How to Talk to Kids About the Cost of Living Crisis

The cost of living is rising every day, and this is not just in Nigeria; inflation is at an all-time high in other countries around the world. While it’s easy to shield kids from adult problems, they often notice more than we realize. Maybe they overheard a conversation about rising prices or noticed that you’re cutting back on certain things like food items, snacks, or family outings. Even though these discussions may feel uncomfortable, they are important for helping kids understand the world around them in a way that makes sense for their age.

By breaking things down and speaking openly, you can help your kids feel more secure during uncertain times while also teaching them valuable lessons about money. In this post, we’ll explore how to approach the conversation with your kids and offer practical tips for guiding them through these tough topics.

Why It's Important to Talk About It

Children are incredibly perceptive. Even if you think you’re protecting them from financial concerns, they can often pick up on subtle cues—whether it’s a comment about rising grocery prices, overhearing a discussion about bills, or noticing that certain family traditions, like movie night or takeout nights, have changed. When kids sense something is off but don’t fully understand the reasons behind it, it can create unnecessary anxiety or confusion.

That’s why it’s so important to address the cost of living crisis head-on with your kids. Being transparent helps them understand why certain changes are happening and reassures them that their needs are being taken care of. It also allows them to be part of the solution. 

The key is to explain these concepts in a way that is appropriate for their age and developmental level, making sure to keep the tone positive and constructive. They don’t need to feel the weight of “adulting,” but having some understanding will help them feel included and grounded.

Next, we’ll look at how to explain these ideas based on your child’s age, making sure the conversation is clear and reassuring rather than overwhelming.

How to Explain the Cost of Living Crisis by Age Group

Younger kids might need very simple explanations, while older children and teens can handle more detailed discussions. Let’s break down how to approach the topic for different age groups.

For Younger Kids (Ages 4-8)

At this age, kids might not grasp complex financial terms or economic situations, but they are aware of changes in their environment. Keep your explanation simple and focus on concepts they can relate to, like needs vs. wants.

How to explain:

• Use relatable examples: "You know how we have to buy food, clothes, and things for school? Lately, it costs more money to buy these things. So, we need to be extra careful about what we spend our money on, just like when we decide if we need another toy or if it’s better to save that money."

• Reassure them: It’s important to let them know that they are safe and that their basic needs will be met. 

For Preteens (Ages 9-12)

Preteens are starting to understand the concept of money and how it works. They may notice that things are changing, like fewer family outings or switching to more affordable options. This age group is ready for a bit more detail, but it’s important not to overwhelm them.

How to explain:

• Introduce budgeting: "Right now, things like food and electricity cost more money than they used to. That’s why we’re being careful about how much we spend and stay within our budget." 

• Discuss trade-offs: Explain the importance of making choices. For instance, you can say, "Instead of eating out this weekend, we’ll cook something fun at home so we can save money for other important things."

For Teens (Ages 13+)

Teens are capable of understanding complex financial concepts, and many may already have some experience with managing money, whether through part-time jobs, freelance gigs, monetary gifts, allowances, or savings. This is a good time to give them a more detailed explanation about the cost of living and the importance of financial planning.

How to explain:

• Go deeper into budgeting: "The cost of living crisis means that everyday items, like groceries or fuel, are more expensive than before. To make sure we have enough money for the things we need, we’re budgeting carefully and cutting back on some non-essential expenses."

• Teach financial responsibility: Talk about how this situation can be an opportunity for them to learn how to manage their own money wisely. Challenge your teen to take on more responsibility by managing a portion of the family’s grocery budget for the week. Let them make decisions about what to buy within the set budget.

Practical tips for having tough money conversations with your kids

1. Be honest and reassuring

You don’t want to worry your kids unnecessarily with your financial struggles, and that’s understandable. But it’s also important to be open and honest about the reality of the situation. Kids can often sense when something is wrong, and if they don’t know what’s going on, their imagination can fill in the blanks with worst-case scenarios. The key is to strike a balance—be truthful about the challenges your family may be facing, but also reassure them that things are under control.

2. Use everyday examples

Kids learn best when they can relate concepts to their daily lives. Using everyday examples of how money is spent, saved, or budgeted makes the cost of living crisis easier to understand. By showing your children how the crisis impacts the things they see and do, you can give them a clearer picture of the situation and teach them valuable lessons about money management in the process. For instance, showing them the current cost of their favourite cereal, snack, or it may be a toy you promised to get them for their birthday.

3. Encourage empathy and gratitude

In times of financial difficulty, it’s easy for kids to become focused on what they don’t have or what they might be missing out on. But you can shift their focus from what they lack to appreciating what they do have, while recognizing that others may be going through tough times. This helps them develop a sense of gratitude and empathy early on. Make a habit of expressing what you’re thankful for as a family.

4. Involve them in simple financial planning

One of the best ways to help your kids understand the cost of living crisis is by involving them in simple financial planning. Not only does this teach them the realities of managing money, but it also empowers them to make informed decisions about spending and saving. Turn shopping into a learning activity. Use it as a way to teach them about comparing prices, looking for discounts, and sticking to a budget. It can be a fun and educational experience.

Talking to your kids about the cost of living crisis is not about stressing them out but about preparing them for the realities of life in a way that’s age-appropriate and constructive. Ultimately, these conversations provide a great opportunity to teach your kids valuable life skills like budgeting, gratitude, and problem-solving, while reinforcing the importance of family support during challenging times.