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Savvy Strategies for Explaining the Recession and Other Sticky Money Issues to Your Kids

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Erika Rasmusson Janes on Jul 27, 2010 at 4:15PM

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"The Great Recession"

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a Erika Rasmusson Janes on Aug 27, 2010 at 4:17PM

Why it’s sticky: “Recession” is a word your kids probably don’t know -- and it’s a big concept to grasp. Janet Bodnar, editor of Kiplinger’s Personal Finance magazine, suggests saving the recession discussion for kids who are middle-school age or older. They’ll be mature enough to wrap their heads around the concept, and the discussion may even complement what they’re learning in economics class.

How to explain it: In her new book Not Your Parents’ Money Book, author Jean Chatzky, who’s also the financial editor for the Today show, gives kids the basics, saying: “A recession is defined as a period of economic decline of usually two quarters or more. Technically, economic growth -- as measured by GDP, the value of all reported goods and services produced by the United States -- falls over that half year. And during that time, typically, unemployment is rising, personal income is falling, people are buying less stuff, and the stock market is headed down.” This is the technical explanation, but you'll also need to contextualize. Explain that many people may be cutting back on spending and, while it's hard to say when the recession will end, the economy does tend to recover.

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