A Guide to Raising a Family When You’re Struggling With Debt

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When you achieve financial success, it’s easy to think that financial problems won’t come your way anymore. If you’re raising a family and haven’t experienced financial troubles so far, your confidence might rise even further. But life is unpredictable. You could be well-off and secure one day and broke and drowning in debt the next.

Many families experience financial woes. As one of the leading causes of divorce, money issues can break apart families and cause trauma to children. If you’re the breadwinner and you drown in debt, it’s not just financial problems that will plague you, but possibly a lawsuit as well. Creditors can sue borrowers who fail to pay them back. They will demand the money you owe them, plus interest, attorney fees, and court fees. Suffice it to say, dealing with a lawsuit will be an extremely challenging time for you and your family.

Thankfully, your family doesn’t have to suffer the worst of your problems. You can still provide for their needs while overcoming your challenges. You can even use this time to teach your children about financial responsibility.

How Financial Problems Affect Children

Children might not yet understand the concept of finance, but they will still feel the effects of financial problems. A study from the American Academy of Pediatrics found that the type of debt the parents owe plays a role in kids’ social and emotional well-being. Parents who owe high credit card debt and medical debt had their kids experience a worse decline in their well-being than kids whose parents owe a high mortgage or education debt.

Money might not be your kid’s favorite topic, but it’s essential to make them aware of what’s going on. Keeping your kids in the dark only gives them a false sense of reality. Maybe they’re used to weekly vacations, and then you suddenly stopped your trips because you couldn’t pay for them anymore. The kids will eventually wonder what happened to your holidays. If you give them a made-up answer, you’ll also give your kids false hope that the weekly vacations will resume anytime soon.

Your money problems can get worse if your kids are clueless about the situation. Since they don’t know the truth, they’ll assume you can still afford other luxuries. You might end up making yet another poor financial decision to keep up appearances or reduce your guilt.

down in debt

If your financial problems cause fights between you and your spouse, your kids can be exposed to your conflict. This can lead to serious trauma, which can last until their adulthood. So even if it’s difficult, be honest with your kids. They may be young, but that doesn’t make them deserve the truth any less.

Raising a Family With Financial Problems

  • Be Open About Your Struggles

No matter how old your kids are, don’t lie to them. Most kids 12 years old and above are already aware of their family’s financial standing. If they’re younger, there are age-appropriate methods to tell them about financial problems anyway. For example, if you lose your job, you can tell them that they won’t be getting expensive gifts for their birthdays in the meantime. Make them understand that your job gives you money, so you’d also be short on cash without it.

  • Be Optimistic

A positive approach to financial problems will help stave off anxiety in children. In fact, your situation is an excellent time to teach your kids about debts and financial responsibility. For example, if a creditor sued you because of your failure to pay them back, calmly explain what your kids can expect. To ease their worries, ask help from an experienced collection attorney. Tell your kids that you have the chance of winning your case despite your struggles.

  • Avoid Blaming Your Spouse

Whether your spouse played a role in your debts or not, avoid blaming them for your problems. Pointing fingers only aggravates the situation, putting the peace of your family in the balance. Talk calmly and use a level head while considering your options and plans for moving forward.

  • Teach Kids About Financial Discipline

You might not feel qualified to teach about this topic right now, but you will also learn from teaching it. Every time you have to make a purchasing decision, ask your kids if the purchase will truly be beneficial. Then start teaching them about budgeting. If they’re already receiving allowances, give them assignments. For example, they should have savings by the end of the week. Then you’ll budget their savings together and list down financial goals.

Financial problems don’t have to weaken your family’s bond. If anything, it should make it stronger. Overcoming that challenge together can help make your kids more responsible and mature.

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