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Children learn to lasso that money

In a faltering economy, many families are teaching kids the value of frugal living.

By Marilyn GardnerStaff writer of The Christian Science Monitor / October 14, 2008

Even before the stock market roller coaster and bailout crisis, Kim Maksymuik and her husband began trimming expenses and giving their 5-year-old twins gentle lessons in what is most important. "We understand that things in life change, and we need to be financially prepared for even the worst situations," she says.

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As part of their quiet belt-tightening, they eat out less frequently. They go to the library instead of the bookstore. "Many times this is better as there are many free activities at the library," says Mrs. Maksymuik of Tampa, Fla. The family sells old toys and clothes at garage sales or resale shops. Maksymuik also shops at resale stores, noting that clothes often carry the original tags.

In a faltering economy, many families are taking similar steps to shift their priorities and educate children. For some it is a necessity, resulting from a pink slip or foreclosure. For others it is a precaution, a way to save and an opportunity to talk about money – often a taboo subject in families.

"The big lesson both adults and children have to learn from the financial crisis is about values," says Dorothea Hover-Kramer, a family therapist in Port Angeles, Wash. "What really matters in a world of uncertainty? Children can do very well on less. It was an illusion with which parents fooled themselves to think every child needed designer-label clothes and fancy toys. Kids are much more flexible than most adults want to know."

How parents convey these messages can determine whether children feel deprived or content with what they have. "Take this time to assure your children that you are there to protect and take care of them," says Lori Mackey, a creator of financial education products for children. "My suggestion is to not create fear and insecurity around this situation, but look for solutions on how you can teach your children better habits."

Katherine Harms of Baltimore cautions against being too open. "Families who make speeches about all the cutting back and doing without make it a lot harder for their children than it has to be," she says. "We certainly need to be honest with children who are old enough to grasp the realities. Probably the most important thing children need to know, a lesson my parents urged on me, is to use every gift to its fullest. Children grow accustomed to replacing 'obsolete' and 'out-of-style' possessions."

For some children, lessons in economizing start early. "I just had a talk with my 9- and 4-year-olds about living on less," says Stephanie Ochoa of San Antonio. "At the supermarket, while they each left with two snacks, they did not get everything they hoped for. They started crying. I went home and told them that because the cost of gas went up, the cost of food went up, and we really needed to cut down on extras. Overall, they seemed to understand that it is not just us who have to plan our trips, watch our gas mileage, and cut back on extras. The whole country is having to do it."

In Austin, Texas, Michelle Hamilton's two young sons are also learning about money. "They watch Bloomberg with us in the morning, and we are teaching them about the stock and commodities markets," she says. "We strive to teach them about real assets and explain needs versus wants."