Talking finances with kids, a new challenge for boomers amid economic uncertainty

NEW YORK (AP) -- When Brian Hickey laid off a member of his staff because of slowing business, he found himself answering some difficult questions -- but not from his employees.

Instead, he found himself comforting his 7-year-old son, who had heard about the layoff, and was worried that his father would be next.

''He's asked about my job and we've explained to him that we're not worried about it right now, but these are tough times,'' the 43-year-old New Yorker said. ''We try to reassure him that he and his sister are safe and secure and we're not going to be in any danger.''

It's a discussion that a lot of baby boomers are having with their kids these days. A weak stock market and mounting job cuts have translated into tighter budgets and new worries for many families. The political uncertainty and fears about terrorist attacks since Sept. 11 have exacerbated those concerns.

For boomers, those born between 1946 and 1964, the task is especially daunting given that many have children who have only known prosperity. Terms like ''recession'' and ''layoff'' have little or no meaning to children of the 1990s.

As a result, explaining how the family budget is being affected by the drop in the stock market, a layoff or just the general uncertainty may be especially difficult. But financial planners say it is crucial that parents be up front about any changes.

''Since the kids are part of the family and they're going to be affected by less spending, it's important for them to be informed about what's going on,'' said David Marotta, a financial planner in Charlottesville, Va.

Children can sense tension and fear, so parents need to make sure they are calm -- particularly if the family is dealing with a job or other income loss.

In the case of younger children, just including them in budgeting and allowing them to make suggestions can ease anxiety, said Judy Lawrence, author of ''The Budget Kit: The Common Cents Money Management Workbook.''

Clipping coupons or spending less allowance might allow youngsters to feel like they're doing their part in a difficult time. Parents really need to make sure their children don't feel alone.

''Get them to participate. What do they think about this? What are their fears, their thoughts about this? What can they do to help out?'' she said.

Teen-agers are likely to have more sophisticated questions, and parents shouldn't be afraid to answer them directly.

''In some cases, it may be appropriate to talk about a worst case scenario, that if parents lose their jobs, for example, the family would have to move into a smaller house, or use up savings,'' Marotta said. ''This can also be a way to teach kids why a little prior planning, like having savings, is important.''

Parents also should limit their spending if they're trying to give children the message that finances need to be more controlled.

Although Hickey doesn't believe he or his wife are about to lose their jobs, the decline in their stock portfolios and general concern about what's next for the economy has made them spend more carefully. They're shopping at more discount retailers and delaying big purchases, including a new home.

''I don't anticipate getting a bonus this year and that's a real loss in income,'' he said. ''The anxiety is higher than the real hardships right now, but we're entering a period of uncertainty.''

He's not sure his two children, who are ages 7 and 3, notice any difference, but he believes he's setting a good example by being prudent.

Some financial advisers say boomers might be better equipped to reassure their children about financial change.

''A lot of the boomers I work with, their parents didn't talk to them about money, so they were raised with few money management skills and when there was so much out there to buy, didn't stop themselves,'' Lawrence said. ''But boomers as a group, tend to be more open with their own children than previous generations, and when they see the need to talk about money they're going to be more willing to talk to kids about it.''

When Mike Petrus got laid off from his $100,000-a-year job as a business planner last spring, the Farmington Hills, Mich., man found himself reassuring his 17- and 22-year-old daughters that he would be OK.

Unlike his parents, who rarely talked about money, Petrus said he has done his best to keep his children up to date about his situation without upsetting them. His younger daughter, for example, knows there might be less financial help for when she starts college next year. But so far, the more immediate effect will likely be a more modest Christmas.

''My daughters have both been very supportive and concerned about my well-being, but they've learned something too: There's no certainty out there anymore,'' he said.