Talking to kids about parents unemployment

Nov 11, 2010 at 1:34 p.m. ET

With the unemployment rate skyrocketing over the last ten years, chances are your family or friends have been affected by a job loss. What’s the best way to talk to your kids about unemployment? How can you be honest without causing undue worry? Experts and real parents weigh in on this important topic.

Unemployed woman

The Bureau of Labor Statistics says the unemployment rate is currently at 9.6%  -- which is a drastic change from 3.9% in 2000. If you or a spouse has lost a job, you may be wondering if you should talk to your kids about your financial situation or shield them from the worry. As you start cutting back on extracurricular activities and allowance, your children will undoubtedly notice that something is up.

See it as a teaching opportunity

Jen Hancock said that her husband lost his job and they decided to tell their 5-year-old son what was going on, in part so he wouldn't think that their stress was about him. "We reassured him that we had a plan to deal with it, but in the meantime, we were going to cut back. I think this is important. He is a member of the family and while we don't want him fretting about things that are beyond his control, letting him know that there are things we can't afford and why--  I think it is healthy," she says.

Rachel Lister, managing editor of Busy Mommy Media, said that her family is also dealing with unemployment and she thinks it is important to discuss as a family the changes they need to make. "As stressful as unemployment is, I've enjoyed watching my children develop thriftier habits," she says.

"The other day at the grocery store I saw how ingrained our spending habits have become to my oldest son when he saw another customer grabbing a pizza from the freezer. My son turned to me and said, very loudly, 'Doesn't that guy know that there's no coupon for that pizza this week?' I had to laugh but I was thrilled that he had learned the value in waiting to purchase things we want until they go on sale," Lister says.

Use age appropriate advice

Financial planner Julia Chung says to customize what you say according to your child's level of sensitivity, age and maturity. Keep it simple and focus on the bottom line -- how it will affect them.

"It doesn't make sense to tell your five-year-old that you've renegotiated your mortgage and because your amortization schedule is shorter, it costs more. That's about as useful to him as calculus and nuclear physics," she says. "You can, however, tell your five-year-old that chocolate and toys might be harder to come by for the short term but let him know that it's because your family gets to have this wonderful house. He'll have more chocolate and toys in the future, and your family gets to keep the house too. Most kids will love that."

Read more about discussing your financial situation with your kids: