There are a lot of kids who won't be getting a new Xbox for Christmas.

As many as 1 in 3 people said they'd forego gifts entirely this year, according to WalletHub's 2020 Coronavirus and Holiday Shopping survey. In addition, more than 102 million consumers will spend less on the holiday this year than they did last year, according to the same report.

The coronavirus pandemic is to blame.

In the last eight months, the health crisis has negatively impacted the finances and health of many families in the U.S. More than 20 million adults are currently on unemployment benefits and more have likely lost income due to Covid-19.

The economic fallout also has consequences for kids.

In April, the share of children that had at least one unemployed parent surged to more than 21%, a record high, according to an analysis by Zach Parolin, a post-doctoral research scientist at the Center on Poverty and Social Policy at Columbia University. Even though it's since declined, at the end of August, more than 1 in 10 children still had at least one parent out of work.

Explaining to kids that gift-giving holidays may look a little different this year because of the pandemic can be difficult for parents. But it's a conversation that adults should have with children to manage their expectations.

"The general thing is that kids do better when they aren't in the dark," said David Anderson, a psychologist and the senior director of national programs and outreach at the Child Mind Institute.

1. Have the conversation early

As soon as kids are verbal, parents can start having these conversations, said Anderson.

If you have a young child who doesn't understand money, you can focus explaining on the things that will change, such as not traveling or not having as many gifts, he said. With an older child or teen, you can be more specific, such as telling them not to expect a new iPhone or video game if it's out of your budget.  

Remember that kids know the coronavirus pandemic has changed a lot this year and acknowledge that in your conversation. For example, if you're not giving gifts, you can say, 'because you know your Father is not working, we're going to find other ways to celebrate,' according to Anderson.

Parents should also make it clear to their kids that they will answer any questions that they have, and not be afraid to revisit the conversation, said Anderson.

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2. Include an optimistic note

It's also important to tell your kids what will be the same or what you're looking forward to this holiday season.

Many important parts of the holidays — such as making festive foods, decorating your living space, watching special movies or singing songs — don't cost a lot of money or are even free.

"Put a lot of emphasis on experiences right now," said Winnie Sun, co-founder and managing director of Irvine, California-based Sun Group Wealth Partners and a mother of three, adding that could include calling family members, a Zoom meeting with friends or playing a game together as a family.

You can also discuss what you're thankful for this year and find ways to give back to others, said Scott Henderson, an accredited financial counselor.

"Just because you've had a hard year yourself doesn't mean you can't start looking outside yourself and outside your family for opportunities to serve and help other people that maybe are even in a less fortunate situation," he said.

This can help ground your children and redirect focus away from gifts. "What you're trying to remind kids is that there still are lots of holiday rituals that you can still do," said Anderson.

3. Validate any feelings they have

Parents should be prepared for a range of reactions from their children, according to Anderson.

"As much as we wish that kids would respond with 'I get it, thanks so much for talking about it,' that's unlikely," he said. "Kids that expect different things may be disappointed, and that's ok."

What's important is that parents try to validate their children's feelings without taking them personally or shutting them down. If your child is upset in the moment, Anderson recommends taking a deep breath and letting their emotions run their course.

You can support them by telling them that you understand why they are frustrated or upset, and sharing your own feelings about the situation, he said.

One thing parents shouldn't do is expect emotional support from their children, Anderson said. He recommends that caregivers get support from a partner or other adult to deal with any feelings of guilt that may come along with this conversation.

4. It might not feel good, but it's right

"Unfortunately, it's rare to have this conversation with kids and say, 'I feel better,'" said Anderson, adding that the point of the conversation is for parents to help their kids, not feel better themselves.

"In developmental studies of parenting, gift-giving is not a significant behavior of predicting successful childhood outcomes," he said. Instead, building healthy relationships, support, guidance and teaching are the things that are most important.

Still, parents often feel a lot of guilt about not being able to give their children gifts, said Sun, who is also a member of the CNBC Financial Advisor council. But, having these conversations with your children can help them learn important life lessons, she said.

"We need to see these financial lessons as being a gift for our children, even though it feels horrible for us to live through," said Sun.

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