In this article, you will find:
- A stormy economic forecast
- Making a plan and sticking to it
A stormy economic forecastYou've heard the statistics. The United States is in its worst recession since 1982, if not since the Great Depression. Gross Domestic Product, the rawest measure of economic output, is dropping, while unemployment is rising. Experts disagree about how far this slide will go, but nearly all agree that the worst is yet to come. Some even forecast double-digit unemployment rates. Chances are that you or somebody you know has already lost a job.
You may be wondering what impact all this has on your kids. While they may not understand the finer points of the current economic climate (who among us does?), it's safe to say that your kids are absorbing the gloomy forecasts from the news and adults' conversations. With layoffs affecting workers in all industries, it's quite reasonable for kids to pick up on adult fears. You can help to put their minds at ease by talking to them about your own situation, and preparing for the worst to happen.
Be the Grown-Up
Whether your children are concerned about troubling economic news, or you're currently dealing with unemployment, what kids want to hear is much the same message. "They want reassurance," says Janet Bodnar, editor of Kiplinger's Personal Finance and author of Raising Money-Smart Kids. "They want you to be the grown-up."
Being the grown-up means having a plan in place for dealing with unemployment. "Kids ask, 'Will we have food on the table? Will we have a roof over our heads?' You need to anticipate those questions and have answers for them," Bodnar says.
Trim Your Budget
First, make sure you gird yourself financially for the months ahead. Ideally, you've already got several months' living expenses saved up to cover such an emergency. You should also be ready to cut costs. The most important thing, according to Bodnar, is to take action immediately. "You need to be proactive. You can't depend on other people to do this for you."
This can even be a teachable moment, as you go through your budget, line by line, to trim the fat. Bodnar advises that you share with your kids what financial decisions you're making. "It's best to put it in the context of your monthly expenses: 'We have to cover the mortgage, the car loan; these other expenses are expendable. We'll be cutting back on vacation, going out for dinner, and other discretionary things.' It's a good lesson for kids," she says. Giving younger kids a sense of the big picture is fine, while teens can benefit from hearing some of the details. You could even share with them the specific expenses you'll have to cover every month. Letting your kids know what the plan is will reassure them - and it just may reassure you, too.