With all of the market turmoil over the last several years, what should you be telling your children? We know that our kids are watching and they know things are going on that stress us out. With limited knowledge of markets and economies, how do you explain to them that the stock market is volatile and that unemployment is above 9%?
The first step is to talk in their language. This means using metaphors that they will understand and relate to. Depending on the age of your children, a simple explanation like “We aren’t going to be able to go to the movies for a little while” might be sufficient. For a teenager, this might be the perfect time to teach them about budgets. Sit down and write down every expense that they are responsible for, such as school tuition, gas, cash for dates and dinners out. Then look at where they can help cut expenses to understand the tradeoffs of there not being enough money.
Overall, trying to shield your children from the realities of the world would be a mistake. They probably know bad things are going on, no matter their age. Try to use this as an opportunity to reassure, educate and include them in the discussions.
CPFCU published an article with several ways to include children of various ages in the discussion about money, markets and the economy.