It's the Best of Times. It's the Worst of Times.

By Allison Berman
January 20, 2009

It is the best of times it is the worst of times, as Dickens would say. People in all income brackets are adjusting spending habits: Some cutting back on luxuries (a designer handbag); others, more essential items (replacing chicken with pasta - a less expensive food choice). So how is it the best of times? It's a prime opportunity to teach children to pay for necessities first (food and shelter), then help those less fortunate and put money away for the future, and only then do you purchase "wants."

The unfortunate reality is "rainy days" happen even if you do everything "right". I received a great performance review, days before my dotcom employer downsized me. I was prepared financially -with sufficient savings to hold me over while I found a new job. I was unprepared emotionally. Since I didn't do anything "wrong," I resented dipping into money I saved for furniture or a rainy day. My boyfriend (now husband) said simply, "It's raining."

Prepare your children for life's realities explaining (at a child appropriate level) the impact of our lackluster economy. Remind them, it is still our responsibility to help those less fortunate. My husband and I give to food and clothing drives and my daughter gives toys "to children who don't have their own." (An added benefit, she better appreciates what she has unencumbered by the "excess" so many children have today.)

When your child needs the newest "X," make the decision hers'. Is she willing to forgo a sweet sixteen with every teenager she ever met - for a more intimate dinner with a couple of close friends to pay for her need?

And as uncomfortable as the conversation might be, be upfront with your child. Explain finances are tight. By having the conversation you empower your child to be a partner in the solution rather than a bystander of your decision making. And think of the wonderful lesson you are teaching about family values as well - that everyone in the family needs to work together to get through difficult times. Your child just might decide the "X" was a want not a need and stop asking for it. And he might surprise you and go for the home party too - if he realizes the financial strain the fancy party would cause.

Shielding your children from this economic climate is not protecting them. Help them understand the decisions you have made well and the ones you wish you made differently. Give your child the skills to make responsible financial decisions as an adult; that is protecting your child.

Allison Berman, an artist and mother of two, handpaints custom home accessories for interior designers and private customers. She works out of her home studio in Warwick, NY. See her collection at www.withlovealib.com. She can be reached at ali@withlovealib.com. Her column appears Tuesdays.