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How to discuss the economy with kids?

Our new economy has left us in a myriad of new/different situations as it relates to our family finances.  We, as adults, are exposed to these realities every day, whether we are affected directly or less directly.  Our children are also increasingly exposed to these realities, and sometimes it can be a difficult topic to broach.  How are you discussing the recession with your children, if at all?

I need help from those more versed in economics than I. My 9yo hears a lot of talk about the bad economy. He knows that people are losing their jobs, that school days in our district may be cut, that Obama is trying to fix things, etc. But except for the tanking of his college fund and our retirement (which I see no reason to get into with him), we've been lucky enough not to be affected. To him it's just this thing, "the bad economy" that he hears about.  Last night he asked, "Why is the economy so bad now? What happened?" And I really didn't know how to explain it to him. Heck, I barely understand it myself.  Can someone help me out with a simply-worded explanation for a reasonably bright kid?


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we talk a lot about what is going on in the world with our kids, we always have-and i have had some flack about it at times, but my 16 year old can discuss politics (and his own views about them!) with just about any adult. maybe you could read some news stories about the economy you feel comfortable with as a family and discuss them. i don't think there is a one size fits all answer to your question, as all of our views about the economy, and how it relates to our own lives can be so different.

In my opinion essentially what happened, was that the banks put all their eggs in one basket. They handed out loans to people cheap, with the agreement they could raise the price later. They raised the price higher then the people could afford and their was a spiral effect.

There is way more to it then that, but since that is a major issue you could show him how it is bad to count on one thing and have no back up plan.

There are a couple of good episodes/podcasts from This American Life that really get to the root of the housing bubble and the how and why behind "liars loans" people took out to buy houses. There is another that explains things like derivatives and the other complex financial "instruments" which were more like gambling than anything else. Check out #365 "Another Frightening Show About the Ecomony" and #375 "Bad Bank" explains a lot.

Really, it's a lot like any boom and bust cycle, except that this time a lot of the regulations that were put in place after the Great Depression and the 1929 crash have been dismantled.

At the end of the day things are only worth what someone else is willing to pay for them and can afford. It sounds almost too simple but really think about it and it makes sense.

This one may sound flaky, but it helped my 9 yr old daughter. One of the American Girl Dolls is from 30's and the depression figures prominently in the books and movie. A few months ago she was reading this book and said, "It is good things aren't like they were in the book." So we had a discussion about the economy and that many people now didn't have jobs. It was interesting how she processed the comparison between her book and the world around her.

This isn't specifically about the current recession, but it's about a lot of the underlying dynamics of our sick economy, and I think it might be accessible to a bright 9-year-old if you watch it and talk about it together.


It's described as "The Story of Stuff is a 20-minute, fast-paced, fact-filled look at the underside of our production and consumption patterns."

I personally think all of our kids should watch it when they're ready, since they're going to have to deal with the repercussions of our current choices...

The story of stuff is a great watch for any family! Awesome to share that!

A great book I thoroughly enjoyed is Affluenza, the all-consuming epidemic


And another, Your Money or Your Life


I sure wish my parents discussed finances with their kids. Starting off your adult life with credit card debt is no way to go!

And two huge thumbs up for This American Life!

This blog has a section for 'beginners' labeled "Financial Crisis for Beginners"


It provides link to numerous summaries on the crisis including This American Life.

No matter what your passion or profession I think we all need a basic understanding of how we got where we are today.

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