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Tips for Tackling Financial Challenges as a Family

Tips for Tackling Financial Challenges as a Family

If your family is going to have to tighten their belts in the months ahead and you’re wondering how to talk to your children about it, the good news is that this can actually be a positive experience. Job loss or other situations that lead to lean financial times is stressful, but this is also a great opportunity to teach your children about budgeting and finances if you have not done so yet. Working together as a family on a budget can also help relieve some of the tension of the situation.

Deal with Emergencies

If you have an emergency that you need to deal with, whether it is an urgent home or car repair that can’t wait, or a medical situation, there are plenty of things you can do to get the cash to cover it. It is usually best to go ahead and address the issue since you will have to at some point, and these situations only get more costly if you wait. If the cost is medical, some providers will work out a payment plan with you. 

Another possibility might be taking out a loan. It’s easy to research low interest personal loans from a private lender, and you can usually apply and get an answer relatively quickly. A personal loan is probably your best option. You could also look into borrowing against your retirement account or using your credit card although there are significant disadvantages to both of these solutions. There are certain limitations associated with the borrowing from your retirement, and credit cards usually have high interest rates.

Age-Appropriate Explanations

An honest discussion with kids about family finances does not necessarily have to mean sharing every single one of your worries with them. Instead, think about what information they need to have. Kids don’t need to worry about whether they will have a roof over their head or food on the table. You can share more information with older children than younger ones, but this will also depend on your child. As their parent, you are the best judge of how prone they may be to anxiety. Just as you would with any other serious issue, find the right balance between honesty and reassurance.

Create a Budget Together

This part can soften the blow of breaking the news that the usual purchase of clothes or games or the annual family vacation might be downsized. Working together on a family budget can help empower children. For example, you can show them what the new family entertainment budget is and let them choose how they want to spend it. Telling kids you’ll need to turn the thermostat up or down a few degrees to save on utilities may not go over well, but if you show them that this gives them a little extra cash for takeout once a week, they might change their mind. Finally, if you have teenagers who are looking ahead to college and are worried about how this will affect their plans, sit down with them and look at what is available to them in scholarships and grants as well as federal and private loans.

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