Tips on talking to kids about money

March 23, 2009 8:22:41 AM PDT
With recent studies showing 70 percent of us are stressed and curbing expenses at home, there is concern for how this is affecting children. Psychologists say kids are intuitive, even if you don't tell them about your economic worries, they will know something is wrong. SIGN-UP: Get breaking news sent to you

"If there's a lot of tension in the home, they'll pick up on it and they will tend to blame themselves," said Dr. Jerry Shapiro.

Dr. Shapiro is a professor of counseling psychology at Santa Clara University and he sees first-hand the impact this economic downturn is having on families.

"During recessions, divorces are down, so people who are not getting along are living together purely for financial reasons. We also know alcohol and drug abuse goes up and domestic violence goes up," said Shapiro.

Dr. Shapiro said kids must be told about their families' economic problems -- but at an age appropriate level. Another tip, interpret the economic news into your child's world in terms they can understand. For a five year old that might mean not buying a new toy.

"If you're talking to elementary school children, you may have to say to them 'look, we can't afford hot lunches anymore, but we're going to be giving you special sandwiches from home.' For adolescents, it may be, 'you can't just have free access to the car; gas is expensive,'" said Shapiro.

Family vacations to Tahoe or Hawaii might turn into camping trips. The point is kids of all ages have to understand why the family is stressed. And in some cases, bad circumstances can have silver linings.

"Their parent may be home now or one of them may be home now when they get home from school. They're not interested in whether or not dad has a new job. They're interested in what it means to them," said Shapiro.

And parents are charged with being the economic interpreter.

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