Kids and Financial Crisis

Foreclosure, Job Loss, Financial Upheaval: Helping Kids Manage when Their Families Are In Crisis

By Susan De Luca, LCSW

The state of our economy is a common topic among colleagues around the water cooler, parents on the sidelines of their kids' games, and the financial talking heads on the news. Millions of children, however, are often the invisible victims of our economy's fluctuations. Although their voices are not usually heard, the children in our classrooms and communities feel the same fears, struggle with the same questions, and even experience their own unique consequences of their families' financial crises.

Many families have changed their spending habits or investment strategies in response to job losses, home foreclosures and banking scandals that have plagued the American economy recently. But for those families who have lost their homes or life savings and their dreams for the future, emotional, psychological, and physical scars can be long-standing for both young and old alike. The children in these families suffer in ways that affect their self-worth, their academic achievement, their relationships, and even their trust in the larger world.


Children and teens experience the effects of financial uncertainty in numerous ways. Studies show that children who live with socioeconomic adversity at an early age are at an increased risk for mental health challenges as early as adolescence. Children whose parents are out of work report their own health as being poorer than those whose parents are employed. Young children are more emotionally sensitive, less sociable and more distrustful of others if their families are experiencing intense financial stressors. Younger girls are more likely to feel excluded by their peers. And both elementary students and older teens can easily lose focus resulting in poor academic performance when consumed by family financial worries.

Teachers also perceive changes in their students whose families are struggling financially, rating them as more hyperactive and aggressive. As a result, these children are more likely to receive disciplinary action at school. Unfortunately, various mental health issues are more commonplace among children of all ages who worry about their families' abilities to meet financial obligations. Children and teens in these families experience more school phobia, ADHD symptoms and sleep disorders. Anxiety and depression, as well as physical and medical complaints, all increase among these children.


While some literature suggests avoiding discussion of financial issues with children -- even teenagers -- most experts agree that open communication that avoids catastrophizing is the most effective, respectful approach to helping children understand and process these challenges. Similarly, asking children to be a part of brainstorming possible changes, such as how the family can cut spending or helping with cutting coupons, can provide children with a sense of empowerment.

Family members, clergy and educators all have unique opportunities to help children and teens develop resiliencies and increase their coping skills. While financial fears and the uncertainty of many families' futures remain real, those of us who care for and about children can be sources of support, information and hope. Following are some suggestions when working with kids whose families are hit with foreclosure, job and savings loss, and lifestyle changes due to financial hardships:

  1. BE REASSURING AND OPTIMISTIC: Educate children about the possibility of negative outcomes versus the probability. Emphasize that people are resilient and can and do rebound from hardship.
  2. ACKNOWLEDGE AND NORMALIZE THEIR FEELINGS: Kids feel more resilient and more empowered when they know they have a right to their feelings.
  3. MAINTAIN NORMAL ROUTINES: Everyone feels comforted by consistency and familiarity.
  4. TURN OFF THE MEDIA: Limit exposure to sensationalized accounts of the economy's volatility.
  5. MAKE TIME FOR CLASS DISCUSSION: Give children a forum to address what they are experiencing on a daily basis at home and in their communities.
  6. DO SOMETHING TO HELP OTHERS IN NEED: We all know how reaching out and improving someone else's day feeds our self-esteem. Even young children have gifts to share and can gain perspective on their families' struggles by helping others who may be facing different challenges.