Why it’s important to have these difficult financial conversations with your kids

The COVID-19 pandemic has caused heightened levels of anxiety amongst parents enduring reduced job security and lack of income. With our careers – and therefore our finances – under threat, it’s understandable that anxiety around these problems could trickle down to our children.

According to a recent multi-country survey conducted by global human rights NGO, Save the Children, about a quarter of all children who have had to cope with recent COVID-19 lockdowns – involving school and university closures and social restrictions – say they are dealing with feelings of anxiety, with many at risk of lasting psychological distress, including depression. 65% of the surveyed children struggled not only with boredom, but feelings of isolation.

ALSO SEE: Signs of depression, stress and anxiety in children

“This is why it’s so important that we do our utmost to connect with our kids during this challenging time,” says mom and Liberty Investment Specialist Sindi Mondi. “Our children should be part of important conversations, including financial conversations. Even though these talks are difficult, they can be reassuring and help manage expectations. Being open, honest and caring is paramount. At Liberty we believe that children have the right to be empowered, and investing in their future, gives them a steady start in their own journey of financial freedom.”

She has these tips on how to have these difficult financial conversations:

A loss of income for your family

With millions of South Africans potentially facing retrenchment or reduced work hours, a loss of monthly income is happening to families across the economic spectrum.

“Families are going to have to budget to make ends meet, they’ll be tightening their belts and putting a pause on some of their luxuries, which is why you have to be very clear in explaining the situation to your children,” says Sindi. “You have to explain this isn’t a punishment, just the current – temporary – reality, and try to come to an understanding together,” she adds.

ALSO SEE: How to tell your child you lost your job

Making the concept of money more tangible

Sindi recommends having conversations about how money is a finite resource. This can help younger children understand why you might be budgeting. “Show them what you spend on groceries, essentials and utilities like water and electricity. It makes them realise the value of certain things,” she says.

Setting long-term, medium-term and short-term goals

As children become teenagers and young adults, ensuring they are setting financial, educational and career goals become increasingly important, especially with the uncertainty that goes hand-in-hand with a pandemic.

“Even though we may be in a financially precarious situation now, having medium and long-term goals doesn’t have to change. The role of us as parents is to financially empower our kids. Make sure they understand why spending habits have to change in a lockdown, for example – but also to prepare them for the future,” says Sindi.

Making sure children are on the road to becoming financially literate is integral, and advising them on how to save their money, rather than spend it on short-term wants, means having conversations about their futures. But it’s also about asking the right questions.

“Do you share ideas with your children about where you see them in the future and how they can get there? When they start earning money, are they still going to be putting it towards owning a home, education, or even travel? Do they know that they should always be saving for something bigger, better?” Sindi asks.

The worst-case scenario

While no one enjoys talking about death, the pandemic has shown just how vulnerable we all are to opportunistic diseases.

“If your children are old enough to understand the concept of death, they may be worried about their own lives and yours, which is why they need to know what you’ve done to protect them,” says Sindi. Making sure that they’re aware of their insurance cover, or simply that they have access to quality medical care, is important. But equally important is letting them know whether their parents have funeral plans, life insurance or savings that can support them should anything happen.

ALSO SEE: How to help your children cope with death, divorce and the loss of a friendship

Having cover for their education is also a great step towards investing in their future, especially if you are no longer there. Speaking to your kids about their future ambitions opens the door to having real conversations about what financial protection needs to be in place to ensure their journey towards achieving their ambitions is not derailed by the lack of financial capital.

“Conversations like these can be helpful for parents as well because it leads to introspection about their own plans and policies. You might realise where the gaps in your cover are, and help you realise if you need advice on how to fill them,” says Sindi.

ALSO SEE: Insurance and medical aid policies you should purchase for your family right now

Talking about your finances and the future can be difficult even among adults, but being direct and open with your children can spare them further anxiety, even in the worst-case scenario.

“It doesn’t have to be all doom and gloom but making sure your children know that you’re helping them prepare for the future can help ease the tension that comes with a pandemic. No one was ready for COVID, but by normalising these kinds of conversations, you can help your kids feel more prepared,” she adds.


This article does not constitute tax, legal, financial, regulatory, accounting, technical or other advice.  The material has been created for information purpose only and does not contain any personal recommendations. While every care has been taken in preparing this material, no member of Liberty gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. Any recommendations made by an adviser or broker must take into consideration the client’s specific needs and unique circumstances.

Liberty Group Ltd is a Licensed Insurer and an Authorised Services Provider (no. 2409). Terms and Conditions apply.

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