Parents ask me daily how to talk with their kids about what’s going on in the market and as a result, in their own homes. Parents are worried and kids pick that worry up and begin to try to make sense of it on their own. Here’s a plan that will help you help your family acknowledge the 800 pound gorilla in the room.

Talk about money at dinner. Since you are eating in more these days, make sure you are all eating together so you can talk and you can listen. You need to know what your kids think they know. Ask you kids if they are talking about money at school. Are teachers bringing it up in class? Are classmates talking about problems at home? Use these questions as a segue to your discussion about your family and money.Kids pick up on the household tension that begins to get thick when money is tight. So, if you or your spouse has or is about to lose a job, lose a home, and family finances are about to change dramatically, talk about it now.

Explain money shortfalls in concrete terms. Kids don’t grasp the abstract very well — so explain what less money in the household is going to mean to them on a daily basis. Does it mean less spent on groceries? Yes. Does it mean they will go to bed hungry? Probably not. Does it mean no vacation this year? Maybe. How about hobbies, sports and holidays? Less money available for these expenses? Maybe. Will you need to move? Kids, especially very young kids, want to know what will happen to their room, their cat or dog, their friends. Explain how their lives may change but that you will always be there — that will not change. Now is the time to reassure and give kids a sense of security.

Write a letter. If you’re not comfortable talking about what is going on with your finances, then start by writing a letter to your kids. Lay it all out and then let it rest a day or two. Go back and edit what feels right and get rid of what does not. This is not a letter you need to send, or that your child will ever read. It is your dress rehearsal for the discussion.

Get control over spending by making a list. Ask everybody to make a list of what they need and what they want. Brainstorm ways that the whole family can help meet those needs and wants. Commit to every need getting covered first, and wants take a family action plan. If it’s a beloved vacation, then brainstorm how everyone can contribute to make that vacation happen. Young children can use their time and talent to start a business. Dog walking, snow shoveling, raking leaves. Letting your child help create and contribute to the family action pan will make the vacation a whole new, maybe even more appreciated, time together.

Start allowance. Set a realistic allocation for kids that will cover certain expenses, like clothing, sports, lunch at school, gas, car insurance. Allowance is the first step towards budgeting and learning to take personal responsibility for the money in their lives.. Allowance allows your child to have some control over their expenses and that control will go a long way towards reassuring a child that is anxious about money.

Barter and trade. Clean closets, drawers, basements. Chances are your trash is someone else’s treasure. Siblings can trade up clothe. Friends can trade clothes and sporting equipment.

Get a job. If the family income falls short, a teen can get what they want and need by earning money. Consider asking them to contribute a portion of those earnings.

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Susan Beacham
Written by Susan Beacham
Susan Beacham founded Money Savvy Generation in 1999 after almost two decades in private banking and investment management complemented by considerable time teaching at the elementary level.

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