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Alex Eben Meyer for Money

The country is officially in a recession, but that probably doesn't mean too much to your kids.

Yet as millions of Americans lose their jobs, the fallout from the recession might be hitting close to home. Families across the country are suffering financially, and if you’re among them, it’s important to keep all members of your family in the loop—and that includes your children.

“Keeping [the children] in a bubble and letting them find out what a recession is for the first time when they’re on their own is a horrible idea,” says Mitchell Goldberg a financial planner and president of investment firm ClientFirst Strategy.

Here’s how to talk to your children about financial troubles during a recession.

Maintain healthy boundaries

A golden rule to keep in mind—regardless of your child’s age—is that children should not be a repository for their parents’ financial anxieties, says Sean Grover, a psychotherapist and author of “When Kids Call the Shots.”

“I see a lot of children and teenagers come to a session just flooded with anxiety because their parents were up late talking to them about everything that could go wrong,” Grover says. While the parents think they had a great conversation, the kid is “freaking out” because they think they might have to move or won’t be able to afford college, he adds.

To avoid telling your child too much, or in a way that’s not appropriate, come up with a plan ahead of time. Parents should make as many decisions as they can about budgeting and what costs have to be eliminated before they speak to their child, Grover says.

“If parents just sort of run their mouths and dump their anxieties and don't have a plan, then the children are just going to get very, very anxious or angry,” he adds.

Help them understand the big picture

The first question your kids may ask themselves (and you) is, “How is this going to impact me?” But it’s important to help them see the big picture.

Explain by using specific examples of changes in people’s lives, recommends Mary Lou Kelley, a clinical psychologist and professor in Louisiana State University’s department of psychology. For example, restaurants and hair salons are closing, so their employees may lose their jobs and not be able to pay their mortgages. You can point out how the pandemic is exacerbating the economic situation by explaining to them that some people can’t go to work because they don’t have childcare (like summer camp), which is putting even more pressure on their finances, she adds.

Seeing the bigger picture may also help them know that they’re not the only ones going through changes.

“Over 20 million people lost their jobs so you have to let the kids know that they’re not alone,” Goldberg says. “Every kid has a friend who has a parent who was furloughed or laid off, or who has a parent who’s suffering.”

Kelley recommends doing something with your child that helps your community as well, like bringing food to the food bank.

Explain how life will change — for yourself, then for them

Parenting is a leadership role, Grover says. So put yourself first when explaining how your lives will be different. For example, telling them that you’re going to bike to work every day or that you and your spouse won’t be eating out will demonstrate to them that you are sacrificing too, he says. Then you can shift the conversation to decisions you have made about what will change for them.

Age matters in terms of when and how much you tell your children. The older the kids are, the more advance notice they should get about changes in their lives, Goldberg says. But younger children may get stressed out, so it’s okay to wait until closer to the time the changes will be implemented. Preteens and teenagers are much more engaged in problem solving, so sharing financial challenges with them while providing strong leadership and positivity is being an excellent role model, Grover adds.

And try to avoid taking something away without giving something in its place. Otherwise, children could feel punished even if they haven’t done anything wrong, Grover adds. He worked with a family who had to hold their son back from summer camp. But because the child was really into bicycling, the parents gave him a budget for a new bicycle and the family went on bike trips together. The bike cost a lot less than summer camp would have, and the son didn’t feel as though he was losing out without gaining anything in its place.

Make it a lesson

The more children understand now, the more they’ll be able to manage money on their own later.

“Too many parents keep their children in the dark about finances,” Goldberg says. “When the kids grow up and become adults themselves, they haven’t learned any lessons.”

This could be a good time to help your child understand how money and the economy works. Teenagers are often old enough to understand the logistics of economic cycles, for example, Goldberg adds. You could explain the difference between a bear and bull market (U.S. stocks entered a bear market in March but have since recovered much of their losses).

“You can’t teach a child how to be an adult when they are an adult,” Goldberg says. “You want them to have the basics down pat.”

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