How Much Do You Tell Your Kids About the Financial Crisis?
by rocksinmydryer

I wrote at BlogHer a couple of weeks ago about how parents can deal with the issue of teens and tweens who are desiring expensive, designer clothes. A healthy, common-sense discussion ensued, with many parents chiming in with their hopes of teaching their kids about contentment, frugality and reasonable expectations.

But in the two weeks since that post, there has been considerably more economic sky-falling. Parents are having dinner-table discussions with their kids about what this means for them. Instead of just steering kids away from designer clothes and purses, many parents are considering cut-backs of a more drastic nature, ones more noticeable to kids.

So, parents wonder, how much information is too much? How do you paint a realistic picture of the situation for your children, without creating fear?

Megan of HalfPint House has a nine-year-old daughter who overheard a troubling CNN report in a restaurant. When she asked her mom, Megan explained clearly and simply:

I told her that we were all hearing a bunch of things on the news about Wall Street now because the people who make decisions with other people’s money made some bad decisions. Some really bad ones. And that a lot of people made a lot of bad decisions with their own money. Some really bad ones. And what this means is that all of these people - the ones who made bad decisions for everybody else as well as the ones who made their own bad decisions - are in a lot of trouble right now, trouble that needs help.

Melissa Schorr of MSNBC has written an excellent article full of specific tips on the subject, urging calm, honest discussion like Megan's. Rule number one, of course, is to take into account the child's age:

“You can’t be telling your 5-year-old the economy is faltering and we might go into the Great Depression,” says Lynnette Khalfani-Cox, “The Money Coach,” a financial expert based in Mountainside, N.J. and co-author of “The Millionaire Kids Club” book series. “But my 8- and 11-year-olds do know the word foreclosure.”

Additionally, Schorr suggests a dose of calm honesty is in order:

Don't just react to the negativity in the news, says Elisabeth Donati, executive director of Creative Wealth International, a Santa Barbara, Calif., non-profit that runs Camp Millionaire, a summer camp for tycoon-minded tykes. She cautions that parents should fully understand the situation first, before unburdening their worries to the children.

“Teach kids that everything in life is cyclical — and that goes for financial markets also,” says Donati.

Susan Heim, a parenting author, has made a similar list of practical suggestions, including promoting family togetherness, encouraging inexpensive activities, and setting limits without feeling guilty for it:

Despite what they might tell you, it won’t be the end of the world for your children if they don’t have the newest video game system. This is a good time to teach them about priorities—food is more important than games—and delayed gratification. These are good lessons to teach your children all the time, not just during an economic crunch.

As Heim points out, this financial down-turn may provide parents with the opportunity to teach lessons that are valuable regardless of our nation's economic situation. CreditMom wrote here at BlogHer a few days ago about how her family is pulling together as a team:

Do they get it? Not fully but they do understand conceptually we are in a time of major belt tightening and we all need to do our share. So now when we shave a bit off their allowance and curb our dining out events they at least have a basic understanding of where we are coming from and are part of the "team".

Additionally, parents--and kids--might benefit from some historical perspective. After all, the WWII generation grew up in a time of economic hardship considerably more serious than the one we face now. Schorr's MSNBC article suggests:

[Consider] enlisting a grandparent to talk to your child about growing up during the Great Depression.

“We have talked about our parents’ memories of that experience — many of which are not as bleak as one might imagine,” says James Garringer, 52, a father of three in Muncie, Ind.

My family has had a few dinner-table meetings of our own recently. We live pretty frugally all the time, and we've used the events of the last few weeks to help demonstrate why saving and frugality have been such an important part of our lives (and, interesting, I've seen a few lights of understanding in my older kids' eyes). I asked the kids if they had any suggestions on some ways we might cut back a little further, and they surprised me with their creativity. Mostly, I reminded them (and myself, in the process) that what really mattered were the people gathered around our table. We're talking, and we're together--and that's good.

Shannon Lowe is a BlogHer contributing editor (Mommy/Family). She also blogs at Rocks In My Dryer and The Parenting Post.

Submitted by rocksinmydryer (view blog) on Fri, 10/10/2008 - 08:37

Comments

 

Even for our kids in college!

I have two children in college - a freshman and a junior.  I can't stress how much this applies to them, also.  

The first day the Dow plunged over 900 points, my daughter was home and we were watching the news about it on tv.  She commented, "oh, this is bad, but I don't think it's anything that affects the average person much."  This is a straight A student, in a mini-Ivy league school, who's not yet had an economics course.   Immediately, I sat her down and explained how that drop could ripple through the world.  

My son, the freshman, has been keeping up with the news (he's a business/finance major) and I got several calls from him asking if we we're going to be "ok".  Our conversation revolved around keeping everything heard in the news in perspective and our own financial backup plan that's been in place for years.

So, I had one bright but somewhat clueless child, and one media overloaded worrier child - both needing talking to in different ways.

 

 

 

LePlusJeune - proud Independent

www.remodelle.net

Submitted by Leplusjeune on Fri, 10/10/2008 - 06:35
 

Great post! My oldest child

Great post! My oldest child is 4 and is just on the verge of picking up things on the news and trying to make sense of them. I do wonder how I can use this as an opportunity to demonstrate that the typical preschooler "I want, want want...." attitude is not going to cut it without going too deep and making it too hard to understand or too overwhelming for him. It is a delicate balance. 

PhD in Parenting - http://phdinparenting.wordpress.com

Submitted by phdinparenting on Fri, 10/10/2008 - 08:41
 

As a child ....

I am a young and new college student myself, and because of that, i think it effects me more than anyone in the family. not to be selfish, but my parents financial needs and obligations depend on my personal financial needs and obligations. it determines how much i get from loans, how much i need to make in a seperate job, my new credit line and if i should be on their's or not, also insurance, for my car, health etc. If my parents weren't honest with me, i would be out of luck. everything that i need to get my life in order would be messed up and out of balance, and possibly create the same problems for me that they could potentialy have.

i feel that any child under 15 doesn't need to know all the specifics as far as yearly income, tax expenses, rent and mortage payments etc... but should still be well informed about the convenience of finances for them. if it's hard to make payments, don't go into details but them know about budgeting, and the fact that bills were short, so extras are too. that way.. not only do they know about your situation, it teaches them responsibilities for themselves and learn to manage money properly and efficiently.

http://tcc5.com/tibercreek.html/

 

Submitted by tibergirl on Fri, 10/10/2008 - 09:44
 

The Questions Keep Coming

This was great, and very timely.  My kids (7 and 9) have been hearing things at their school from other kids and they've come home with some great questions.  The other night, my husband and I were talking in the kitchen about this, too, and our daughter came in and heard some of the conversation.  We have been hesitant to share too much information because we don't want to scare the kids.  I think this gives some great guidelines.  Thanks.

Submitted by gh on Fri, 10/10/2008 - 11:54
 

Kids adapt very fast

 

Excellent blog!  My kids have been asking questions and I try to answer to my best knowledge instead of avoiding or down playing it.

Submitted by JanetAnderson on Fri, 10/10/2008 - 16:38
 

Taking The Opportunity to Teach

Yes we need to take this opportunity to tech our kids about hardwork, resiliency, perseverance, frugality, contentment, etc.  My friend and I were talking about this the other day and boht our kids were "worried" abot the economy - We can't hide these kind of info to our kids nowadays - they hear and see it everywhere. But it's good to have a heartfelt discussions with them on this topic. 

Submitted by LizasEyeview on Sun, 10/12/2008 - 08:37
 

Wonderful opportunity!

I always find it interesting that it often seems to take a negative situation to stimulate positive growth. As a parent coach I have worked with many parents on many issues and handling our financial worries in the presence of our perceptive children seems to be a popular one lately. I agree wholeheartedly with Susan Helm that this is a wonderful “opportunity to teach lessons that are valuable regardless of our nation's economic situation”.  Remember, as parents, we are our children’s best teachers. Unfortunately, we forever seem to be a reactive society that often needs a kick in the pants to get us out of our complacency that we often settle into when times are going well. We need to ask ourselves, what we want to teach our children about the value of money and the pros and cons of spending vs. saving. Children who experience satisfaction and success with saving at an early age are more likely to develop healthy financial habits that will prevent future financial struggles from occurring as adults. Saving for a special item also helps cultivate an ability to delay gratification and provides built-in motivation. Nearly every toy, gadget or excessive article of clothing children ask their parents for can become the object of a goal setting session. Goal setting helps children learn to become responsible for their own futures whether it is for good grades, toys or savings. We should also be mindful about teaching our children to become wise consumers in our commercial packed world that has an ad around almost every corner.

Many kudos to the parents who have posted the wonderful things they are already doing to instill financial responsibility in their children and if you haven’t started yet, there is no better time like the present. If you are unsure about where to begin and how, there are many useful tools, books and resources available to help parents in this most important endeavor.

PCI Certified Parent Coach ® 

www.theprogressiveparent.com

Submitted by parentcoachConnie on Sun, 10/12/2008 - 09:33
 

Letting the kids participate

My kids are pretty aware of our economic situation. My daughter is almost eleven, and when we started having financial troubles I took her aside and told her that we would have to cut back and go with a lot of things we have been used to. She got a little dramatic and likened it to books she's read about girls who had been through The Great Depression or other hard times. She said she never thought anything like that would happen to her. I think she sort of enjoyed her moment.

Frankly, I think it's good for my kids to understand there isn't unlimited money. Teaching self control around spending is good.

It does break my heart not to be able to pay for piano lessons and sports activities that I know are very good for them. But they have risen to the challenge beautifully, and really they aren't suffering.

We only told them what we thought was appropriate. No need to share the information that we thought we might lose our house at one point. 

Polly Poorhouse

http://economiccrunch.blogger.com

Submitted by pollypoorhouse on Sun, 10/12/2008 - 19:10
 

Troubling Times

I think it is important to be realistic with children about the fact that everyone is being more careful, and explaining why they won't be getting as much for Christmas this year . . . if that is the case.  Older kids can absorb the information and you can talk about history and how it has played out in the past.

The one thing I would shield them from, however, is the media.  TURN OFF THE NEWS!!!  My kids were around when 9/11 happened and I remember being too absorbed in watching those images myself as well as following the aftermath.  Months later kids in preschool were still drawing pictures of planes crashing into buildings.  So, I think it is important to remember that they are soaking it in, ALL of it, every time CNN is on in the background, they are listening - so be careful with how much exposure to the media fanatics and financial disaster reports your kids are getting.

It is possible to go overboard on the whole thing and cause undo stress to your children.

http://www.stopscreamingimdriving.com

Submitted by Carrie Blankenship on Mon, 10/13/2008 - 11:37
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