The "Money Talk:" Teaching Your Kids About the Recession

"Mom, how much money is $700 billion?" the little guy asked the other day on the way to school. He'd overheard us talking about the bailout plan and, as usual, had a non-stop stream of questions. We took the opportunity to talk to him about the dangers of borrowing too much and ways to save money. Our little financial adviser even had some of his own suggestions, but we’re not going to start charging his big brother, Ryan, for rent anytime soon.

It's important to talk to your kids about everything that's going on, but discussing money is never simple. Here are a few ways to make the conversation easier:

Be Honest and Have an Open Exchange
It's okay to talk about the big stuff with your kids. When you do, be open and direct, responding to all of their questions. If they stump you, admit you don't know everything, but say, "Let's go try and find the answer together."

If things are starting to tighten up with your family budget, definitely share that with your little ones, as well. If your kids are like our boys, their hearing is like sonar and they'll find out anyway. You may as well be proactive.

Our kids want to be treated like adults—whether they’re eight or 18. Finances are definitely an adult-world issue, but you may be surprised by how much of this "big people stuff" they can handle. Make the talk an equal exchange, not a lecture, and listen to their ideas and suggestions.

Be Reassuring
Our children look to us to provide for their needs, both physical and emotional. If you're facing tough times, stress to your kids how much you love them and how your family will pull through together. Being a family and caring for each other transcends the checkbook—make sure they know that.

Seize the Day
This crisis actually holds potential for great learning opportunities. The next time a story about the economy comes on TV, point it out to the kids and have them watch with you. If you're balancing your checkbook, invite them to sit down and work the calculator. When out grocery shopping, have the little ones compare prices on generic and name-brand products, clip coupons, and spot sales. When we're eating out and our little guy asks for a soda, we'll ask him, "Would you rather have a soda or a dollar in your piggy bank?" You can easily use these daily activities as simple ways to teach your kids what it means to make smart, practical money decisions. It's a lesson that will stick if you’re engaging.

Make Sure Your Caregivers Are Aware of the Lessons
Talk to your babysitters and caregivers about the lessons you're teaching your kids. If you don't typically buy them whatever they point out at the grocery store, then you should certainly let your babysitter know that. Make sure that your kids are constantly seeing similar adult behavior from their role models—that means you and their nanny.

Check Out These Great Resources:

• Financial expert Dave Ramsey’s kids' site, "Junior’s Clubhouse" has a bunch of games and lessons designed to help our little ones learn about money.
• Kidnexions has free, kid-friendly finance software. Help your children track where their allowances are going and how to start saving.
• Our friends at FamilyEducation.com have put together a nice collection of articles on the little ones and finances for these difficult times.
• This Wall Street Journal article has great tips for offering an older child a loan (and making sure they pay it back!).
• Last, but not least, here’s a list of great money books for kids on Amazon.com.

What you teach your children about money will follow them for the rest of their lives. Financial responsibility is one of the most important things you can pass on to your children, so take the time to talk.

How do you handle "the money talk" in your own family? Share your thoughts and experiences on the financial crisis with the entire Care.com community by posting a comment!

For Part 1 of the cost-saving series, click here.