It is best to try to explain tough economics to kids. Regardless of their age, never frighten them. Try instead to allay their fears. Reduce the family stress by sharing the situation in as much detail that is age appropriate. For example, if a parent has lost his or her job, be honest and straightforward, but never convey panic, which weighs on children tremendously. Younger children need reassurance. Assure them it will get better. For example, if they want to buy a small pet, the time will come when this purchase is possible, but at this point, it is best to wait. It is certainly appropriate for all age groups to say that we're going to have a lean birthday or holiday season this year. Encourage creative gift giving that is from the heart rather than the wallet.
As to teens, share the details of your monthly take home pay, and how you/we are going to make changes in our family purchases. High schoolers can process this information and it will be good for them in the long run as they reach adulthood themselves. And with teens, even tweens, it is opportune to admit a mistake that you made (e.g. too much credit spending in the past, not enough savings, etc.) If debt is too high (i.e. over credit limits), get your teens help in cutting back on spending and expenses. Let them know just why you say "NO!" to any requests on their part for purchases. If teens have this detail, they will more likely understand, and begin to learn cash management strategies for their futures.
