’ll let them know about it right away and won’t try to hide it.
  1. Children with financial anxiety often benefit by learning to think of money in a different way. Money, after all, is simply a worthless piece of paper or a number on a computer screen. It’s merely a formal representation of goods and services. It’s a collective lie that we all choose to believe in (or are forced to believe in).

So teach children to relate to money as a symbol of other things as opposed to something important in and of itself. Talk about the goods and services your family provides, and how for most of human history people bartered and traded without any type of money at all. It is these goods and services that are the true source of wealth. Learning to see money as an abstract symbol may help them lessen the anxiety they feel over what goes on in the larger economy.

  1. Tell them: “Our family is okay, but the way we stay okay and stay out of trouble is by being cautious with our money.” It can be a good opportunity to work on budget issues with your children. Show them how you manage your money. What you do to try and save. They’ll feel a sense of empowerment by knowing how you (and they) can stay on top of things.

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