Mom, what if there's another recession?

Kids say the darndest things.

Along with worrying about whether or not they have a date for the homecoming dance and how to finally get rid of that acne, teens today seem to have some pretty weighty issues on their minds. The smart phone in their pocket brings the world, with its political complications and economic upheavals, right to them.

My teen is no exception. Recently he asked "Mom, what if we have another recession?"

Whether I answered his question sufficiently is up for debate, but I'll list the points I made in my response (below) along with a few resources you can use if you're faced with a similar situation.

In trying to develop financial literacy skills in my teen, I'm always working for balance. That means I'm trying not to overload him with so many details that he glazes over, but give him enough data so it's real. Although he's asking about a recession, don't get hung up on technical definitions. What he really wants to know is "will we be okay if something unexpected happens."

Here's what I told my teen.

- It's not really a question of "if" we will have another recession, but "when."
- That said, while the recession in 2008-2009 is the one many teens will be thinking about, there have been many others (here are a few).
- I told him (briefly) about the savings and loan crisis that closed the S&L in our town and the dot-com bust that came later.
- People lost jobs and money in both. But (and here was the important part as far as my teen was concerned) we came through it in the end.
- As a family we believe two ways to weather storms like a recession or crisis are to build up our emergency fund and diversify our investments.

We'd already worked through some of the resources on the #FinLit Menu for Parents (like fun this TedED video about economic bubbles and tulips). That made the whole conversation a lot easier for both of us.

VISA's Practical Money Skills provides
tips for building an emergency fund.
That's how I handled it. You might find a different or better way, based on your family's situation. However you decide to approach it, here are some resources you might find helpful.

Building an Emergency Fund
Publisher: Practical Money Skills by VISA

What causes economic bubbles? 
Publisher: TEDEd

The dot com bubble explained in one minute
Publisher: One Minute Economics

Savings and Loan Crisis
Publisher: Federal Reserve History

A Review of Past Recessions
Publisher: Investopedia

Financial Concepts: Diversification
Publisher: Investopedia

Planning for the Unexpected
Publisher: Practical Money Skills by VISA

What Causes Business Cycles?
Publisher: Practical Money Skills by VISA

Start here: The #FinLit Menu for Parents

When my son entered his teens I started to get serious about financial literacy in a way I should have been years before.  The good new...