Stacy Hawkins Adams

Life Notes
By Stacy Hawkins Adams
Theme: Parents Should Talk to Kids about Finances, Cutting Back

If your kids are like mine, they’ve seen headlines and heard TV news reports about the nation’s economic woes, stock market dips and record job losses.

They know adults who are unemployed and others who are working longer hours. They’re familiar with some of the companies that have closed and wonder what it all means.

Whether your children are watching from afar or experiencing effects of the widespread financial downturn firsthand, experts say now is a great time to educate them about finances and budgeting.

“I’ve always recommended that families talk with their children about finances and teach them at an early age how to manage money, on a level they can understand,” said Michelle Jones, an Atlanta-area resident who founded the family finance website www.betterbudgeting.com in 2001.

“It’s important for parents to be honest with their children if they’re going through difficult times or if there is a job loss in the family,” Jones said.

Parents can ease their children into necessary changes by couching adjustments as a team effort.

“If you need to cut back, do it in a way that doesn’t worry them,” Jones said. “Parents can say: ‘We’re going to be alright, but we need to not eat out as much as we used to. We need to not take a vacation this year.’

“If there’s a job loss, explain that in life, people lose their jobs, but it doesn’t have to be devastating,” she said.

Parents should view the need to change habits or survive a job loss as an opportunity to equip their children with positive coping strategies.

”If, when they’re growing up, you let them go through it with you and let them help you cut back, when they’re adults, whether they go through challenges themselves or it’s their spouse or a neighbor, they will be sympathetic. They’ll be able to deal with stuff.”

Fred Brock, a former New York Times reporter and the author of several financial guidebooks, agrees.

Parents should include their youngsters in everyday financial decisions, to teach them how to make wise choices, he said.
“Kids who’ve grown up in the last 20 years in this country have grown up in a situation where every year, everything was better,” said Brock, whose books include Live Well on Less Than You Think. “Now that’s ended. Kids and young adults who haven’t lived through tough times are unprepared.”

Brock suggests that parents cure the problem by first setting a good example.

“If the kids see the parents cutting back – clipping coupons, buying a used car instead of a new one – that’s helpful,” he said.

He also offered practical tips for trimming costs and teaching responsibility:

If you go to a movie that costs from $6 to $12 for a ticket (depending on what part of the country you live in), don’t buy the overpriced food as well. “The last time I was at the movies, they wanted $3.50 for a little bottle of water.”
If your kids are used to wearing designer clothing to keep up with their peers, tell them the competition is over. “Start looking at sales and in second-hand clothing stores.”
Send lunch to school with your children instead of allowing them to buy. It’s often healthier and cheaper, because you can buy the lunch items in bulk.

“Turn it into a learning experience,” said Brock, who is based in Manhattan, Kansas. “It may be a little traumatic at first, but if it’s explained properly, they’ll be alright.”

Jones believes the process can bring families closer.

“Don’t shelter your children, but definitely try to keep a positive attitude,” she said. “Switch off the TV and play some games and don’t let the kids hear so much of it. They know it’s (not good), so ask them how they feel about what’s going on.

“Parents feel bad about having to have this conversation,” Jones said. “Don’t make it a serious talk; just work it into your everyday conversation and take it from there.”

Book:
Live Well on Less Than You Think by Fred Brock

Education:
The Powell Center for Economic Literacy
Offers teacher programs, student programs and lesson plans for students in metro Richmond and nationwide.
For Information visit www.powellcenter.org or call (804) 741-2806