"Mom, how did the collapse of the non-bank asset-backed commercial paper market cause a liquidity squeeze in inter-bank lending?"
"Dad, what are credit default swaps, collateralized debt obligations and mortgage-backed securities?"
Adults are having a tough enough time grasping how the sub-prime crisis snowballed into stock-market mayhem, massive job losses and a slumping economy. Try translating all that for kids around the dinner table. But those who know something about money - the business professors, the bankers, the financially literate - see this downturn as an opportunity to teach fundamental lessons about budgeting, savings, job security - and empathy.
"My neighbourhood seems to have a lot of auto workers and our kids have asked about job losses," says Casey Cosgrove, the director of the Canadian Centre for Financial Literacy and a father of three children ages 11, 9 and 4.
"It's difficult to translate the current economic woes into terms they might understand without depressing them. But there are a lot of teachable moments we're trying to expose them to, without burdening them," says Mr. Cosgrove, who lives in Burlington, Ont.
For Mr. Cosgrove, it begins with linking the sub-prime crisis to something many kids relate to: cellphones. It's often peoples' first taste of financial obligation - making monthly payments, getting caught in higher-than-expected rates and, in some cases, trying to cancel plans only to find out they're trapped into three-year agreements.
"I tried to explain that people sign up for things they don't fully understand, or know the consequences of. If we don't learn some of these things now, we might make financial decisions or enter into agreements we don't fully understand. And the sub-prime crisis is just like that, but on a grand scale."
He's teaching his kids about budgeting and financial planning by giving each of them three jars labelled Save, Spend and Give. Any extra money from, say, a paper route, is divided into the three categories - one as a long-term nest egg, another for treats and a third for donating to a food bank or a friend in need.
Time-pressed families and a cultural shift mean basic conversations with kids about money have fallen by the wayside, says Scott Ward, a financial adviser with brokerage Edward Jones and father of two kids, ages 3 and 13.
"I think it's something we've overlooked, or even been afraid to talk about. Money isn't always easy to talk about sometimes. But kids want to learn," says Mr. Ward, who has held workshops for parents and children on the topic. (One of his lessons: the economics of a lemonade stand.)
Like Mr. Cosgrove, Mr. Ward stresses the importance of savings to his children. When his 13-year-old was 9, Mr. Ward sat him down and asked him to draw his dream, what he would most want in five years' time ("a digital camera") and in 10 years' time ("my own house"). Here's what those things cost, he told his son. If you save your money, you could afford these things. Spending money goes into a piggy bank. One chunk goes to charities such as the local Salvation Army. Long-term savings, from birthdays or allowances, goes to the bank, where some is invested in the stock market.
The stock market?
"It's down right now. We go through the statements together," he says. He tells his son the same thing he tells clients: Mutual funds mean you share the gain as well as the pain of a company, and that "over time, if you pick good companies, they'll do well."
