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Money & relationships: How your money behaviour can affect your children

Indulging in ‘financial incest’ by burdening the children with one’s money problems can damage their financial personalities.

, ET Bureau|
Apr 22, 2019, 06.30 AM IST
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When adults burden or over-expose kids to their financial problems to reduce their own stress, they are indulging in ‘enmeshment’.
The worst collateral damage in any conflict between spouses is usually children. Being soft targets, they are, unwittingly or otherwise, treated as sounding boards or punching bags for parents’ frustrations, anxieties and insecurities.

It’s no different in case of financial problems. Be it a sudden job loss, debt accumulation, poor spending habits or a divorce, kids often bear the brunt of a souring financial situation. Brad Klontz, a certified financial planner and psychologist, came up with a term for this money disorder among adults: ‘financial incest’ or ‘enmeshment’.

What is financial incest or enmeshment?
When adults burden or over-expose kids to their financial problems to reduce their own stress, they are indulging in ‘enmeshment’. This is because the unhealthy exposure can be daunting for a child, often marring or even maiming his financial acumen. It can lead to anxiety over money, skewed attitudes and poor financial habits.

In a study published in the Journal of Financial Therapy, in 2012, Klontz described it as the “inappropriate involvement of minor children in parental financial matters, including conversing with them about financial stress, and using children as messengers to pass along financial messages between adults”.

What are the ways in which financial incest is committed?
Here are some ways in which you are subjecting your child to money stress:
  • You are blaming the spouse for shortage of money, whether it is due to his poor spending habits or non-payment of maintenance after divorce.
  • You are making the kid guilty about the effort you are putting in to fund his requirements, be it education or entertainment.
  • You are sharing your stress about loss of job or lack of increment and feel better after venting on the kid.
  • You are using him as a buffer for your failure to meet financial obligations, such as payment of bills, loans, EMIs or rent.
  • You are suspending his pocket money or curbing his spending due to frustration about financial spats with your spouse.

What is the impact and is the damage lasting?
“If you are burdening the child with information about a situation that he can’t control or resolve, it will lead to resentment or guilt,” says Priya Sunder, Director, PeakAlpha Investment Services.

If he cannot find a solution to the problem or alter the circumstances, he will feel frustrated, leading to extreme financial habits like reckless spending or stinginess. He could turn into a workaholic or refuse to hold a steady job, or even have poor financial compatibility with his partner later on. “The impact may not necessarily last too long, unless the child is subjected to sustained behaviour or is constantly deprived of money,” adds Sunder.

How can one talk money with kids without hurting them?
It is always a good idea to have money conversations with children without introducing negativity, aggression or blame games.

“Children are very smart and if you sit down and explain the situation, they will immediately understand,” says Sunder. So, as long as you discuss it without blaming the kid, and encourage him to offer a solution to the problem in order to resolve it, it will be a winwin situation for both,” says Sunder.

Parent trap: Righting a wrong
A bad financial situation explained in the wrong manner can induce anxiety among kids. Know how to say the right thing at the right time.

  • Refusal to buy things due to limited income or fund shortage
Wrong way
"Do you know how hard I have to work to run the house and support you? I can’t fulfill all your demands all the time!"

Right way
"I earn a fixed amount. Of this, I first need to take care of essentials like food, clothes, bills and loan repayment. Only the money left after these expenses can be spent on luxuries and entertainment."

  • Dealing with creditors
Wrong way
“Please tell uncle that dad will not be able to pay you since he is out of town and will be back only after a month.”

Right way
Do not force the child to lie on your behalf. Chart out a plan to repay your debts. Then sit down and explain to the kid why you can’t make the payment immediately and how you plan to do so in the future.

  • Spouse’s poor financial habits
Wrong way
“Your mother spends all the money on her dresses and jewellery! How will we ever save for your foreign education?”

Right way
Sit as a family and calculate the amount required for education. “We will all have to cut corners and bring down our discretionary expenses if you want to study abroad. We can even take a loan for it.”

  • Financial problems of separation or divorce
Wrong way
“You can’t go for the school trip because your dad does not pay the maintenance regularly and I don’t have enough money!”

Right way
“I have a limited income and fi rst need to take care of the essentials. If both of us try to save more, you can go for the trip next year.”

  • Loss of job
Wrong way
“We can’t go on a holiday because I’m saying so! Just accept it!”Hiding the fact from the kid, pretending all is well, and making excuses for cutting down on holidays or eating out.

Right way
“I want a higher paying job and am already looking for it. I should be able to find it soon. Till this happens, we will have to cut down on our discretionary expenses like eating out or fun trips.”
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