It’s a holiday task many financially strapped – or simply concerned – families face: explaining to their children there will be fewer presents this holiday season.

With the stock market tumbling, unemployment rising, additional layoffs lurking and the possibility of war looming, many consumers have decided to cut their 2002 holiday budgets.

Financial experts applaud the efforts, saying in times of uncertainty no one needs the additional debt. But some parents worry their fiscally responsible decision could shock their children.

Let’s be honest, many children grew accustomed to the extravagant gifts that accompanied the good times of late. With stock portfolios growing, jobs secure and overtime overflowing, many parents, grandparents, aunts and uncles were more generous.

As a result, new holiday gift-giving standards were set – standards that may not be met this year.

“People definitely have less money to work with this year,” said Betsy Taylor, president of the Center for a New American Dream, a Takoma Park, Md.-based organization that promotes consumer responsibility.

Discuss the situation

The situation has forced some parents to sit their children down and tell them to expect less this year.

“Many people are having this conversation with their children,” said Andrea Barbalich, executive editor of Child magazine in New York.

Child experts say no matter how dire your financial circumstances, it’s best to be honest with your children if you need to spend less.

“Kids like to be a part of family discussions,” said Richard Brozovich, a psychologist with the Oakland Schools in Detroit. “Nothing makes a child feel better than thinking they are helping out.”

Plus, children aren’t fools. Even preschoolers can pick up on trouble in a household. Being up-front will ease any anxieties children may have – like the family is about to lose their home or sell the family pet.

Yet, while it’s important to be honest with your children, you don’t want to alarm them.

“Don’t scare them,” Brozovich said. “Don’t spend a lot of time talking about this. Your children are not there to carry your burdens.”

Look for bargains

Experts say children can be quite flexible and understanding.

“Most children are pretty happy to have things to open up and be surprised,” Brozovich said. He suggests parents scale back their spending without dramatically altering the number of gifts given during Christmas.

“Don’t buy them just one gift if they’re used to opening seven or eight,” Brozovich said. Instead, think about buying one nice present and maybe a number of smaller items found at discount or dollar stores.

And don’t just go for practical items, Brozovich said. Kids want fun, so include at least one toy or game if you can afford it.

Make a priority list

Once you’ve laid the ground rule that there will be fewer gifts this year, it’s time to come up with a strategy to make the holidays just as much fun.

Start by asking your children what they really want.

If your child is about 6 years old or older they are probably capable of reasoning.

Instead of allowing children to bring a list to Santa, experts like Barbalich suggest making children narrow their requests to a single item.

This way when there are fewer toys under the tree or dispersed throughout Hanukkah, “It’s not a great shock,” she said.

Family time is important

Experts say quality time spent with parents is what kids really want – no matter the age.

With this in mind, Taylor – author of “What Kids Really Want that Money Can’t Buy” (Warner Books, $22.95) due out in February – suggests families focus on holiday traditions and not necessarily gifts.

“Have a potluck Christmas caroling party. Go on an outing, ice skating or to a museum if you live in an urban area. Go out into the country and cover pine cones in peanut butter and birdseed for the birds. Make it a party,” Taylor said.

Last, parents need to remember it’s OK to cut back.

“Your kids will be OK,” Brozovich said. “It breaks my heart to see so many parents go into debt because they are afraid of disappointing their kids.”

Mandell said the worst thing parents can do is put lots gifts on credit cards and further exacerbate their debt.