My husband was laid off after 18 years at the same job. Now we're wondering what to tell our kids, who are 9 and 10 years old. They're smart and already sense something is up, and we don't want to worry them.
Kids are acutely aware when something is wrong.
But since their fantasies are often much worse than the reality, I agree with your instinct to tell them the truth. What's important, though, is how you do it. If you act alarmed, they'll become frightened. Spare them the ugly details. It's fine to briefly explain what happened in terms they can understand.