The bad news is inescapable and much as you’d like to there’s no use hiding under a rock. If your kids are starting to ask questions about the economy, it’s a good idea to learn the best way to talk to them about this difficult subject.
According to the experts, today’s kids are much better equipped to deal with sensitive subjects than you were, as you know if you’ve already discussed sex with them without resorting to that birds & bees nonsense. The trick is in approaching them in a way that raises their comfort level and presents only the information that is appropriate to their age level.
If you don’t talk to them about the economy, they are going to hear about it anyway. So don’t worry about whether you think they’ll be able to understand what’s going on. The best thing you can do is to keep the lines of communication open.
We asked Atlanta GA-based psychologist Dr. Erik A. Fisher for his advice in talking to kids about the economy. Dr. Fisher is the author of “The Art of Empowered Parenting, The Manual You Wish Your Kids Came With” and a blogger for the parenting website, ParentSociety.
Provide concrete examples
At age 3 your kids aren’t ready to understand personal finance. It’s vitally important that you express confidence and avoid passing on your own fears and insecurities to your children. 8 year-olds and older are ready for an education in basic financial concepts but these are difficult for even adults to understand, so you’ll want to make sure to provide concrete examples. “Your kids will hear all kinds of terms like foreclosure but they won’t know what that means,” says Fisher. “Explain to them how a mortgage works and what banks do. Make it concrete by using examples such as a barrel full of apples. Get out a stack of pennies and teach them how interest works.” Fisher stresses that, while there are certain guidelines for particular age groups, it’s also important to keep in mind the maturity level of the individual child, “If the child finds it difficult to accept change, you have to ease into those conversations, give them bits and pieces of the puzzle.”
Emphasize the role of the family
You should teach your kids the value of work and explain to them that, in these tough economic times, everyone is going to have to work a little bit harder. Fisher stresses the importance of the family unit and says you should get across the idea that you, as a family, are all in this together. “Have your kids put some money away each week so that they can realize the value of savings,” he says. Explain to your kids that the family is like a business, with money coming in (income) and money going out (expenses). An understanding of what goes into running a family can go a long way toward teaching kids the value of money.
Paint a positive picture
While Fisher thinks that a lot of parents make the mistake of pretending that everything is rosy right up to the point where the family is forced to move to an apartment because the bank just repossesed that 3-bedroom home in the burbs, he says there are things that you should keep from your children. “Don’t let them know how much you owe,” he says. “Don’t let them know that you are horribly in debt and can’t get out. And whatever you say, don’t make the kids feel guilty.” Kids, right up into their teenage years are largely driven by impulses and emotions. It’s okay to gloss over the details so long as you provide them with hope that your family will recovery from this temporary setback. “If you’ve been impacted financially and had to make adjustments in your spending, let the child know that things are changing in terms of how the family is spending their money but reassure them that they are going to be taken care of and that it is not their fault.” The parent’s role doesn’t change just because your financial situation may have. It’s as important as ever to provide your children with a sense of security.
Focus on what’s really important
Life is full of ups and downs. The economy is cyclical. But relationships, if properly nurtured, can last a lifetime. You don’t have to go on expensive vacations or constantly look for ways to entertain your kids. Simply spend more quality time with them and less time slaving away at work. Fisher says you shouldn’t back off on allowances because providing kids with an allowance and letting them make their own choices about how they spend their money is critical to teaching them the value of things. But it’s also important to take a step back and show them that there is more to life than things alone.
Older children, let’s say teenagers and above, are ready to learn a powerful lesson from the economic crisis. Explaining the root causes of the crisis can help teach the lesson that arrogance has been the downfall of every major civilization throughout history, according to Fisher. “We’ve spent so much time in our culture accumulating wealth and what got sacrificed is relationships. Our sense of value should come from within.”