Talking about money isn’t easy with our kids. It’s really easy to lose your cool when discussing money.Over-indulging our kids and buying things they don’t need is a recipe for disaster. It can come at a financial cost for example, taking on more debt, delaying retirement, prolonging mortgage payments etc. But what do you do when your kids want stuff such as a big screen TV, the latest i-toy or custom runners you just can’t afford. How do you tell your kids “we can’t afford it” without feeling embarrassed, helpless or powerless?

The issue of affordability is becoming a real problem in Canada. A recent poll by Ipsos Reid indicates that 50% of Canadians are $200 away each month from not being able to meet their financial obligations. Affordability has become a real problem for many. The problem is you may feel the pressure to ‘keep up’ and because of that you may cave in to your kids demands. You may know in your heart its a bad decision but do it anyway but it can come at a cost of debt and other financial worries.

Here are 5 tips to on how to discuss affordability with your family.

1. Manage your emotions. Because money evokes so much emotion, you might be feeling embarrassed or ashamed that affordability is an issue. Check in with your feelings and try to stay calm.

2. Be honest with yourself. There is really no point to sugar-coating affordability issues. Children need to understand the difference between need and want, and financial priorities.

3. Think big picture. Financial priorities provide context and clarity for everyone. Discuss these with your kids, for example, your goals for saving for retirement, paying off debt, reducing mortgage balances etc. Help your kids understand that money really doesn’t grow on trees.

4. Make financial trade-offs. Daily we make trade offs with our money. For example, you may choose to keep your 10-year-old car in favor of buying a new one or may choose to spend your family vacation at home versus travelling abroad.

5. Discuss affordability with your family. It’s pretty amazing how smart and savvy our kids are when it comes to problem solving. Get your kids involved in helping to find solutions for affordability issues. Brainstorm creative ways to cut expenses, to waste less food or to only buy what’s on sale. And the “do without strategy” works well too. That way affordability becomes a problem to solve, not something to avoid or secretly hope will go away. Kids become part of the decision-making process and don’t feel like they are part of the problem.

It may be tough to say ‘we can’t afford it’, but if you change this statement slightly and say to your kids “we can’t afford it right now because we have other financial priorities” it will take the pressure off of you. If we want our kids to learn the value of money and hard work, having these kinds of conversations makes money real.