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Talking finances with kids

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Kids are big fans of family rituals, so they notice even the smallest change in routine, and a lack of explanation will have them concerned.

If you traditionally stop for ice cream after soccer games, they'll immediately wonder why you drove past the store. If you have to forgo the ice cream, suggest a snack at home instead as a way to save time and money.

"Initiate some dialogue so kids can understand the changes," Palmiter says.

"The underlying subtext of kids' questions is 'Are we safe?'" says Gallo. "Talk about financial turmoil in terms they can understand, and help that along by asking them what they've heard on the news and in school."

2. Be open and honest -- to a point
If you've never talked money with your kids, sitting them down to discuss financial challenges may be overwhelming. But the conversation may have to be initiated if your kids start asking money questions.

If you must have the talk, pick a time when none of you is busy, like after dinner or when weekend chores are done. Have it in a comfortable setting, like the backyard patio or dinner table, instead of the formal, living room setting.

When Heller sat down with son Jonathan, he was open and honest, but spoke at a 9-year-old's level.

"I said, 'Yes, Jonny, stocks went down today. We go through periods when they go down, but they also go up again. We don't want you to worry about it, because sooner or later, stocks will go up again,'" Heller says.

Palmiter recommended this selective truth-telling, in which parents choose information to share based on the child's age and mental development. The younger the child, the more psychologically vulnerable he or she is, and the less information you should share.

"Younger children may accept one sentence as an explanation, like, 'I'm not going to work right now because there's been a change at my company, but don't worry, I'll get a new job soon,'" Palmiter says.

But older kids will want answers to questions such as why there's no family vacation or new car. Parents can be more open in sharing information and also can ask them questions, Palmiter says.

"To an adolescent, I'll say, 'I was downsized at work and it got me worried, but I'm confident things will turn out fine. How do you feel about it?'" he says.

Palmiter sees it as an opportunity to get closer to his children and help them deal with stress.

3. Decide what to keep confidential
Should you show your checkbook and mutual fund balances to your kids? That's up to parents to decide. It's OK for you to determine how much you want them to know about your money-making abilities.

Heller doesn't talk salary with the kids. "My parents never told me how much they made, and I don't see the need for my kids to know," he says.

However, Leitz chooses to tell her three teenagers nearly everything. "They know my salary, our house's value and mortgage payments. However, they're not to share that with their friends," she says.

Still, she doesn't share her personal-spending or career decisions. "My kids don't need to be making age-inappropriate decisions about whether I earn too little, spend too much or made the right career choices," Leitz says.

Next: "... make it about choices they can have."
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