Dealing With Financial Turmoil
The tanking economy, credit crunch, housing crisis, and rising unemployment rate of 2008 have put money (or, rather, the lack of it) at the very top of parents' minds, especially as we enter a new year, a new recession, and a new administration.
In 2008 an already slow economy practically came to a screeching halt. Seemingly reliable corporate giants and age-old banks collapsed or asked for government rescues to the tune of hundreds of billions of dollars. As the stock market struggled to stay afloat, one major company after another begged for lifelines. Automakers teetered as banks and credit card companies cut back on credit lines, making it tough even for people with good credit to get a car. Companies doled out pink slips in droves, and the worst unemployment rate in decades showed no signs of letting up. House prices plunged and more families faced foreclosure on their mortgages.
No doubt, the economy will continue to take center stage throughout 2009, as families tighten their purse strings further and brace themselves for even more economic setbacks. Even the basics — rent/mortgage, gas, groceries, heating oil, child care, health care — may become a difficult burden for usually financially stable families.
What to Watch:
As countries continue to reel from a global recession, more and more children here and abroad will go hungry or face homelessness. Many families on the brink will resort to buying unhealthy, cheaper foods and put once-routine checkups, medications, and immunizations on the backburner. And less money for charitable giving could mean scarcer resources for those newly in distress. There may be fewer dollars for scientific research and the fight against threats such as measles, tuberculosis, malaria, hunger, and AIDS worldwide.
The fragile economy may get worse before it gets better. Now, it's essential for many (if not most) households to learn how to live with less — and do it within their means, instead of falling back on credit or loans.
Parents have an additional challenge: helping their children through these difficult times. Even if they don't always say so, kids are very aware of the tension felt by their parents. As with many things, the best approach is for parents to talk to kids about what's going on and how their family will cope. Kids may not be interested in the global economy, but they are interested in what is happening to them and their family.
It's OK to say "no," set limits, and tell them that there's a limited amount of money in the family budget. Honesty is key but too many details might be too upsetting, especially for younger children. If nothing else, our collective money crunch is a prime opportunity to teach kids of all ages important lessons about separating "wants" from "needs," delaying gratification, and earning the things they truly want. After all, food, heat, and a roof over their heads come before toys, "in" clothes, or a teen's new car.
Family Money Troubles
Financial Management During Crisis
Financial Woes? How to Talk to Kids When Money's Tight
View the next Issue to Watch
View the entire list of Issues to Watch
Return to Main Page