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Talking to kids about finances

      My husband and I decided this year, we would have a staycation this winter break. Not only are we saving money by staying home, we're talking to the kids about the concept of spending more carefully in 2009. As the year comes to a close, I have been talking to friends about whether they are discussing the financial crisis with their kids. One of my friends who is out of work tells her son she can't afford the things he asks for but she hasn't really sat down with him and explained how job loss affects the family finances.

   Kidsandmoney                          Today, I read an article in the WSJ by the Intelligent Investor suggested having a year-end financial talk with your kids. "No matter what your circumstances -- whether you lost half your retirement savings, had your year-end bonus eliminated, seen your business shrink, gotten your hours cut back, been laid off -- the financial crisis is a threat to your family's mental and physical health," the article says.  Apparently, studies show how much money families earn doesn't affect how happy kids reported themselves to be. What did predict happiness was how forthright the families were in discussing financial problems.

     The trick, is to explain finances and problems without telling kids more than they need to know, psychologist Alison Mountford told the WSJ. So, if you're going to attempt to talk to your brood about money issues, here are some tips provided by the Intelligent Investor:

* Be consistent. Amid financial uncertainty, emphasize familiarity , continuity and the comfort of simple routines. Stable mealtimes, bedtimes and a regular time for exercise will reassure everyone that some things still remain within your control.

* Be heard, not overheard. No matter how big or small your financial problems, don't discuss the painful details unless you are certain your children are out of earshot.

* Identify what matters. Don't hide any concrete changes that might disrupt your kids' lives -- changing from private to public school, moving to a smaller house. But do assure kids you will make the most of it. 

* Challenge your children to help you find ways to save more or budget better. This also may be one of the best opportunities you will ever get to distinguish wants from needs.  Let your kids make suggestions -- a family movie night with popcorn and free videos from the local library may be even better than an expensive night out.      

     After reading these tips, my husband and I talked to our kids about our budget for the new year. We challenged them to each come up with a way for the family to save money in 2009. How involved do you think kids should be in discussions of family finances?

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