How to Break It to Your Kids That You’re Broke

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Being broke is hard.

Telling your kids is even harder.

I’ve experienced some really difficult times financially, situations during which we were truly desperate. I felt like I was letting down my family when I had to say no to school pizza day and when we ate the same things day after day because it was all I could afford. I particularly hated to say no to my kids when they asked for something like a new pair of shoes.

I felt like a failure as a parent.

The most important lesson I ever taught my daughters

And that brings me to the most important lesson I ever taught them.

I sat them down and told them we were broke. Busted. I informed them we had no money. Nada.

And then I made that lesson even more real by giving them a glimpse at our finances. My eldest daughter was the one who wanted the shoes. She had seen my pay stub and couldn’t understand why a person who just got a thousand bucks wouldn’t buy her the much-desired footwear.

I sat her down at the laptop and walked her through paying ALL of our bills online. When we’d finished, there was only about a hundred dollars left and she crowed, “See, we CAN afford the shoes!”

I said, “Sure we can. If you don’t want to eat. If you want to walk to school and if I want to walk to the next city over to go to work. If you don’t want to have anything but tap water to drink instead of juice. What do you think?”

She was silent. She hadn’t thought of those things at all. Of course, she hadn’t. She was about twelve or thirteen years old. When my other daughter hit the same age, I did exactly the same thing.

Not everyone approved. Extended family members were horrified. They told me that I was wrong to “put financial stress on a child.” They were aghast that I had shared with my children that we were struggling. They felt that it had eroded my daughters’ feelings of security.

But both of my girls, who are now adults with their own households and budgets, have told me this was one of the most eye-opening things I ever did for them. They chalk their money-handling skills as an adult up to that pivotal moment, when they saw how budgets really work. And it’s their opinion that matters the most to me.

If you are having tough times, you need to talk to your kids.

You can’t expect your kids to understand why you keep saying “no” to anything that costs extra money if you don’t discuss it with them. I’m not saying you need to tell an eight-year-old that the family is about to starve to death.

But you need to have an age-appropriate discussion with your children and explain that your budget has changed. You need to let them know this means things are going to change for all the members of the household. Luxuries are going to have to go for the time being.

If you don’t have this discussion with your kids, you are missing a golden opportunity to teach them that financial problems happen and that we can get past them with hard work, savvy thinking, and the slashing of budgets.

Be honest.

I always think you should be honest with your children on an age-appropriate level. If they are old enough to ask a question, they are old enough to get an answer. If there is something going on that is about to dramatically affect them, then they deserve the truth.

You can be honest without terrifying them. You can say that no matter what happens, things will be okay – maybe different but still okay. Giving them an idea of what to expect can really help them navigate tough times.

When we lost our home to foreclosure, I sat my girls down and explained it to them. I told them we’d be moving, they would keep their furniture and clothes, and that we’d make playdates with friends from their old school. I told them that once we left, a new family would be living in our house and that unfortunately, even though I really wanted to stay, we did not have enough money to do so. I explained that they would have to share a bedroom at the new place and that we were going to have to make some changes for a while. Because we had been already living fairly frugally, the worst shock was having to share a room.

When they asked why, I explained that when we had the flood in our basement, the insurance company had raised our rates to something I could no longer afford. (Our monthly premium was almost as much as the mortgage.) I said, as well, that when Grandpa had been sick, I’d taken a lot of time off work to go to the US to help Granny, and that time off work meant that I didn’t have enough money to pay for this. Cause, cause, effect.

Then we discussed the things we’d like to have in the apartment we’d be moving to, and we focused on planning.  Where would we live? What color could they agree on for their room?

The biggest point here is that a difficult decision was made a little bit easier because they truly knew what was happening and what to expect.

Will this work with your kids?

Now, this conversation won’t work with every kid. It really depends on several things and you need to be honest with yourself when you think about these questions:

  • How open have you been with your kids about money in the past?
  • How much money have you spent directly on your kids?
  • How often have you said no and made your kids earn something they fervently desired?
  • How entitled are your kids?

Are you ready for some tough love, parent to parent?

There are a LOT of kids with whom this will not work at all. And that is because financial boundaries haven’t been set in the past. If your child has always gotten everything they asked for, if you’ve capitulated to tantrums at the store and bought things to shut them up, or if you have a partner who has done these things, you haven’t done your children any favors.

That means that the reality check is going to be far harsher for them. And it turn, it’s going to suck for you, too, because they’re going to complain, whine, and be outright nasty when you start canceling cell phones and extracurricular activities.

Remember: You are the adult. You must make decisions right now that will affect the future of your entire family. Don’t let complaining kids muddle your decision making, no matter how viciously they attack you. A lot of people are facing difficult decisions and while you can’t totally disregard your children, you must focus on their actual needs (food, shelter, medicine), not their perceived needs (cell phone with unlimited data, new clothes, tennis lessons).

What to do when your kids won’t get on board

If you are going through difficult times, you’re dealing with a lot of stress. Kids who won’t get on board can make a bad situation even worse. Here are some tips for making your kids aware that changes will be made, whether they like it or not.

Remember, you are the parent.  You’re not their best friend. You aren’t an ATM machine, dispensing cash upon request. You are not there, quite frankly, to make them happy. You’re there to guide them and care for them. And sometimes that isn’t easy. If your budget will not withstand their huge data plans or their sports teams, then it won’t. Going into debt to fund these things is not only a horrible idea for you, it’s also a horrible idea for them because it does not model financial responsibility. That’s your job. You aren’t the spreader of unrelenting joy. You are a mom or a dad.

You make the decisions. You don’t need to discuss the cuts you are going to make with your children and give them choices in the matter, not unless those choices are actually viable. If you’re just cutting back a little, you might be able to give them a choice between cheerleading and their cell phone. But if things are really bad for your family, you may have to slash relentlessly.

I guarantee you that if you take away your child’s unlimited cell phone data plan, it will not be pleasant. We’re programmed societally to feel these things are an absolute necessity for everyone over the age of twelve. But – remember back when we were kids? We just took off on our bikes for the whole day and it was fine as long as we were home when the streetlights came on. Just because a decision is wildly unpopular, that doesn’t mean it doesn’t need to be made. You can free up hundreds of dollars monthly by getting rid of everyone’s massive phone bills. That may be the difference between keeping a roof over your head or being evicted.

You have to do what’s best for the entire family. You’ve heard that saying, “The squeaky wheel gets the grease?”

Your unhappy kid is going to try his or her darnedest to be that squeaky wheel. I’ve raised two kids through the teenage years and it was a wild ride. There were times they hated me. It was terribly upsetting, needless to say. But still, I persevered because I had to think about what allowed us to survive our rough spots, not what would make my whining kid shut up.

You have to be willing to be the bad guy. If you give in to terrorists (even young ones who share your DNA) they’ll learn that their terrorist activity worked. If it works, why would they change their behavior in the future? Therefore, it is important to kibosh the misbehavior. Do not let your child’s rage play a factor in what you’re cutting from your budget.

If your child loses his or her mind because (using that cell phone example again) you are slashing their data and they can’t be on their device 24/7, they’re just going to have to lose their minds. And you, my friend, are going to have to deal with that behavior. A lot of parents give in because it’s easier than fighting with their kids. I know how awful a ticked off teen can be, but this is an indication you must step up to the plate and handle their ire. You cannot give in just to calm them down and have peace in your home. You may even have to discipline them if they continue to try and make life unbearable until they get their way.

I see it happen all the time, both in my comments section and on social media. My kids, now adults, see it happen too and they always say, “You would have NEVER put up with that.” And they’re right. I wouldn’t have. This is a situation in which you absolutely must parent. It’s no fun for you either and that’s a big reason a lot of parents cave to the demands of their teen tyrants. They simply don’t want to have to put up with them.

I’m going to be blunt – giving in because you don’t want to deal with their wrath is just plain lazy parenting. Teenage angst does not a necessity make. I’m sorry to sound mean, but it’s true. This is primetime for lesson-learning and you need to be the one to teach them the skills they need to navigate adulthood. If the company for which they work one day makes an unpleasant change, do you want them to believe that behaving like a miserable human being will change things? How will that affect their career? How will this impact their future?

It’s not fun for anybody but it’s an incredibly important lesson you’re teaching right now that could change the course of their lives.

Everyone needs to learn how to handle hard times.


Hard times are difficult for everyone in the family – not just the adults responsible for paying the bills. Each member of the family has the responsibility of working together to survive. It isn’t always fun, but it’s very important not to cushion your children from real life. If you do, the shock will be even bigger when the hard times happen to them one day in the future. You are giving them the tools they need to manage their money in adulthood and this is an incredibly vital, although sometimes painful, lesson.

Have you had to talk to your kids about money problems? Do you have any advice for people who need to do this now? And is there anything you wish you had done differently? Share your thoughts in the comments.

Hat tip to Diane Kennedy of USTaxAid for suggesting I write about this important topic
How to Break It to Your Kids That You’re Broke
Daisy Luther

Daisy Luther

Daisy Luther is an author and blogger. She's the single mom of two daughters and credits extreme frugality and a good sense of humor for her debt-free lifestyle. She is the author of numerous books, the editor of, and is the founder of a small digital publishing company in the emergency preparedness niche.

10 thoughts on “How to Break It to Your Kids That You’re Broke”

  1. When I told my kids I didn’t have the money, they said for me to write a check. At 12 & 14, I put them on the checking acct. Explained how it worked. Had them write the bills and keep the ledger of how much was left. They are in their thirties and good managers of money. Yes, I did have to get each a state ID to write checks and add them to my acct.

  2. Bravo, Daisy! What a timely article. One of our neighbor kids came over one day asking if our electricity was off. We told him it was not and knew why theirs had been turned off, because a car repo guy had recently been asking if we had seen their Chrysler 500. They eventually moved due to foreclosure. Your daughters are lucky they know what hardship is, and they are better and more compassionate adults because of your honest and practical approach. I knew a woman who was the Personnel Officer at a bank. She thought she had a perfect life. One day she came home and found half the pots and pans missing but most disturbingly, her husband had drained their joint account to zero. He felt she got the better deal because he left her the house; however, a house is not instant cash, so for the first time in her life she knew what it was like to have an empty wallet. She said in retrospect it made her a nicer person and Personnel Officer. At work she sometimes counseled people with money problems, and she used to be short with them because she thought only irresponsible people got themselves in such predicaments. Now she knew it could happen to good people as well. But as long as they realize they have the power to turn things around like you did—and don’t expect “someone else” or a GoFundMe to bail them out—they can not only survive but thrive.

  3. No kids myself, never wanted them, but my brother had to do this with his two daughters. The older one wanted something, and he asked her where the money for it was coming from. Then out came the pay stubs, and all the bill for the month. She grew up shopping thrift stores as a teenager, and carried her frugality into collage. She married a guy who may be more fugal than she is. Add to that, that they both have degrees in their fields, and have been unaffected by recent events.

    Further tip on kids, start them thinking about money from the get go. Let them know what comes in, and where it all goes. Provide necessities, rarely splurge on other things. Save splurging for birthdays and holidays.

  4. Raised our 3 sons being frugal. One is not married, no kids but extremely frugal so doing okay. The other 2 married wonderful women who seem to think you MUST spend every penny. Our 3 grandkids seem to think that everything is paid by credit card – paid instantly, not billed monthly. I’m horrified because both families live just minutely below their incomes – the kids are going to suffer big time when the credit card isn’t available.
    Parents do their children a big disservice by not including them in the financial aspect of family life. Children need, no, must, learn how the world works and money management is a very integral part

  5. I’m the oldest of 6 kids. We lived on my dads income and since I’m the oldest things were tight financially. We always had plenty to eat, basic food that we put up or made ourselves. We were encouraged to earn our own money for any extras. As a child I never worried about having food or a place to live. I didn’t appreciate not having the money for extras. Especially when some of my friends didn’t have to consider money. But my parents were fair and taught us that we were to learn to take care of ourselves. It ended up being a great lesson and good preparation for adulthood. If things get or are tight for you, realize it’s a great opportunity for your children for living in the “real” world. How you handle it will teach your children how to handle adversary. The world isn’t always kind to us and we need to just toughen up and get through it. It doesn’t have to be depressing but rather can be looked at like a “challenge” to be overcome and conquered.

  6. Thank-you Daisy for not sugar coating it. We are sadly seeing the unfortunate result of the entitlement mentality and n the streets in many places. Although I agree there are issues and inequalities underlying the temper terror cry bully tactics of so called “peaceful protestors” are potentially dangerous to national security in the US. Whatever the issues and whatever your position peaceful protestors don’t loot, burn, extort money or take over police precincts. Feeding into our kids entitlement mentality isn’t doing them any favours especially now when there are situations worldwide potentially leading to drastic changes in society and finances… Hope I am wrong but hard times may be ahead.

  7. While in high school I worked three jobs while also completing a vocational program. All my kids as teens received the financial lessons.

  8. Your kids are so lucky to have had you as a mum, Daisy. I think they must have started out their adult lives much better prepared than most (having to pee into chip bags when stuck on the highway notwithstanding!!) When my dad left on my 10th birthday, which entirely took my mother by surprise (he left with the car in his bedroom slippers, saying he was just going out for a paper, and drove 2 hours to the town where he had already rented and furnished a house to live with the woman he’d been seeing on the side for at least 3 years), things suddenly got very tight, with my mum a newly single mother who had only just finished qualifying as a realtor. Her response was to yell at us when we wanted something and say something like “Why do you think I’m made of money!” It would have been so much better if she had sat us down and explained how much she was making, how much things cost, and how little my father was giving her for child support. Instead, she just yelled at us and made us feel guilty (no doubt because she felt guilty too), and my father (who really did stiff her on the child support) was the one who gave us the luxuries and sent my brother to boarding school (not me, I was just a girl!) So he was the ‘good guy’, and we were always angry at my mother, and she at us. How I wish she had done what you did with your kids!

  9. My husband was making good money in construction when we got married; then the bottom fell out of the construction industry about the time my son was born. He was on unemployment for a year and we lost our truck. Then we found out that a dairy that was in walking distance from us was looking for someone to work there. He got the job and found out he had a knack for it. He was like a sponge and soaked up everything anyone was willing to teach him. He ended up working for dairies for almost 40 years. That was 40 years of pay that is considered farm-labor pay, so we were never rolling in money.
    My kids grew up knowing that times were hard and money was scarce for most of their time with us. My son accepted the reality better than his younger sister did, who always grumbled. The Thanksgiving that he was 3, my mom and sister came to our house for the holiday. They sat on the couch with him in between them with a Sears Christmas catalog on his lap. They wanted to go through it with him and see what he was wishing for as a gift. They said that he would show them things and say things like, “I want that, but it costs too much.” and “I want that, but it is too old for me.” My daughter was never that accepting of the situation. Luckily, I am heavily stubborn and was never inclined to give in to her whining (even when I could afford it).
    I always shopped thrift stores and clearance sales. I bought winter clothes in the spring for their next winter. I bought summer clothes in the fall for their next summer. I would keep my eye out for gifts at reduced prices all year long and put them aside in a gift bin, because I could manage it if it was just one gift a month in our budget. Then I could pull them out for their birthdays and Christmas without breaking the bank. This is something that I have carried on for my 3 granddaughters too.

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