Plummeting stocks! Billion-dollar bailouts! Bankruptcies! Foreclosures! Times like these, real life seems to extend its pointy finger, and—pop!—there goes the bubble of safety in which we thought our families lived. It’s tough, as parents, to know how, or whether, to address the topic. Certainly we don’t want our kids panicked about collapsing markets and staggering oil prices. Besides, how to explain a tangled financial web we ourselves barely comprehend?

Much as we might want to shield our children, however, the biggest mistake is to avoid the topic. “Kids will see the worry on your face, the tension in your body,” explains Jan Faull, child development and behavior specialist and author of Unplugging Power Strugges: Resolving Emotional Battles with Your Kids Ages 2 to 10. They’ll feel scared and somehow to blame unless you “bring them into the loop.” But how? Here, tips for talking about, and living with, the financial crisis, whatever your child’s age.

1. Open up the discussion. Operate on the same principle as with the Birds & the Bees talk: the older the child, the more detailed the info.

With preschoolers, says Faull, parents might say: “Mommy and Daddy are worried about money, but it’s an adult problem, and we’ll take care of it.” Vital is that your child know she’s protected. This holds true no matter how dire your situation. Should you be losing your home, say: “We’re going to move to an apartment, but we’re all going to be together. You’re safe with us.”

School-aged kids, privy to news reports and playground rumors, will know something is up. Parents can explain mortgages, banking, whatever might fit into a child’s knowledge base. But, says Faull, deliver the information “in soundbites.” Don’t burden your child with details, nor with the problems you and your spouse might be facing.

With teenagers, parents should be specific. After all, teens will be discussing the issues in school, and says Faull, “you’ll want to sift the information they’re getting through your family’s worldview.” No need to open your check ledger, but do let them know how the crisis is directly affecting the family.

2. Manage expectations. Explain, in a non-alarming way, that there’ll be some belt-tightening. Whether this means gas-saving activities—backyard camp-out rather than weekend road-trip, say—or a leaner Christmas load, your children need to be told. Says Faull: “A child who gets one birthday present instead of the usual five will feel he’s done something wrong”—unless you explain the reasons behind it. Expect kids to push your limits, whining, even tantruming, for what they’re used to. Change is never comfortable, especially when it entails loss. Allow room for emotions, but continue to affirm your new boundaries, with as much patience as possible.

3. Use the crisis as a teachable moment. Older kids need to know how credit cards work—and the dangers of spending money that doesn’t exist. Cost-cutting tricks can be a form of play for younger children: clipping coupons from the Sunday paper, say, or scouting grocery aisles for sale items. All ages can learn lessons in budgeting through the apportionment of their allowance toward spending, saving, and charity. If parental resources are stretched thin, teens with jobs might be asked to contribute to their own after-school activities.

4. Reduce the anxiety level. TV news feeds us the same info on an endless loop, breeding fear rather than providing illumination. Get the updates you need, then retire the remote. Or switch to Sesame Street, Hannah Montana—whatever! As for bickering, or battling, with your spouse about finances, do it behind closed doors, away from the kids. Find ways to vent your own stress. Pound a Stairmaster, punch a pillow, talk to friends—just don’t lash out at the kids. When you do—and, let’s face it, who among us doesn’t?—take responsibility for your words and actions. Make sure your child knows she’s not to blame.

5. Count your blessings. No need to act the Pollyanna, denying today’s realities. Just open your eyes to the good all around. There’s always something to be grateful for. A younger child might enjoy doing a nightly gratitude list—alphabetized. “I am grateful for…applesauce…Ben 10…cartwheels…” All ages can be taught to look for silver linings: A laid-off parent might have more time to play at home. Fewer fancy toys might mean more creative play with whatever’s at hand.

As Faull points out: “With children, you can find happiness in so many ways other than buying things.” Now, whether we like it or not, may be just the time to test that theory.