How to talk to kids about the economy and budgeting

I'm revisiting the issue of kids and money over at Boston.com's Child Caring blog, where it's tied in to a great piece that Globe staff writer Linda Matchan wrote last week about talking to kids about hard times.

I've written about similar ideas over at Work It, Mom! and Larger Families, but this time the advice aimed specifically at parents of younger children. It can be hard to stay up-beat and still be realistic. Here are a few tips to try:

Be open and honest, but don't over-explain. Jamie Woolf, author of Mom in Chief, suggests that parents should answer kids’ questions and respond to their concerns, but not delve into all the details. “For example, you may be worried about your college savings, but your ten year-old daughter is not likely to lose sleep over it,” she writes on her blog.

Let the kids help you save. If the kids feel like they're helping you save money, being more frugal can become a source of pride rather than frustration. Let your little kids hold the coupons while you shop for groceries. Grade school-aged children can be tasked with shutting off lights at home when they're not in use. Teens can help track their own expenses and learn how to cut costs. Embrace inexpensive or free activities and homemade gifts, and find ways to make your entertainment dollars do double duty. (For instance, buying a family membership to a local museum is a tax-deductable way to enrich your kids lives and help the community at the same time.)

Be consistent. Kids crave stability, and you’re not doing them any favors by deciding to splurge “just this once.” If you do, when the next opportunity to spend comes around, you won’t have a leg to stand on.

Show them how to budget. Parents are split on the allowance issue -- should you tie it to chores or just give them the money? -- but you give your children an allowance, take the opportunity to talk to them about how to save and how much to spend. If your kids are really young and money has no real meaning to them yet, start with something they do understand -- like treats. Can your 6-year-old make a very small bag of candy last a week? That's basic budgeting.

Be willing to meet older kids part way. If you budget $25 for jeans and your teenager wants a much more expensive pair, tell her that you’re willing to pay for part of it -- but she has to come up with the rest. According to Chick Moorman and Thomas Haller, authors of The 10 Commitments: Parenting with a Purpose, saying so “curbs feelings of entitlement and allows children to take ownership for achieving their desires.”

Remember that, as a parent, your job is to set limits. “You’re not depriving your children” points out Dr. Michelle New at KidsHealth.org, “you’re teaching them important lessons about delaying gratification, earning treats and rewards, and about family finances.”