Background How do I explain financial inequality?

Children are keenly aware of financial inequality and have many questions about it. Answer them with care.

Whether in nursery school, the playgroup or at the latest in kindergarten, children from the most diverse backgrounds eventually come into contact with one another. Children reflect the country's diversity and the great variety of individual circumstances in life. Some have two siblings, others none. One playmate may live with a single parent, the other with their grandparents. And some families have more money than others, leading children to wonder why.

“I think Lukas is poor ...”

Children become aware of social differences at an early age and want an explanation. They also make comparisons with their own family's social status, because that is what they know best. They wonder why some children always get new toys or travel to distant countries during summer vacation. And they are far less inhibited when it comes to talking about money. Your child may well come home from school one day and tell you how their classmate Lukas is poor, but Anna – well, she's super rich! Ask why they think this is the case. Children generally draw their own conclusions about what they observe. It is both healthy and important to discuss these matters with your child when they bring them up.

“Mommy, why is this woman asking for money?”

Poverty in Switzerland is not always immediately apparent and is often hidden. Nevertheless, there will be situations where you are confronted with it in the company of your child. Someone asks you for money or you come across someone living on the street. These kinds of encounters trouble children: the experience is new to them and not something they recognize from their own social environment. This may lead them to ask questions that parents have a hard time answering, like “Why is this woman asking us for money?” or “Why is this man sleeping outside?” In most cases, you don't know yourself, other than that the person is plainly short of money.

Here's how you can talk about it with your child.

If you don't know why, don't be afraid to say so.

Suggest that this person is probably short of money at the moment. Explain that we get money through work, but work isn't always easy to find. There can be many reasons why someone isn't able to earn an income. Unfortunately, we don't all have the same opportunities starting out in life. Some of us, for example, inherit a lot and benefit from family ties throughout our lives.

Talk to your child and ask how they imagine being rich or poor. Some interesting questions you could ask:

  • “How do you get rich?”
  • “When do you think someone is poor and when is someone rich?”
  • “Who helps people who don't have much money in Switzerland?”
  • “Would you share your birthday gifts with a poor friend?”
  • “What could you give up if we had less money, and what should we, your parents, do without?”

There is no right or wrong answer to many of these questions. But it's important to discuss them. Questions about financial inequalities are likely to keep coming up. This is a good thing – it means your child has a broad social circle and is actively observing their environment.

The main points in a nutshell

  • Children gather experience based on their own family's social status.
  • The wider their social circle, the more experience they will likely have with social diversity.
  • Children usually expand their social circle upon entering kindergarten.
  • Talk to your child about what it's like to be rich and poor and ask them what this means to them.
  • Tell them if you do not know something and admit if you're only speculating.

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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