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How to Help Your Children During Tough Economic Times
America is changing. Jobs are being shipped off-shore, gas prices are on the rise, and the government is in flux about who caused our current economic crisis. Although these are adult problems, children also feel the pressure. Children can see the anxiety in a parent's eyes after dad has just been laid off. They hear the grim news reports about Wall Street in the background, but what really impacts your kids is how you handle the news reports. Your reaction to a changing America is what will help or hurt your child's ability to embrace the change.
In these times of economic and political upheaval, it's important to be honest with yourself and your children. You must take great care to not burden your children with your fears. You can use these times as an opportunity to teach your kids financial responsibility. Here are some tips on how to help your kids understand and thrive in this historic period of our country.
Be Age-Appropriate
Generally speaking, children under the age of 10 will not have the mental maturity to understand adult problems like finances or politics. It's good to teach all kids the value of a dollar, and the best way to do that with younger kids is through developing a strong work ethic. Reward them with money for chores well-done. This simplifies the financial principle of supply and demand, and will help your kids to understand that real work provides real results. Children shouldn't get an allowance just because (this is the same thing as getting credit cards just because), instead they should get money as a direct result of productivity. The simple fact is that our current financial crisis began with people getting credit they did not deserve; it will be solved by people living with the money they directly produce. It's best to teach your children this early on.
Be Honest
For older kids, preteen and up, begin with an honest dialogue. The key is to first understand the crisis yourself, which is not an easy task. As soon as you understand the origins of our current crisis, you can explain the current economic crisis in terms your kids can understand. You can use tools like online videos to explain what caused the crisis in the beginning. Encourage questions from your kids, and also be sure to answer them. If you aren't sure of an answer, research it. It's better for your kids to get the answers from you, because they need to trust that you know what you're doing. Being honest is a lifestyle. Don't buy what you don't need. Take your kids with you on shopping trips, and teach them why you're buying a certain item (perhaps it's cost effective, or a splurge because you prefer a specific brand). This will teach your kids how to shop when they are on their own. Also, when your kids inevitably ask you for a certain item that you may not be able to afford, explain that you can't afford it. Instead of saying no, offer alternatives. Teach your kids to use their hard-earned allowance to buy luxury items, instead of depending on you to buy them. This teaches your kids fiscal responsibility, and they won't be as cavalier with their own money, as they would using you for "credit".
Be Proactive
Assess your financial situation first, before discussing it with your kids. Be brave, and look at your income and your debt. A lot of people are really afraid to look at the truth of their finances, but now's the time. Before you can create a plan of escape, you have to look at the situation as it is. Think of ways to cut down your expenditures, and save more money. After you have taken a hard look at your situation, have a family meeting with older kids to discuss the family finances. There's no need to go into excruciating detail, but do a general budget, including income, savings, and monthly bills. Visual aids will help. Draw a pie chart showing your expenses, and the percentage of your income that feeds these expenses. Once again, encourage questions. Children always have questions, and nothing is too stupid to answer. Ask for your kids' input. Sometimes, a brain storming session with the whole family can create a better budget. You'll be surprised at the money saving advice that your kids may provide, because they will be seeing the situation through different, less complicated eyes. Find ways that each member of the family can work toward a solution, even if it's as simple as turning off unused lights (thereby saving on the family's electricity bill).
In summary, there are ways to help your kids deal with the scary and uncertain financial times. Teaching your kids fiscal responsibility secures a brighter future, for you, them, and generations to come. |
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| If you read the last article and your very first thought was, "how can I explain the situation to my kids when I can't understand it myself"? The EmpoweringWomen series is for you. Kathy Boyle of Chapin Hill Advisors has been running an Empowering Women series monthly at my house for the past year and it is the one thing I do JUST FOR MYSELF every month. I have learned a great deal, have enjoyed the comraderie of other women, and have been happy to have a place to discuss these crazy times with other people in a safe environment to ask my stupid questions. Kathy is bright and informed, but presents her material in a way that everyone can understand and she never makes me feel like the idiot I am! Although Kathy advertises here (thank her for supporting essentialmom!) I personally recommend this class as well!
-- Gretchen Menzies
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