How Do I Manage Debt When I Have Kids?

Anyone with kids knows that feeling of juggling a million balls all at once. Your calendar is always jam-packed: you’re helping with algebra homework on Wednesday, providing snacks at the game on Thursday, helping out at the PTA bake sale on Friday, and finding the time somewhere in between to get a gift for your child’s friend’s birthday party on Saturday. Managing your kids’ lives can make it even harder to manage your own—especially if you have debt.

Paying off debt is never easy, but it can feel particularly overwhelming when you have a family to support. It may even be tempting to shield your children entirely from the realities of debt. However, being transparent with them and making managing debt a shared family goal can alleviate some debt management stress—and the results your family achieves together will bring you closer.

So, how do you begin talking with your kids about debt? What should you do to make achieving debt freedom a family activity? And how can you cut costs without cutting fun? Read on to discover the best tips and tricks for managing debt with kids.

Create a Safe Space to Talk About Money

Household finances—especially debt—can be a taboo subject, but it’s an important topic to cover in order to help your kids develop a better understanding of money. Through honest, transparent, and age-appropriate conversations, you’ll want to build a strong foundation that helps them think of money as a tool—rather than something that dictates a person’s self-worth.

While how much detail you share will depend on your family’s unique situation and the age and maturity of your kids, it’s always a good idea to ease into conversations like this. Start by explaining how you got into debt—even if it means admitting to an error in judgment on the part of an adult (yes, even yourself!). If your debt situation does involve overspending, remind your children that no one is perfect and that making mistakes is perfectly normal.

Keep the conversation as positive as possible, orienting it towards planning to work together to solve the problem. Explain to your children that you need their help to change the way the whole family spends money. Be sure to provide them with specific examples of changes they can expect—remember, the goal is to be transparent, not vague! For instance, you might tell them that they may have fewer holiday gifts this year or that the big family vacation may need to happen a little later than expected. Discuss the benefits of becoming debt-free and how it will help all of you in the long term—eventually you will get to take that big family vacation!—in order to help them understand why you (and they) need to make certain cutbacks right now.

Finally, include your children in conversations about planned purchases and money management when appropriate. This serves two crucial purposes: it shows them the value of budgeting, saving, and paying off debt; and reinforces the idea that they are valuable members of your family’s debt-free team.

Go Over Your Spending with a Fine-Tooth Comb

Whether or not you include your children in this step is up to you, but either way, create a spending plan. Look at how much you’re currently putting towards the three main categories of household finances: wants, needs, and debt repayment/savings.

Start by making a list of your fixed expenses—the ones that remain the same from month to month. Common examples include housing payments, subscriptions, debt payments, and insurance premiums. Next, go over your credit card and bank statements from the last six months. Figure out a rough average for your typical variable expenses—those whose amounts may change each month. Variable expenses often include things like food, gas, personal care, and entertainment. Finally, break up your full list of expenses into the three categories outlined above.

Now that you have a detailed map of your expenses for a typical month, it’s time to decide where you can cut back. While there are some things you won’t be able to change, most common household expenses can be reduced or eliminated with careful planning or, in some cases, negotiation. If you have a lot of items in the “wants” category, for example, that’s a good place to start cutting back—pick your favorite streaming service to keep and cancel the rest or focus on cooking meals at home as much as possible by making eating out (or ordering in) an occasional treat. “Needs” can be reduced too—try shopping around for cheaper car insurance or calling your internet service provider to negotiate a better rate. Whatever you’re able to cut or reduce can be money put towards your debt payments.

Once you have your plan in place, show your children how you’re dividing money between the three categories. Tell them when you’ve been able to put more towards bills or when you’ve paid off one of your debts. Keep them involved throughout your debt-free journey and celebrate significant milestones together!

Manage Your Kids’ Expectations

If some of the expenses you decide to reduce directly impact your kids—all-out birthday parties or lots of holiday gifts are often common overspending culprits—you’ll need to help them understand what they can expect from these events while you all work together to become debt-free.

Remind them that every member of the family plays an important role in achieving freedom from debt, and some of the things they’re used to may have to change for a while. Instead of renting space for a big birthday party at the arcade, you might throw them a smaller party for their close friends at home. Instead of lots of big or expensive holiday gifts, they may get a few smaller gifts (or just one “big” one).

Look for Alternatives Within Activities

If you can help it, try not to cut your kids’ extracurricular activities. After-school enrichment opportunities like sports, creative outlets, and clubs are important for their development—and their happiness! Instead of cutting these activities out entirely, look for ways to reduce costs—or find alternative ways to “pay” for them. Shop for equipment at secondhand stores or online marketplaces like Facebook Marketplace, NextDoor, or eBay; and see if you can volunteer your time as a coach or chaperon where appropriate instead of paying enrollment fees.

Get in the Kitchen—Together

We get it: eating out is an easy way to treat yourself and your family. But going out to eat too often can throw your budget off track—and create unhealthy habits. Make it easy (and fun!) to reduce how much you spend on restaurants and takeout by making cooking a family activity that everyone can look forward to. Find recipes together, letting each family member choose at least one meal each week depending on your family size and situation. Check your local grocery store’s weekly ad for deals and base some of your meal choices on what’s on sale that week to save even more! You’ll not only not cut costs—you’ll teach your kids valuable lessons about both budgeting and nutrition, helping them develop positive relationships with both money and food along the way.

Don’t Forget to Have Some Fun

Getting out of debt can be a long and difficult process, but that doesn’t mean you’re not “allowed” to have some fun along the way. Don’t feel guilty about indulging yourself or your kids once in a while with a little treat—a night out for you, a new toy or game for them, or a small family trip for all of you together. Allowing for little luxuries now and then will help keep you all motivated to continue working towards your debt-free goals.

While you probably won’t be taking a week in Disney World, there are many budget-friendly ways to have a great time—road trips or camping trips are two great ways to make memories together without breaking the bank, for example, and any souvenirs you bring back won’t cost an arm and a leg either. Staycations are also a great option—your city or town may have more to do than you realize! Check out your local museums and take in some fun learning experiences—to save even more money, plan your visit around free or reduced admission events. If your family is the outdoorsy type, take advantage of state and local parks and hiking trails for a picnic, some exercise, or even just a little fresh air. If they’re old enough, consider letting your kids plan out some activities themselves—they’ll have even more fun if they’re running the show!

We’re All in This Together

Paying off your debt doesn’t need to be a secretive, behind-closed-doors affair: Give your family the chance to join you on your journey to debt freedom! People learn best from experience—by allowing your kids to see that financial hardship doesn’t have to consume them, you’ll help them build strong economic foundations for later in life.

When you’re balancing paying off debt with a family, it can be hard to look at all of your options. That’s why we offer a Custom Debt Relief Plan to help you find the debt solution that’s right for your family. Our team of debt specialists work with you and support, motivate, and encourage you every step of your debt-free journey. Reach out to us today to explore your options!

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