Bankruptcy & Your Kids

What To Tell the Kids When Financial Problems Loom Large

by Steven R. Neuner

We are not psychologists, this article is not psychological advice from a trained or licensed family or mental health professional. However, we have met with many, many people over the years and from that experience can give you the benefit of our perspective. You may be looking at this page because you are in debt and are feeling some guilt about your current circumstances, and especially about how it impacts your family. Guilty feelings are not a bad thing. They mean you acknowledge some responsibility for your current circumstances, and a need to do something. So feeling guilty or scared are normal and healthy. It is what we do with that guilt or fear that is important.

Dealing with financial distress is scary. For many of our clients, a major hurdle is what to tell their children. Along with confronting your financial troubles, you have confront your family and the fears you may have about them. Yet a healthy and effective approach to taking control of your life and moving on to the fresh start you need demands that you do so.

A good start is to recognize what you are fearful of and put it into perspective. Downsizing and cutting back mean making hard choices. Children are going to be affected, if they haven’t been already. It’s embarrassing to disclose what is happening to you. And it leads to hard questions about how and why. You may feel that telling the children forces you to admit failure, and disappoint what you think are your children’s expectations. You may be afraid that you or your children may lose status or respect among their peers and your neighbors.

While these are real concerns, we believe the right approach can help you minimize the effect they have on you and your family.

First, recognize that children are brilliant at discerning minute changes in their parents’ emotional landscape. They will sense if not know that you are struggling and that things are not right. Not sharing with them what is going on and what you are doing about it can only increase their anxiety. With the right approach, you can lessen the stress on them and yourselves as well.

Explanation can have positive benefits if done right. Children learn from us both by seeing our mistakes and seeing how we deal with them to move on. Showing your children that you are not hiding from your situation, but taking control of it and making the hard decisions that need to be made is a very positive example. By sharing with your children what you are doing, you also allow them to become part of the solution. You show them that as a family you are working together. For example, you might explain that paying for their new ipod or toys means you will have to give up something more important. a roof over your head. In the end, you are telling them “We’re all in this together” and “We will get through this and move on”.

The hard part may be explaining how this situation came about. Don’t be too hard on yourself. The point is not to cast blame. Instead, it is to deal with the past and move on. Maybe the causes were beyond your control and it was just the economy, or an unexpected event. You might want to show how past decisions to buy and spend contributed to this situation–“if I had it all to do over again, this is what I would have done”. At the end, you and your children need to deal with past but not dwell on it, and move on: “this is what happened, this is where we are, and we will deal with the present the best way we can, so that we can protect you and the family.”

We often tell our clients that protecting their families and their ability to continue supporting themselves and them is the single most important mission. Credit scores, paying creditors, concern about what others may think of us are secondary.

A useful image here is to think of yourself as “putting on blinders”. Just as blinders help a horse avoid getting spooked or distracted by extraneous noise, people in financial distress need to put on blinders to the past and the too-distant uncertain future. The past is done: we recognize what happened, but we do not dwell on how much better things were then or what we might have done differently. The distant future is unknown. We can only predict a limited time into the future. Stay focused on the here and now, on what we have to deal with now and what we are reasonably certain will happen or we can control. Bad things could happen or good things could happen, but making decisions today on what might or might not happen is just another distraction sucking emotional energy and attention away from the job at hand.

Of course, before you sit down with the children, you need to take careful stock of your situation. Put together a budget, with your actual monthly income, and the basic and necessary living expenses. You can use one of our budget forms or come to see us for help with this. You also need to have a plan. And we often recommend that our clients write it out and keep it for future reference. The plan can be changed, but in the emotional forest, that piece of paper is a road map to where you are and where you need to go. It can help you keep on track.

In addressing your children, you should decide where to draw the line. You need to retain a zone of privacy–not all your financial affairs are their business. Decide what the children need to know. You are not inviting them to audit your personal finances. You also do not need to make them your emotional caretakers. At the same time, commit to keep them in the know to some degree. And make clear that you still control the finances and make decisions for yourself and the family. Decide in advance what expenses or activities are not going to be changed or touched, except as a last resort. Your children need to know what they will not have to give up, as much as what will be different.

All this is information your children need so they can adjust their expectations and know why things are happening, and how they fit in. But the other tough question is: what do your children do with this knowledge, in dealing with their peers? Here might be some talking points for them:

1. It’s not a reason for shame

2. Coin is not everything–pride, hard work, and love of family are just as valuable

3. “It’s not what you have now that counts, it’s what you had to start out with that counts”

4. “It’s not where you end up that counts, its where you started from and how far you traveled”

5. Lots of successful people failed at some point in their lives, and went on to success–“behind every great success is a great failure”

6. “It’s not how many times you get knocked down, it’s how many times you get up that counts”

7. Teach them resilience

8. Teach them the value of planning and savings.

As we help clients and their families overcome the financial difficulties that have befallen them, we recognize that protecting and preserving their personal sense of self worth and their family structure are critical parts of the solution. While we are not psychologists or family therapists, we offer these thoughts to help. Of course, each person and each family is different, and in appropriate cases, there is no substitute for seeking the help of a trained psychologist or family therapist.

© Steven R. Neuner, 2010.

We are NJ bankruptcy attorneys. We help people obtain debt relief under the Bankruptcy Code.

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