For many families, the holiday season brings joy, connection, and celebration. But for some, it also brings stress—especially when money is tight.
The pressure to provide the "perfect" Christmas can feel overwhelming. Parents may worry about affording gifts, special meals, or holiday activities. And children and youth, even if they do not fully understand the situation, often sense that something is different.
This post offers guidance for parents and caregivers on how to talk to children and youth about financial difficulties and set realistic expectations—without causing additional stress or worry. It is about being honest, age-appropriate, and reassuring. And it is about remembering that your relationship with your child is a protective factor for their mental health, even during hard times.
Children Feel the Impact, Even When They Do Not Understand It
When there is a job loss, unexpected expenses, or another change in circumstances, it can be stressful for parents and caregivers. Children and their mental health are also affected, especially when they sense stress at home.
Kids are very intuitive. They know when something is wrong. Even young children who cannot understand the details of a financial situation can sense tension, worry, or changes in routine.
That is why talking to them—in an honest, age-appropriate way—matters.
Before You Start: Check in With Yourself
Before starting the conversation, check in with yourself and your emotions. Make sure you feel prepared. Take time for self-care before you begin. Pick the right moment. Avoid times when you are rushed, distracted, or only have a few minutes. Choose a calm, quiet moment when you can give your child your full attention.
How to Start the Conversation
1. Think About Your Child's Concerns
Will they need to give up a sport, lessons, or a camp they are looking forward to? Will you need to move? Will there be enough food to eat? Understanding what your child might be worried about can help you prepare for the conversation and address their specific fears.
2. Be Open and Honest—Without Giving Too Many Details
Use simple words and let them know how you think it will impact them. Consider their age and understanding when sharing information.
You should not be afraid to be open and honest with your kids when it comes to money. There is no need to frighten them—just let them know that, as a family, you need to spend wisely.
3. Reassure Them
Let them know they are safe and cared for. Tell them you are working on the problem. Children need to know that their care and well-being is the main focus.
4. Ask How They Are Feeling
If they are not sure, you might want to help them identify their emotions.
Validate their feelings, even if it is hard for you to understand. For example, they might say they are sad they will not get to watch their favourite shows. You could reply something like:
"It sounds like you are sad and maybe frustrated about giving up our streaming service. I know it is hard to give up things we really like to do."
5. Emphasize It Is Not Their Fault
Make it clear this is an adult issue and not theirs to solve.
6. Keep Checking In
Let them know that things will likely change. Tell them you will continue to have conversations and will let them know when you have more information.
How Much Detail Should You Share?
With young children (under 5), you can acknowledge that there is a concern and you are working on the problem. Older children can understand more of the reason—job changes, loss of assistance—and what you are doing to solve it.
If something they were excited about is not going to happen because of new financial concerns, let them know that.
Explain needs versus wants. Explain the difference between needs (food, shelter) and wants (gifts, vacations, sports equipment, etc.). Let kids know that right now, you will focus on needs. Tell them that may mean that some, or all, of the wants will not happen.
If you are unable to meet needs (food, shelter, transportation), let them know that you are working on finding help.
When Kids Compare Your Family to Others
Kids often compare themselves to others. And it may be true that their friends, right now, are not having the same money problems that your family is.
You might say something like:
"It is normal to compare yourselves to others. I do that too sometimes. But we do not know all the details of anyone else's life or situation. Let's focus on what we do have, which is each other, and try not to focus on what other people have."
Tips by Age
Birth to 5 Years
Children at this age are aware of tension in the environment. They may react to emotions and perceived threats to their security—for example, a parent who is upset and crying, a parent who is yelling, or a parent leaving angry without the normal goodbye routines—with physical regression (like bedwetting) and emotional regression (like becoming more clingy, unable to sleep in their own bed, or having nightmares).
What helps:
Develop and keep to a routine
Reduce the number of changes in your child's world
Limit the number of transitions
Be mindful of how your behaviour, as well as your words, can have an impact
Do not fight in front of your kids
Look to friends and family to spend some time with your child
Encourage your kids to talk about their feelings and worries
6 to 11 Years Old
Kids at this age are developing strong friendships and understand loss. They may have to cope with changes to routine because there is not the same amount of money—for example, they may not be able to register for the next swimming lesson, or they may not go to the summer camp they were accustomed to.
Even relatively small financial worries can build up to a breaking point in a child's mind, producing erratic outbursts, tears, and periods of tiredness. There may be less money for toys or food at home, leading to a child hoarding toys or food.
When kids witness their parent's fear, anger, or distress over lack of money, they may react with physical and/or emotional regression. They may hear the word "no" more often and react with attention-getting behaviour.
What helps:
Remove all conflict from your child's presence
Do not fight in front of, or within earshot, of your child
Explain changes in routine simply, without laying blame
Allow your child time to adjust to new things
Develop a financial plan to deal with your child's needs
Encourage your child to talk to you about their fears or worries
Teens (11 to 18 Years)
Teens are very aware of what is going on in their parents' lives. They are also very critical about the situation. Teens are more conscious about being different from their peers, and how these differences are accentuated. Changes in finances hit teenagers very hard.
What helps:
Talk to your teen about changes in your financial situation, but avoid blaming the other parent
Talk to your teen about budgeting and money management
Help your teen understand planning, so they can maximize their funds to select items that their budget allows
Do not use teens as messengers about money
Encourage teens to participate in money management—earning money, saving money, comparing earnings and expenses
Preparing for Uncomfortable Questions
Your kids may ask uncomfortable questions, like "Can we afford to keep our house?" or "When are you going back to work?"
Your kids may be looking for reassurance that everything is going to be alright. Even though no one knows for certain what the future holds, try to answer their questions as honestly and sensitively as you can.
Remember that it is okay to not have all the answers. You can also get back to them later with answers, which will help keep the conversation going.
Setting Expectations for Christmas
When you cannot afford expensive items for Christmas, setting expectations early—and gently—can make a significant difference for your child's emotional well-being.
Frame the conversation around your values and budget. Say something like: "This year, we are going to focus on what matters most to our family. We are going to spend time together and do things that make us happy, rather than spending a lot of money on gifts."
Be clear about what will happen. If there will be fewer gifts, say so. If a special trip or activity is not possible this year, let them know. Children cope better with change when they know what to expect.
Offer choices where you can. Even small choices—like which movie to watch together, or what to bake—give children a sense of control and agency.
Focus on experiences, not things. Plan free or low-cost activities: a walk to see neighbourhood lights, a family game night, baking cookies, or volunteering together. These create memories and build connection without financial strain.
A Final Thought
Money struggles are hard—not just for parents, but for kids too. But with honest and open conversations and ongoing check-ins, you can help children feel safe and understood.
These moments build trust and can strengthen your connection—even during difficult times. Remember that during these difficult times, your positive relationship with your child is a protective factor to their mental health.
You do not have to have all the answers. You just have to be present, honest, and reassuring. And that is something money cannot buy.
If you or someone you know is in crisis, help is available 24/7:
Suicide Crisis Helpline: Call or text 9-8-8
One Stop Talk: Connect directly with a mental health professional ( Monday to Friday from 12 p.m. to 8 p.m.) through online video, and voice. Go to onestoptalk.ca or call 1-855-416-8255.
Kids Help Phone: 1-800-668-6868 or text CONNECT to 686868
Lynwood Charlton Centre: Contact our Access and System Navigation team at 905-389-1361 for free, confidential mental health support for children, youth, and families in Hamilton
You are not alone.
RESOURCES
The Kids Mental Health Foundation Talking to Kids About Financial Stress and Money Worries
Canada.ca Teaching children about money
Families Change Money Worries and the Kids
Global News ‘Good’ vs. ‘bad’ debt? How to talk to your kids when you’re in the red
TD Stories How to talk to your kids about spending less money right now
Psychology Today When Should We Talk to Kids About Money?
