The pandemic years weren’t easy. Many people had their hours cut or lost their job altogether and have suffered some degree of financial loss as a result. But how do you explain a reduced family budget to your child?

Talk about it openly

Other changes in circumstances such as training and further education, another child or a separation can affect the family finances. Perhaps you’re thinking: “I don’t want to bother my child with the family budget.” However, it’s a simple fact that children notice things that are bothering their parents, including money worries. So it’s good to talk to teenagers and children of school age about the family budget openly and involve them. This way they’ll learn that a budget can both increase and decrease.

The annual family budget

Of course, not all families live on a budget that was drawn up at the start of the year and approved by the “family council.” But if your income changes dramatically, as a parent it makes sense to sit down and draw up a family budget. This budget will then be the basis for a discussion with your kids.

What if I need to reduce our outgoings?

If spending needs to be reduced, each family member should have a say in deciding what expenses should be cut back. Everyone is entitled to say what matters most to them and to identify where the family could be more frugal. Perhaps your daughter may be willing to go to the hairdresser less often, but not to give up membership of her basketball club. Or if, as a family, you decide that family outings are a must-have, then this can simply be a nice hike rather than, say, a weekend away at a leisure park. Everyone should contribute their ideas to save money.

Not all problems can be solved alone.

Long-term unemployment, a separation or a drop in income when budgets are already tight can make it very difficult to make ends meet. In this situation, parents should seek professional advice as soon as possible. For example, from a budget advice association (german) or welfare services. Explain to your children that you are looking for help and will receive it. Depending on your situation, it may make sense to go to counselling as a family.

The main points in a nutshell:

  • The family budget also affects your children. They will feel understood and appreciated if they are listened to and involved in the problem-solving process.
  • Speak openly with your children about money: they will learn a lot if you do.
  • Do not hide your own financial worries about your family from your offspring. Children notice when their parents are stressed. They will then understand the reason why and will not blame themselves.
  • As a parent, seek outside help if you realize that your reduced income is making it difficult to make ends meet. Help can be obtained from local welfare services or, for example, via Caritas.

UBS’s educational principles

This article was written in collaboration with educator Marianne Heller, who has years of experience in teaching financial education and debt prevention programs for children and young people.

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