Your kids won't be able to turn on the TV or a computer without seeing the turbulence in our economy. As parents, we have a choice: we can talk about what's going on with our kids or we can let them make sense of it on their own. The good news is that we don't have to have a degree in economics to have the discussion. Here are some tips for having a good conversation:
1) If you have a spouse, get your stories straight. Have one or both of you lost your jobs? What will the impact be on your families' lives.
2) Your youngest kids don't need to talk about credit default swaps. They only need reassurance that everything will be okay. If your family does have to cut back, try to only express the immediate consequences because young kids really don't think long range.
3) Elementary aged kids will also want to be reassured but they can also handle discussions about the impact on others so that they might be concerned about a friend whose family is being affected. Kids this age can understand that there are times when people have more money and times when they have less and that nothing is permanent. But these kids also want to know they are going to be safe and sound. They are going to be looking to you for cues on how to react so saying "we're ruined!" when the stock market goes down might not be the best of ideas. They will take you literally.
4) Middle school kids can talk about things they can do to economize. Even if the situation isn't directly affecting you, engaging kids in a broader solution at this age is a great idea. See if you can come up with things to do that they enjoy that don't require money. Young teens will understand the basics of the stock market and they might have lots of questions about how finances and politics go together. Don't be shy about injecting your values about investing and savings. Go over the basics of debt.
5) With high school kids, this is an excellent time to talk about creating a responsible relationship with money. Some teens won't enjoy cutting back on clothes or gadgets, but this is an excellent time to convey your values about saving, investing, and responsible spending. These kids will be able to follow things like mortgage defaults and how banks got into trouble. They may ask you if everything is going to be okay. It's best to be honest with high school kids -- maybe not about your fears as much as your realities.