Current Economic Crisis Tips for Parents

Tips for Talking to Children about the Current Economy

Tips from Consumer University

Help your children understand what your family is doing to weather this recession and encourage their participation. They’ll feel safer being part of a plan and seeing it in action. Now is also a great opportunity to teach your kids the basics of money management.

1. Give an age appropriate explanation of what’s going on - that doesn’t give them nightmares.
   Whether you tell them jobs have been lost or people spent money they didn’t have, tell them some truth and let them know that when less money is available, people have to spend less. Tell them this is true of your family too, but by working together, you’ll be in good shape.
2. Explain how your family is working hard to keep yourselves financially fit.
   Point out cutbacks the adults in the family have made, and ask the kids to come up with ideas to help out, too. When they’re part of the solution, they feel better about the situation. My sister does this by taking her sons, ages 8 and 13, grocery shopping and asks them to help her find the best per-unit pricing for grocery staples. The boys are not only learning to comparison shop and look for deals, they’re literally learning the value of a dollar. Take a portion of your resulting savings and do something as a family. Whether it’s a special night out, watching a savings account grow, or making a donation to a local charity - make a choice together about some of the family savings. The kids will invest in the spirit of cutting back.
3. Now is the time to stop giving your kids money that isn’t earned.
   Rather than base an allowance on age, base it upon the work they do. When your kids take on responsibilities that result in earning an allowance, no matter their age, they learn that work has value and that skilled work has greater value. Over time, they’ll learn how to negotiate a raise, and offer to take on more responsibility. This is a life lesson you can’t put a price on.
4. When your kids start earning an allowance, give them a little help.
   Ask them about their ‘wants’ and ‘needs’, and teach them how to allocate their allowance towards each. This is called budgeting and we all need to be doing it. This will result in ongoing discussions about how to save and how to achieve savings goals.
5. And here’s a tip for the parents: Don’t feel guilty about downsizing your kids’ lifestyles right now.
   It’s our job to teach them that we all have to cut back when we have less to spend. Children surveyed far and wide have indicated they learn about how to spend and save money by modeling their parents’ behavior. Why wouldn’t their lifestyle change when fewer resources are available? Showing them how to responsibly weather a recession is a skill they’ll need throughout their lives. Don’t deprive them of this opportunity.