Back to Blog

Why You Should Talk To Your Kids About Money During A Financial Crisis

January 8, 2021


Liz Frazier

This article was originally published on Forbes by Copper's Executive Director of Education, Liz Fraizier. 

As a parent, our instinct tells us to protect our child. Since the start of COVID-19, that instinct has kicked into overdrive. Not only are we working to physically protect our kids from getting sick, but we also want to shield them emotionally. Everyday is a struggle when our kids ask us why they can’t see their friends, go to school or visit their grandparents. Parents have to constantly filter what information we tell our kids and what we protect them from knowing.

This is especially true when it comes to financial troubles. Even during good times, the majority of parents don’t talk to their kids about money. So when trouble hits, that shield goes up to protect our kids from the financial stress the parents are experiencing.

But are we helping or hurting our kids by not communicating with them? Recessions and hard economic times are inevitable, and our children are almost guaranteed to experience financial difficulties during their adult life. While we struggle during the current pandemic and looming recession, maybe our children are best served by us opening up to them now so they are prepared as an adult?

A recent study conducted by Personal Capital on the impact on our financial health by how we are raised suggests that talking to your children about the scarier side of money can be quite impactful. The study revealed that respondents whose parents did talk to them about financial crises or recessions were more likely (72%) to be in good financial standing now than those whose parents did not (65%). Only 40% of respondents say their parents talked to them about potential financial crises or recessions.

Financially successful teens

Perhaps one of the most important conversations you can have now with your kids is the importance of an emergency fund. Having cash resources you can use in case of an emergency is a key component of financial security and health. Financial crises or recessions, like the Great Recession and now COVID-19 provide prime examples of why an emergency fund is so important. Talk to your kids about what an emergency fund is, and why they should always have enough for at least 3 months of living expenses. Using the current conditions, talk to them about what happens when someone loses their job and how they need saved money when they don’t have income.

Discussing these worst-case scenarios increases the likelihood that your children will plan ahead with an emergency fund as adults. About 62% of respondents whose parents did not talk about crises currently had emergency funds, compared to over 72% of those whose parents did discuss these downturns.

And while communication is key right now, lead by example as well. The survey results suggested a connection between parents’ spending style and their children’s style. The more responsible a parent is with his or her spending, the more likely their children are to be responsible spenders themselves. Over half of respondents whose parents only spent money when they could afford it reported being debt-free today, compared to only 42% of respondents whose parents often spent beyond their means. Show your child that you are being even more careful with your spending now because of the economic uncertainties.

Remember, your kids always know when something is going on. So rather than let their imagination run wild, talk to them. This doesn’t mean you should tell them about your credit card debt, or about your mortgage worries. The most important thing right now is that your kids still feel safe and secure. But you can still keep it positive with your child, even when you are scared and unsure. Talk to them about what you are doing to keep them safe and the family financially healthy. Keep it simple, and make sure they know that they can ask you anything and the line of communication is always open.


Liz Frazier

Liz Frazier is the Executive Director of Financial Education at Copper and author of “Beyond Piggy Banks and Lemonade Stands: How To Teach Young Kids About Finance”. Liz is a Certified Financial Planner specializing in financial planning for families and working professionals. Her goal is to alleviate the anxiety that surrounds finance, and make financial education, resources and tools accessible to all.

You May Also Like

January 4, 2023

Your Copper Portfolio Breakdown

Depending on the portfolio, an investor will be invested in a customized mix of stock categories across the US and internationally.

Read Now
June 13, 2022

How to Teach Teens the Value of Money

We know you work hard to instill good values in your kids, including teaching your teens the value of money. The task may seem daunting, but Copper’s assembled some tips to help you get started.

Read Now
October 20, 2021

What Your Teen Needs To Know About Credit Before Their First Card!

Learning about how credit works is crucial for the long term financial success of your kids.

Read Now

Looking for more?

Check out our Money Moves!

View Now