Kid Economics

Recently I’ve read varying viewpoints on how much kids should be informed of the current economic crisis, whether they should be burdened with the reality of market failures, whether it will worry them to know that investments are tanking or if they will even understand the situation. Kids are capable of understanding quite a bit and I find that anxiety levels are often elevated by not having real facts as kids are wont to speculate and spin things out of proportion if left without a guidepost. We’ve always been honest with our kids about whatever is going on in our life and the world in which they live. We don’t create a bubble to isolate them from life’s harsher realities or prevent them from experiencing all its joys. We provide them with the information they seek and allow questions and discussions to blossom. And we give them the comfort zone of knowing they are loved and that whatever happens, as a family we face it. The current economic situation is an opportunity for them to learn and to appreciate just what they do have in their lives, so we started there, especially since every year around this time my mother-in-law asks the kids for their Christmas wish lists. SuperHubby and I decided to take this opportunity to throttle back our kid’s expectations for their anticipated booty and remind them they should appreciate what they do have in their lives.

So we sat down with them this weekend and engaged in a discussion of the economics of their lives. Because their kids and it has to be about how it impacts them for the lesson to really manifest itself. We explained that while Nana and PopPop are comfortably retired and like to give them nice presents for Christmas, they should keep their wish list down to 1-3 items each. We explained how their grandparent’s investments were affected by the market and had gone down. As had ours, which we also explained. Actually Superhubby covered most of the market stiff as he understands it better than I and therefore can explain more clearly for a 10 and 13 year old to understand. They asked the initial frightened questions- would Nana & PopPop have to move? No. Will Nana & PopPop be able to afford groceries? Yes. Once we had assured them that their grandparents were fine and wouldn’t have large financial issues, it was on to making them understand that in times like now, it is always better to be cautious of spending and to remember what was most important. Bless her heart, Giggles piped up immediately with “Our Family is the most important!” This from the kid who offered up her $5.72 to Nana earlier that week, saying it was a start to pay for the bedspread that was ruined when her bottle of nail polish broke and spilled. Ace has passed beyond the Santa years, but Giggle’s still has illusions of Santa and it made us laugh when she decided that she would save the big stuff for her Santa list. We’ll keep that under advisement and pointed out that maybe Santa would be extra generous with kid’s who really needed special happiness in their lives this year. We connected that nugget with the fact that Santa was so generous with them last year because we were certain he knew they had had so much sadness that year and the year before in their lives. The fact is we went a bit overboard for them last year as we were grieving the loss of Grandpa and my nephew was still so ill and we wanted to bring a bit more happiness into their space. The piles under the tree took up some serious floor space. I could see Ace digest this thought and knew he was thinking about a few of his friends whose parents lost jobs this year or were going through terrible family difficulties. His very empathetic heart was keeping him in tune with the message.

It’s easy to reinforce to our kids that material things are not paramount, as we tend to be frugal anyway. There are no iPods or laptop per child in our house and we all share one computer. We don’t go out and buy the newest video game system when the one currently in residence works just fine. Ace had to wait until this year to get his own cell phone. The kids don’t have their own television sets. Some people think we’re too tightfisted on this issue but my kid’s don’t throw temper tantrums when they don’t get what their friends have or expect us to go out and buy $100 sneakers. They most certainly negotiate and grumble and nag when they want something bad enough, but they certainly don’t expect to receive everything they want. This frugality allows us to take extra vacations, spend time together and do more exciting things as a family. So our conversation, far from causing anxiety, opened up more dialogue about how savings and investing affect families over all. They were concerned about our liquidity and wanted to know whether we were going to have problems with our bills. We assured them as best we could there, explaining that we’re both employed and not carrying too much debt, but we feel it necessary to watch spending as much as we normally do. We just wanted them to be aware and not ask for too many things when there are people struggling this year in many ways. Like typical kids though, once they were assured that Christmas would still bring some presents, they were settled with our answers and ready to move to other topics as their attention span on this topic waned.