Issue Date: August 24, 2008
Lean times? Tell your kids.
When your finances take a hit, here's how to talk to your children about it.
By Sharon Epperson
You've cut out Friday-night pizza delivery and haven't gone to the movies in months. You can't maintain your lifestyle and don't know how to tell your kids.
Don't ignore their questions or they'll create their own (possibly misguided) reasons why you're cutting back, says Howard Dvorkin of Consolidated Credit Counseling Services. Stay positive. Let them know that you're in control of your money by saying: "I haven't budgeted for that this month." Then, sit down and re-evaluate finances (the discretionary spending part) as a family.
Set up a monthly money date. Serve home-baked pizza and discuss the difference between needs and wants. Ask your kids to make a list of wants for the month, circling the most important. Have them set a savings goal from that list. They can't get every "want," but they can save for one or two.
Start a savings jar. Encourage everyone to contribute change, part of job earnings and birthday money for those special wants. Explain to younger ones that they cannot have that treat until a certain amount is in the jar. Open a savings account for school-age children. Teach them how to make savings grow through the power of compounding, which allows them to earn interest upon interest.
Challenge them to come up with money-saving ideas. A few to get you started: Make favorite "takeout" meals, like Thai chicken skewers or hot wings, at home; scour the local newspaper and Internet for coupons or sales on food, clothing and athletic gear; visit the library for DVDs, CDs and books; and explore local parks and other free venues.
Let older kids chip in. As long as a job does not interfere with schoolwork, teens can pay for some of their expenses, clothes, entertainment and gifts out of their earnings and save for future college costs, too. A younger child might get paid for out-of-the-ordinary chores.
My USA WEEKEND colleague and ParentSmart columnist Ann Pleshette Murphy says there can be a silver lining in an economic downturn. "Believe it or not, going through a rough patch as a family may benefit your kids down the road," she says. "They'll remember how you met a problem head-on and adapted in order to succeed."
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3 books that can help
Pigs Will Be Pigs: Fun With Math and Money by Amy Axelrod (Simon & Schuster). A porcine family turns its house upside down to find enough change to eat out at the Enchanted Enchilada. Grades K-4.
The Kids Guide to Money Cents by Keltie Thomas (Kids Can Press). Three members of the Money Cents Gang explore banks, credit cards, consumerism and even the stock market. Grades 2-7.
Smart Money: How to Manage Your Cash by Danielle Denega (Scholastic Choices). Advice on getting your first job,spending wisely and learning how to budget and save. Middle school and high school.
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