How to Talk to Your Children About Money in a Pandemic

I think all of us will agree that it’s better to read about historical events long after they’ve occurred than to live through them. In these unsettled times, children will ask questions about events on the news, which they will hear on TV or read or watch on their cell phones.  

The event which has affected the most people is the precipitous economic downturn we find ourselves in, by some measures worse than the Great Depression. The financial uncertainty this can generate just from hearing about it can easily prompt questions from your children about family money.

We know that parents would metaphorically rather walk over hot coals than discuss money with their children. But keeping your kids in the dark about your wealth doesn’t work since your children as young as five and six already know there is a lot of money in the family coffers.

 “Kids figure out that most families don’t travel to France to visit their own vineyard, and they’re savvy about using the Internet to find the value of your home, your business and your net worth, much of which is probably inaccurate,” says Holly Harben Swan, Managing Director, National Practice Executive of the Family Office at Bank of America. She discusses this and other issues in a guide recently issued by their Private Bank: An Age Guide to Teaching Your Kids About Money & Wealth. You can download a copy here.

Children prize stability, and in the last weeks, many have been quarantined, their method of schooling has changed overnight, and they haven’t been able to spend time in person with their friends. They will also have seen that the pandemic has required their parents to make lots of changes in their lives.

Depending on their age, kids will know we’re in the middle of a global pandemic, which has killed more than 107,000 Americans; [1] that we are experiencing a stunning economic collapse, and that social unrest in this country has become a daily reality.  They can access all of this news on their cellphones, so it would be impossible for them to be unaware.

Although they know the family has money, given all the turmoil around them, they might want to be reassured that the family is financially stable. Kids as young as five or six could undoubtedly ask you, “are we rich?”

“It’s a fair question from a young child, and in turn deserves a fair answer from a parent,” says Bank of America, in their report.”  How do you respond?

“There are many people in the world who don’t have enough money, there are people who have just enough, and there are people like us who have more than enough.”  Keith Whitaker, President of Wise Counsel Research, a nonprofit consultant to High-Net-Worth families, suggests this answer in the B of A report. [2]

Your older teenagers will know the details of these deleterious events and might go so far as to speak to you in more than brief utterances so they can ask questions about money. They will want to know if you have enough cash on hand to get through this period of intense economic stress.  “Do you have investments in the stock market and stuff?” It would be best if you reassured them that the family has plenty of money and that the financial situation of the family is very stable.

Resources:

[1] https://coronavirus.jhu.edu/map.html

 [2] https://www.wisecounselresearch.org/ *Cannon does not have a business relationship with Wise Counsel Research, nor do we endorse or recommend their firm or any similar firm

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Contributing Writer: Subject Matter Expert Charles McCain