Level With Children When Unemployment Forces Cutbacks Don’t Hide Truth With Continued Spending

You may think your children’s money worries are limited to whether they have enough change for the hottest compact disc.

Get ready to be surprised.

Half of the young people surveyed by Phoenix Home Life Mutual Insurance Co. said they worried about money a great deal, including whether they would have enough for college.

Today’s unstable job climate may thrust your family into a situation where your children will be forced to face economic insecurity.

The challenge for parents is how to respond in a way that eases their concerns but still offers a lesson in money management.

With young children, “you don’t want to overload your child with details that he or she can’t appreciate,” said Janet Bodnar, senior editor of Kiplinger’s Personal Finance Magazine and author of “Mom, Can I Have That?”

“I don’t think you would tell an elementary schoolchild that Mom or Dad will be losing a job and our income will be cut in half. They will worry about something that they don’t really have control over.”

But be aware that children will pick up cues and sense you’re upset.

With teen-agers, you can be more open.

“Tell them the truth,” said Merriott Terry, vice president of education at Consumer Credit Counseling Service of the Gulf Coast Area in Houston.

“If the family has financial difficulties, it’s important that they know that, because they may read into it all kinds of situations. I’ve heard of kids who think their parents are getting divorced, when all they’re doing is dealing with the financial pressures.”

If you tell your teens about financial problems, you may end up with some unlikely allies.

When Terry’s husband was laid off about six years ago, the couple discussed with their children the impact it would have on household finances.

“The boys said, ‘We won’t buy lunch at school anymore. We’ll take a lunch,”’ Terry said. “They thought of all kinds of ways they could stretch what they were doing.”

Both sons got jobs. The family stopped subscribing to magazines and made trips to the library, Terry said.

“If you’re unemployed, tell them you’re unemployed and that you’re going to get so many dollars from unemployment,” Terry said. “It’s a good teaching time, because they can learn how a family can deal with an unexpected happening.”

It also is a good time to emphasize the importance of spending plans.

If you’re in financial trouble, don’t try to protect your children from the truth by continuing to spend in a manner that you can no longer afford.

Children “have to understand that life’s happenings are going to come, and even the best-prepared folks are going to struggle,” Terry said.

Teen-agers may worry about whether the family’s financial woes will affect their college funding.

“You may be a little more honest and open about what this means financially,” Bodnar said. “They need to know about fixed expenses that you have to pay … because kids don’t have a good idea of the kinds of things you have to pay every month.”

Your child may ask if the family is poor, because you’re being frugal.

“Explain that watching where your money goes doesn’t mean you’re poor,” Bodnar said. “It just means you have to parcel out your income to cover lots of different expenses.”