Are you honest with your children about your money situation?

[Purpleandgreenyarn]

Hello

I just wanted to post to ask your thoughts on money and what or if you share your situation with your children.

For context;
My children are 9&4.
Im self employed and earn around £46k after tax. My husband is working, however, and this is where it gets complex, it’s a small start up and he gets paid infrequently and very little. For the past 24 months, we have mostly been living on my income. From time to time, he will be paid a tiny lump sum, but this is just as and when the money is available. This year, he was paid £5,000. Last year it was around £7,000.
So as you can imagine, we are not rolling in it, so to speak. Without completely outing ourselves, I do have a genuine reason to believe this will change. The buisness has been approached by a large conglomerate to work in collaboration on a product, contracts have been signed and the item is being produced, so I have every reason to believe that my husbands wage will increase over the next year.

Money has always been tight, my family had very little and my dad was always quite bad with money. He died many years ago but whilst I was at university he would ask me for my student loan, promising to pay back but never did. This left me getting into credit card debt and I ended up making very stupid financial decisions myself. It took me a while to get out of it, but part of that for me was getting over the shame of saying, I can’t afford it. Fast forward 15 or so years and I am in the black, no credit cards/student loans/overdrafts/loan/store cards at all, and I am saving towards a deposit for a home. However it will most likely be a flat on a shared ownership type scheme (I know they aren’t great but my only option realistically).

To get to the issue, my daughter has been saying she would like her own bedroom, she would like a house with a garden and she has lots of plans about furniture and decoration. To begin with I sort of idly and in a very non committal way would say oh wouldn’t that be lovely, maybe one day, so on and so on. But now it’s gotten to the point that I have started to say outright, I don’t think I can afford that. More recently she has been asking to join her friend in Piano and Karate lessons, but I just don’t have the money, so I was honest and said I won’t be able to afford that. She also mentioned over the summer how we didn’t have a holiday. Obviously it’s that time of year when kids are talking about what they would like for Christmas. I don’t want to create a bleak picture, because they will get what they ask for, clothes, books, craft supplies, and toys, but high ticket items are a no (and I think they would be even if I had lots of money). We go out for lunch as a family once a month, and again once a month we will go to the cinema, they have clothes and shoes when they need them and I tend to buy new, so I really believe that they are lucky on many fronts.
However my husband is taking umbrage with me saying to our daughter that we can’t afford things when she asks, he said he is over hearing her bringing it up with her friends and making herself sound like Oliver Twist. I appreciate we both have our own perspectives that may make seeing the situation clearly difficult, so I just wandered, what do you say to your children when they discuss things that are just not affordable to you? Are you honest? I don’t think she is at an age where I can distract her or try wriggle out of answering as she is nearly 10. Any advice/insights gratefully received.

cheers

Ditto!

It's the best way I think.

Your DH needs to be given a deadline. 9 months or he gets a salaried job. If the project had significant prospects the bank would lend against it. Your DH's priority at this life stage should be providing his family with a home.

Mine know that we both work full time in decent jobs because we want a certain standard of living. They know that we could work less but they wouldn’t have the holidays and the branded trainers etc. then! If your DH earned what you do, you’d have a pretty decent standard of living. I’d be disappointed that I couldn’t give my DC more if I were you, OP, because of their DF bringing in so little. I know you say it is going to change, but when? Don’t wait around too long!

This is exactly how I'd describe the situation.

It is somewhat unhelpful to say to children just "we can't afford it" unless there is no way on earth it could possibly be done (e.g. if they ask for a pony and you literally can barely put food on the table). I think sometimes parents say this because it's an easy quick answer to end the discussion. But it can cause confusion, and creates the false impression that you are powerless. By the sounds of it, you aren't powerless: you are making a choice.

It's about priorities. So you might say, "If we pay for piano lessons it will take longer to save up for our own place, and that's important to your dad and me. So we're choosing not to do the piano lessons."

This is an important distinction. Without it, your daughter might grow up thinking that the only/main reason to refrain from spending money is that you literally have no money. Then when she grows up and does get her hands on some money, she may be inclined to blow it rather than saving it for rent and the electric bill.

You can even start explaining to the 4yo in this way. Not, "Mummy doesn't have money to buy you that new toy" - which will confuse him as he'll see the money in your purse and he'll know you can put your card into a machine and get more money - but rather "we're going to spend our money on the food shopping instead".

Just be honest, with a level opaqueness if it is really worrying. If there are choices to be made, then they can influence what they are, but ultimately you choose, not them. I grew up "quite poor" as a child for my time, did not really bother me at time, just accepted it for what it was, and my parents were great, but it does affect you in some ways in later life. I have got five kids now, and although there is money for a car, heating, TV, a house, some hobbies and a holiday, there us not endless money and they need to know that, and manage their expectations accordingly. I wouldn't focus on where it comes from, just that it is in limited supply. Hope this helps xx

This. NMW is around £23k pa.

From April if he earned NMW for each of his 70 hours worked each week he would be bringing in nearly double that.

That's a hell of a lot of money that his start up needs to start paying him to be worth the time he's invested.

This is a really good way of explaining things.

I find it really frustrating when you hear people talk about how they're struggling to afford food, bills etc but you see them spending hundreds of pounds a month on non essentials like bought lunches and coffees, beauty and grooming, high end phone contracts etc like it's never occurred to them that these are the sorts of things you buy when you have money to spare after essentials, most people can't have all these different things, they have to choose andits not a sign of poverty to make your own lunch or keep your phone more than 2 years.

I've never really hidden the concept of budgeting, having to pay bills, saving, having to have a budget for treats. I think that's healthy. We're not well off but also don't have debts we're being chased for either, so mostly our chats have been about forming good habits.
It must be quite hard explaining being chased for debts.

I hope I don't come across as rude but if you didn't have either the meal out or cinema once a month then your daughter could do her club. One of my children's friends doesn't do any clubs because they're parents can't afford it (children repeat this to each other) but if they were prioritising the cinema I'd assume they could afford it just didn't want her to do the club.

There is nothing wrong with telling a child that you can’t afford something. Children need to learn the value of money and that it doesn’t grow on trees. I also think it is a good idea to have small chores done in exchange for pocket money. That is how children learn - if you simply give them everything they want or ask for, they don’t learn about money at all.
Re your husbands business, keep the faith!! I set up my business years ago now and the first few years were a bloody hard slog. We were bones of our arse skint and the dc understood that. It took time but it is now successful, growing in a controlled manner and profitable. If I had given up in the early years (and believe me, I was tempted. I had previously been on a very good salary and being utterly skint was shite) we and dc wouldn’t have anywhere near the lifestyle we have now. It’s a team effort between you and your DH. Keep going!!

I’m very honest with DS (11) about our finances. He knows how much the mortgage payment is, and roughly how much I take home per year/ month. I’ve tried to explain to him about tax, which he understands although still struggles with the concept of tax bands. He knows that we don’t really have to think about basic expenses but do have to consider / save for bigger purchases (holidays etc). He gets pocket money from which he can make his own purchases. I’m hoping this way he can avoid some of the terrible financial mistakes that I made when I was younger. My parents never talked to me about finances.

I think it is harmful if it’s said all time time and kind of hammered home if you know what I mean? So you can use other excuses from time to time so they don’t get dispondant and into the ‘life is crap’ mentality you can sometimes get as adults. We’re very much up and down money wise and with4 kids have rarely been able to regularly do extra curriculars that cost money or buy treats/ go for days out etc, but I think if ee told the kids all the time it was money they’d be depressed! They kind of know the money situation because they know the cost of things and we’ll say that seems expensive etc and they now in shopping will eg roll their eyes at the cost of something branded, but they don’t always get told it

I hear you - but surely if a start up hasn’t actually started to make a decent profit after 2 years it’s time to walk away? He’s only able to do it now because you are underwriting him (mortgage etc) - and your kids are missing out as a result. You may not call it a hobby, but in exchange for a 70hr week and 2 years of commitment he should be a going concern by now - and he is not. In the corporate world he’d have folded by now because he couldn’t pay staff. I’m sorry, but I think it’s time to have a hard conversation with your DH about how long he’s planning to persist with an unsuccessful venture. It’s not a reflection on him, just a sign that the timing/market are not receptive to his enterprise. I know childminders who set up their own businesses and were earning 45-60k pa within one year - he’s making your MH suffer and your children go without things you should be able to afford because he is on what is, sadly, evolving into an ego trip.

I think saying, "We can't afford that," about extras is fine. I say it to my four year old so she knows she's not getting an entire toy shop for Christmas! I don't think it's a good idea to share significant financial problems with children (unless it can't be helped).

I think it is good for DCs to understand that adults have to prioritise spending on needs vs wants.

But this needs to be age appropriate and not done in a way which makes children feel unsafe.

I did read of someone saying they went through their a lot of childhood terrified they were going to lose their home. The family had hit a financial crisis and had explained this to their children. What they hadn't done was follow up with when the crisis was over.

This had a longterm damaging effect on the person. Never getting to shift the feelings of insecurity.

I think what you’re saying is fine - I have a DC the same age as your DD and I’ve found they seem to get much more aspirational at this age (definitely more of an awareness that some people have more).

I tell mine that we are very lucky because we have enough for everything we need and quite a lot of what we want (as I don’t want panicking over poverty), but we can only spend our money once so we have to make choices. I do comparisons with the 9 year old, eg if we get a takeaway, that’s money we can’t put towards a trip out.

He wants to know all the facts about income and expenditure and I don’t share those as I know they’ll get repeated in the playground, but I think it’s fine for him to know about prices of “fun stuff”.

I appreciate this may not be an option at the moment but we’ve introduced pocket money this year to give them a bit more of an idea of money and how long it takes to save for things (eg those bloody magazines!).

Yes it is fair to tell a child you can't afford things and it doesn't have to mean a bleak picture. Understanding budgeting sets them off for a realistic expectation later in life. Point out the things she does have and explain what real poverty looks like. Also that money is important but you don't need to do expensive things, understanding the cost of things is important and also that you don't need to spend a lot of money to have fun and be happy.

This!
i am self employed and these earnings are not sustainable. I hope he does all of thr household at least?
unless this big deal comes through he needs to find a job.

Read your update: he works 70 hours a week for a 7k income? OP he should be making that monthly!!
unless you give more details you have to accept that it sounds bonkers and unfair on the kids and family.

I talk quite a lot about money with my kids and I think it is sinking in with my eldest (DS) who is 10. DD (7) isn't quite as switched on yet. We're not struggling but i am very careful with spends. DS started private school this year so we're now making compromises for that and without hammering it home all the time the kids do need to understand that that choice (that we made) has financial consequences. They don't go without but when they do ask for things we talk about the cost. And the kids know that I have a budget to work within for everything so if they ask for x then it might mean y doesn't happen so that's a choice for them to make.
I'm forever hearing stories in the playground of kids wanting things costing hundreds of pounds and parents resigned to 'having' to buy it. They don't.

I would never prioritise cinema or meals out over piano lessons. There are ways to have free fun but adding to skills and music would be non negotiable in this house. Go and see Christmas lights, trees, walk in the woods etc. We didn’t always have fun that had to be paid for.

We had a culture of no presents between birthdays and Christmas. We did have ample money but avoided pestering. We also said if something was too much. It was not that we didn’t have the money, but we wanted value for money and reasonable dc with their attitudes to money.

Lastly, my DH built up a business from scratch. Two years of bumping along would not have been tolerated by me! We could never have managed. If you can, you need to analyse what’s going wrong @Purpleandgreenyarn . The time used for work vs financial return is not good enough. Is he actually a good businessman? Why isn’t he getting money in? We had friends who set up businesses and greatly overspent on premises and “gloss”. Running before they could walk. He needs to understand what is going wrong (and it is) in terms of clients paying, his costs and the money he is making. Something is wrong. Start off by asking who needs this business? Him or people who will pay for the service he offers?

I think if I was your DD I might want to know why my father got his hobby supported to the extent that he was a drain on the family income yet couldn't do any extra curricular activities myself as they were too expensive.

Sorry that's nonsense - the biggest businesses in the world: Amazon, Apple, Microsoft, Google etc all started with people pouring their heart and soul into them for little financial reward. The reward comes later. It's not a hobby!

Also - it IS being done alongside a full time job: his DP's! So the family has a stable 46k income whilst the start up is growing. The idea that their daughter could suddenly have everything she wants if all he did is get a job on the tills in Tesco is ridiculous. Children will always just ask for more, and at some point will need to be told "no". It's part of them testing boundaries and learning the value of money.

I won't comment on the family money situation.

However Go Henry is a good pocket money card and enables DC to learn about finances and manage their own money. She has pocket money right?

Your husband's start up is a joke. No one should be doing that. You run it alongside your normal job, until it takes off. £5k and £7k? Oh purlease. Why on earth have you put up with such nonsense?