A friend recently told me that he had been discussing the economy with his two daughters, ages five and seven. He and his wife own a government contracting company outside of Washington, DC. Their family business, like many, has been negatively impacted by the economy. “I have used this opportunity to explain things to my daughters in terms that they understand,” he said. “I told them that we cannot go to the movies every weekend, and that they cannot have every toy that they want because we need to conserve,” he added. “I’ve also used this time to let them know that we are very fortunate. This Thanksgiving we went to help out a soup kitchen before we had our celebration.”

This father has taken the opportunity to do two things that the consultants at the Family Business Consulting Group advise:

1) teaching your children how the economy works; and 2) teaching them the benefit of helping others. Parents face a challenging situation in determining whether or not to address economic issues with their children and deciding what to say to children.

Consultants from the Family Business Consulting Group, Inc. have shared some of their experiences from the field.

“It is my deep belief that if there is one thing the financial crisis is good for it is for giving the perfect opportunity for parents and children to have a discussion about it. Any aspect of the crisis is important,” Denise Kenyon-Rouvinez, an FBCG consultant, family wealth expert, and co-author of Who, Me? Family Business Succession. A Practical Guide for the Next Generation, said. Other members of the firm seem to agree with Kenyon-Rouvinez.
 
“From what I have seen, the issue on whether or not to discuss the economic downturn with children has largely been determined by the children’s age,” Greg Greenleaf said. “I see parents of younger children tending not to say much in order to ‘protect them’ or to not add stress or worry to their lives,” he said. Some hesitate to address the subject because they don’t want to scare their children.
 
“While it is important not to scare younger children, you must assume that they will be getting information anyway, and likely misinformation, through friends or school. So, it is better to say something than nothing” Jennifer Pendergast, executive editor of the Family Business Advisor said. “For younger ages, the ‘something’ can be as simple as acknowledging that there is an economic downturn,” she added.

Initially, the concept of a recession may be difficult for younger children to grasp. But you can explain to her that “some people are losing their jobs and people are trying to spend less money. You can also explain how the downturn is affecting them. If there is no immediate effect, it is still a great opportunity to talk about either saving or prioritizing in terms of spending as well as giving to others who are less fortunate,” Pendergast explained.

“For middle school aged children, it is a wonderful opportunity to begin to explain how credit works and the problems created by buying more than you can afford. Again, this age is a great opportunity to talk about giving back,” Pendergast said. “Later-high school or college age-children may begin to understand the impact on a family’s business. This is a great teaching opportunity to begin to explain dynamics of how your business works—who are customers, how is demand driven, what sort of loans or credit structure does your business have,” she added.

FBCG consultant Chris Eckrich also views this as a wonderful opportunity to teach older children about how the economy works and what it means to participate in the economy.

“By age 12 or so, most kids are sharp enough to walk them through a lemonade stand example and how the makers of sugar, lemons, and cups benefit from the purchase of those items, and how the stand owners benefits when they take in enough money to pay for raw materials and still have some left over, which is called profit,” Eckrich said. “Most teens can understand this concept and how it fits more broadly in the overall economy,” he added.

Greenleaf sees this as a time to teach older children some valuable life lessons. “For older children (teens and college aged) I have seen, and encouraged, parents to use this time as a life learning opportunity. To stress relationships and love over things,” he said. “I have had one client with took their entire family—extended family with in-laws—to work at local food bank over the Thanksgiving holiday. Afterwards they discussed how fortunate they were to have so much,” Greenleaf said.
 Discussing money with children, particularly young ones, is fraught with issues, not the least of which is that all you say is likely to be repeated in some form to their friends at school. So, whether the message is that your family is just fine, despite the recession, or that you are struggling, it can be a challenge to communicate this information in way that children understand and appreciate.

“Parents who have these conversations will be surprise to see how much understanding their children can have, and how much compassion they show to people who are less fortunate than them.
 
This financial crisis may well be a wonderful opportunity to teach the rewards of less greed and selfishness and more humanity,” Kenyon-Rouvinez said.

Things to Consider When Discussing the Economy with Your Children.

  • ¿Hay una edad para hablar con los niños de esto? No, los niños muy pequeños entenderán que no pueden tener el juguete que quieren en este momento y por qué. A partir de los seis o siete años los niños son perfectamente capaces de entender varias implicaciones de la crisis si se les explica de forma adecuada a su edad.
     
  • Hacer preguntas como: ¿Por qué hay una crisis? ¿Qué ha pasado en el mundo financiero que nos ha llevado a la situación actual? ¿Fue justo actuar así? ofrecen la oportunidad de revisar los valores y la ética de la familia. Los padres pueden explorar con sus hijos a qué negocios quieren dedicarse y a cuáles nunca querrían dedicarse.
     
  • La pérdida de dinero es otro aspecto importante que hay que abordar. La mayoría de las familias ricas, aunque no todas, han perdido dinero. Puede hablar abiertamente con sus hijos del impacto que tiene y tendrá en sus inversiones, en su forma de vida, en el futuro. No es necesario asustar a los niños. Puedes hablar de ello de forma positiva. Puedes explorar las oportunidades o las lecciones que ha traído la crisis. Es saludable que los niños entiendan que la riqueza es un regalo precioso que debemos cuidar y que puede no estar siempre presente.
     
  • Tener que despedir empleados es otro tema doloroso pero importante para las familias. Muchas empresas han tenido que despedir a gente en los últimos dos meses o se están preparando para hacerlo. Para la mayoría de los empresarios, tomar este tipo de decisiones es angustioso. Los hijos comprenden rápidamente que también deben contribuir y gastar menos. Algunos también aportan ideas sobre cómo ayudar a los empleados necesitados y a sus familias.