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It's Time To Recession-proof Your Kids

NEW YORK (MarketWatch) -- In a troubled economy, it's more important than ever to talk to your kids about finances. Concrete steps now can help them become money-savvy adults.

Aside from the glut of worries about massive layoffs, foreclosures and a plunging stock market, what appears to be a looming recession also begs the question of how much should we tell our kids about the gloom and doom. Inc. magazine has these five ideas on how you can best prepare them to face the economic monster in the closet when they grow up:

Have the money talk.
When it comes to empowering your children to succeed, it's important to sit down with them and discuss the basics of money management. Show them your pay stubs and bills to help them conceptualize where money comes from and how it is spent. Later, involve your teenagers in devising a plan to save for their college fund, so they grow up feeling a sense of ownership for the family finances.

Lead by example.
Instead of letting your kid roam the cereal and candy aisles, use a trip to the grocery store as an opportunity to teach money management. If rising costs during a recession prompt you to clip coupons and make creative use of cheaper ingredients, show your child the ways in which you save. "[My kids and I] look at produce and look at the price per pound and try to buy stuff that's on sale," says Karen Hoxmeier, founder of and a mother of three. "They look at it like a scavenger hunt, they compete with each other and say, 'I caught this one, it's this much cheaper than that thing they picked out.'"

Don't be afraid to share your struggles.
Every career has trying moments. So rather than just sharing news of your latest promotion, signing a new client or other successes, make a point to explain the whole process to your kids. Tell them how you got started, where you stumbled and how long it took to get to where you are. Even if you're handed a pink slip, be candid.

Look beyond allowances.
Besides handing your children a weekly or a monthly allowance, parents should encourage teens to generate their own earnings. Running a lemonade stand is a classic example of youth entrepreneurship at its best -- and seeing something through from start to finish can be an excellent learning experience for children. Point out ways in which your kids can use their hobbies or skills to fill a need. Have a child who is great at an instrument? Why not suggest they teach lessons to other neighborhood kids for a nominal fee? This will help them develop an enterprising and resourceful nature.

Practice smart saving.
There is no better time to teach the importance of smart saving than during a recession. Chances are you've set up your own savings fund that you can turn to in times of need, so why not have your kids do the same? Use a jar or a container that's transparent for gathering savings. If kids can actually see the money growing, that will help them down the road when it comes to investing part of their income. Make it clear that money in the savings jar should be used for big purchases in your kids' future, such as their first car, or to help others in need.

By Marshall Loeb

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