When you are going through financial troubles, you don’t often notice that your kids are watching. You cancel cable television. You are not going on vacations or eating out that often. Birthday parties or holiday gatherings are not as festive as they used to be. While you may think that children don’t notice, the truth is that they feel your desperation and fear, even if they may not always figure out what is causing it.
As parents, we constantly worry about our children. We shield them from danger and try to make them feel safe and secure. So, when you are faced with a job loss, medical issues and other crippling expenses, you wonder how to tell your children about family finances. Many parents tend to assume that their income or debt issues simply aren’t their children’s business. The idea of talking about money troubles or bankruptcy with your children could be downright scary.
Why Should You Talk to Your Children?
So, why should you talk about your money issues with your children? There can be many benefits to doing so and here are a few:

  • It will really help to calm their fears about the stability of your family finances. If you try to conceal the truth from them, they will fear the worst is about to come. In that regard, kids are not much different from adults.
  • This could become a teachable moment where your children will learn that running away from your problems will not make the situation disappear or won’t make it any better. When you talk to them and tell them the truth, your kids will learn that you are someone who confronts problems head on.
  • When you tell children the truth, they will feel like they are part of the family and a part of the solution. They might be more understanding and cooperative with regard to the decisions you make.
  • They will learn to handle difficult situations and challenges without crumbling.

 How Much Should You Tell Them?
Once you’ve decided you are going to talk to your children, the next question that arises is: How much should you tell them? That really depends on how much you are comfortable disclosing to them. Understand that children pick up on a lot of things because they can sense subtle changes and stress levels in their daily interactions with you. Here are a few things to keep in mind before you talk to your children.
What children really want is a sense of safety and security in their homes. The way you present the information to them will go a long way in instilling that sense of security. If you appear worried and concerned, they will feed off that negativity. If you show them that you have things under control and that you have a plan, they will feel better about the situation. Never exaggerate your troubles or raise an alarm where it’s not warranted. That would simply create panic.
What you might tell your children will also depend on what type of bankruptcy you’ve filed. If you’ve filed Chapter 7, it will likely be a much quicker process. It should all be over in under six months, typically. And you won’t have to give up your assets such as your home or vehicles. On the other hand, a Chapter 13 bankruptcy could last longer. Under this type of bankruptcy, you’ll go under the three- to five-year payment plan, which means your family might need to follow a strict budget. You won’t be able to take on additional debt. So there is much more potential for a Chapter 13 bankruptcy to affect kids’ lives in a real way.
One thing you should certainly avoid doing is fighting about money issues in front of your children. If your relationship with your spouse is strained, that will only make things worse. Ideally, when you decide to talk to your children, get the whole family together. Focus on the conversation by turning off the television and all electronics. Explain to the children what they can expect in the near future. Depending on your children’s age, you can explain the bankruptcy process and what it entails. Tell them about the budget you have in mind and the importance of sticking to it.
Have the kids work out a budget for things they might need in the next few months. Assure them that some things will never change, like celebrating birthdays and holidays. Even there, set realistic expectations. Ask the children if they have any suggestions for increasing income or cutting expenses. Encourage them to ask questions and if you don’t know the answer to the question, be honest instead of making up an answer. When you find out the answer, let them know. This will make them trust you more.
And finally, remember that your children don’t need to know everything about your financial troubles. Be selective about the information that you reveal to them. Keep the tone of your delivery upbeat and positive, but realistic. Keep the message simple and don’t tell them any more than they really need to know. Reassure them that it’s not their fault. Children tend to internalize their parents’ concerns. So make sure they know it’s not their fault and certainly not their emotional burden to carry.
There have been academic studies that have shown negative effects on children as a result of bankruptcy, are real. However, parents who face their challenges with faith, hope, love and a positive attitude can greatly assuage their children’s pain and distress.
Get the Help You Need
It is also critical that you get the help you need. If you are drowning in debt and overcome by your financial troubles, contact an experienced Arizona bankruptcy lawyer who can guide you through the process and help you get that fresh start you deserve. A knowledgeable attorney will be able to help you make a decision about the type of bankruptcy you should file and how better your reorganize your finances. Call us at 480-745-1770 to find out how we can help you.