How to talk with kids about the economic crisis

talk to kids

It’s yet another hard subject to explain to our kids, but leaving them in the dark can mean leaving them alone to worry. Help your kids understand financial concerns without making them fearful.

My sister and her husband were driving home recently, with their 5-year-old son in the backseat. The two adults were discussing the current economic crisis and the fact that it was now impacting people they knew personally. Even though they were secure in their jobs, a friend of theirs had been laid off that week. They were talking about their concern about him and his situation, when their son interrupted, his small voice choked with emotion: “Does this mean that we are going to have to sell our house?!” My sister said that she and her husband were shocked. “We had no idea that he was listening to us! We thought he couldn’t understand what we were talking about, so it never occurred to us that he was being affected. We immediately reassured him; it broke our hearts to think of him worrying that our family was going to lose our home.”

As parents, we often make the mistake of assuming that we can shield our children from the difficult or unpleasant subjects that are troubling us. It is important to be sensitive to kids and to understand that their fresh outlook on life has not alerted them to many of the more painful realities of existence. On the other hand, when we avoid these subjects altogether, we are sheltering our kids from facts of life that they will most likely learn anyway, and, very likely, in less than ideal circumstances. In order for our kids to feel they are growing up in an open, honest environment, where they can share their own feelings, opinions and concerns, we must include them in what’s going on.

Many of us remember a time in our childhoods when we were protected from a family secret. At those times we sensed that something strange was going on, but we never fully understood what it was because as it was never properly explained to us. We didn’t know that our parents were trying to spare us, we just knew that there was a barrier between them and us. This perceived barrier often impairs future communication between parent and child. Kids who grow up around secrecy often feel a sense of suspicion and mistrust. They are far less inclined to open up to their parents when difficult subjects arise in their own lives.

By following these suggestions, you can talk to your child about issues, like the current economic crisis, that are troubling you and affecting your family without causing your child unnecessary worry or anxiety.

STEP 1–before you start explaining anything:

Recognize that your child is aware that something bad is happening
No matter how young they may be, children sense when adults are under pressure and feeling anxiety. They are naturally attuned to their parents’ emotional states. Your kids pick up on your tension or agitation regardless of the smile you glue on your face or the fears you try to hide behind closed doors. They become upset and worried, but because they are being overlooked, they feel that whatever’s happening is none of their business. Therefore, they have no one to talk to about what they are thinking and what they are feeling. So remember, just because kids can’t understand a situation, doesn’t mean that they aren’t affected by it. They are impacted by the emotional reactions that people who are important to them are having to it.

Acknowledge both your and your child’s emotional states
From your child’s perspective, the most dramatic event at the moment is that there is tension and upset in the family. Therefore, the first issue to address is your child’s emotional state and the upset that the family is experiencing. If they are scared, it is important to listen to their fears. If they are worried that your family may have to move, change jobs or schools, you should do your best to reassure them that you are there for them no matter what happens.

Also, offer your kid a realistic picture of how you feel. Explain that in conversations with other adults, you sometimes “let off steam” and sound more frustrated or angry or worried than you really are. Tell them that even though you are concerned, you are taking the necessary steps to resolve these problems. Has your child picked up on your worries and taken them on? Explain that these are problems for adults to fix; it is not a child’s responsibility to solve them. Let your kids know that nothing is their fault, and they are worth every penny you spend on them.

Realize that you are talking to a child, not an adult
A child does not have the intelligence or perspective of an adult, therefore should be talked to differently than an adult. Because kids cannot comprehend a complex explanation, you have to be careful to offer a simple description of the situation that they can understand. It is insensitive and inappropriate to provide children with detailed information. Because kids react with fear and alarm to situations that seem non-threatening to adults, you have to be careful to offer a non-dramatic account of what is happening.

STEP 2–explaining the economic crisis:
Be mindful that your kid is not only learning from what you are saying, but just as importantly from how you are saying it. Their lesson is not only coming from your explanation of the problem you are facing but also from your demeanor, tone of voice, even the look in your eyes as you are explaining it. In observing how you are reacting to this problem, and they are learning important lessons about how to deal with challenges they will someday face. When discussing subjects that are difficult, it is important to speak clearly, calmly, and with confidence. Remain sensitive to your children’s emotional reactions to what you are saying. Encourage your kids to speak up during the discussion about what they are thinking and feeling. This should be a conversation between you; not a lecture from you.

Explain the economic situation in simple terms that kids can understand. Make sure that your explanations are age appropriate.
For an animated explanation go to:
For helpful tips on what to say go to:

This is an opportunity to teach your kids about the value of money and how it comes from hard work. Explain how at times it is harder to make money than at other times, and at the hard times it’s good to realize that there are many things besides money that are important in the world, and these things are free. Talk personally about what you value in your life “that money just can’t buy.” Ask your children to talk about the friendships and activities that they enjoy, and point out that they exist whether or not you have money. Make sure they know that their worth never depends on how rich or poor they are, but who they are as people.

Tell your kids that everyone in the country is working together to fix the current situation and make it better. Show them that they can help too. The more our children feel they are not alone, that they are part of a community that is pitching in and lending a hand, the less isolated and fearful they will be. When possible, have your child help you donate old clothes and toys to charity, volunteer for community events and befriend families who are struggling financially. You can offer your kids a fresh perspective by teaching them the importance of helping people who are in need, as well as the importance of accepting help when you are in need.

About the Author

Carolyn Joyce Carolyn Joyce joined PsychAlive in 2009, after receiving her M.A. in journalism from the University of Southern California. Her interest in psychology led her to pursue writing in the field of mental health education and awareness. Carolyn's training in multimedia reporting has helped support and expand PsychAlive's efforts to provide free articles, videos, podcasts, and Webinars to the public. She now works as an editor for PsychAlive and a communications specialist at The Glendon Association, the non-profit mental health research organization that produced PsychAlive.

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