Keep the explanation simple and age appropriate. Young children are literal so watch your terminology.
Describe the potential impact on your family. Most kids’ prime concern is how this personally affects them. So be honest and clear about any foreseeable changes.
Be prepared for any response. Some kids will shut down. Others might be angry or cry. This is not the time to discipline or try talking them out of their feelings. Acknowledge their pain, confusion, anger or hurt. Then tailor your response to their response.
Explain your plan for new employment. Kids don’t need a lengthy discussion so just briefly explain that you’re seeking a new job and it may take a while. Knowing that you have a “plan” (even if you have no idea what to do) helps kids feel secure.
Involve your kids so they feel they are part of the solution. Ask them for cost-cutting ideas to help your family reduce costs. For instance, mention that turning off the lights will conserve energy. Then ask them for other suggestions.
Try to maintain optimism even in the worst-case scenario. Your children will be watching your behavior closely and take their lead from your attitude.