Children and the economy: what to say when times are tough.

It's hard escaping the bad news about the economy, right? Your children are exposed to the gloom-and-doom, too.

Although they may not understand the details. They probably can pick up on the tone of conversations and notice how adults react to media reports. And even if your family isn't seriously affected by the economy, your children might have friends whose, families are. So they're probably hearing about these scary times from one source or another.

Human behavior expert Connie Podesta says parents--regardless of their situation--should be honest with their kids about the economy. "Most children, like adults, can handle the truth. They just can't handle not knowing what's going on," she says. "Tell them everyone has been spending too much, charging too many things on credit and spending on things they don't need. This is a perfect opportunity to discuss the power of money and how it can be used or abused."

It's important to make children feel safe. "Have a family discussion about your particular financial situation and let the kids know that money will be spent more wisely in the future in every area of life," Podesta says.

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Pediatrician and parenting book author Laura Jana says, whether the child is being denied a toy for the first time or the family situation is much more serious, "parents can treat this like any other factor that is not up for discussion: Be supportive; make a child feel that they are secure, safe; be sympathetic to a tantrum from a child who hasn't been exposed to doing without something; and be short and sweet. Remember to tell your child that grown-ups get frustrated and stressed, too, but that they will be OK."

Just like adults who feel better if they can do something about a problem, you can empower children by getting them involved with solutions. "Have the kids give ideas on ways they can help," Podesta says, Jana suggests making it a family project to spend less than "X" at the store this week or think of creative ways to have a "no-cost" weekend for the family.

Experts agree parents should have ongoing discussions about money and be teaching their kids everyday lessons, Jana recommends letting kids do household chores and earn "perks" like a trip to a park before an allowance is ever involved so they can develop a sense of earning. Or let your kids help cut coupons and find products in the store or go to a garage sale. "A dollar can go a long way, and a 3-year-old can be allowed to choose or figure out what is 'worth it,' which can serve as a good learning experience."