It's been a few weeks since Standard & Poor downgraded the U.S. credit rating amidst the anguish and awe of Americans everywhere. The topic has since been under analyzed, overanalyzed and laden with finger-pointing in an effort to calm the public and stabilize the markets. Whether the Tea Party movement, Republicans or Democrats are to blame is irrelevant. The results are final and it is from this fragmented framework we must all work together to overcome the financial hardship and emotional discord that the market may bring to our own lives and that of our families.

For all of the uncertainty that the economic downgrade may or may not mean for adults in this country, let's not forget that it has a vast potential to affect our children. What happens when your 4-year-old overhears you tearfully explaining to a friend that daddy lost his job? Or when your teenage son notices that his father has suddenly become depressed and angered by a virtually nonexistent job market and long unemployment lines? Children are often the silent victims of our nation's financial problems as they feel the crushing psychological impact on their lives and on those things they once considered safe.

Psychological Impacts of a Fallen Economy on Children

Understandably, many of us want to protect our children from the financial woes of a fallen economy. As parents, we have a strong innate desire to shield our children from the worries and hardships of life beyond the safety of playgrounds and schoolyards. However, by reacting this way, we often cause more harm than good. Research shows that children carry their family's financial stress as a result of being indirectly exposed to their parents' emotions and reactions to it. A Finnish study found that fathers under heavy financial stress became anxious and isolated, while mothers became anxious and depressed. Likewise, the International Journal of Behavioral Development (2002) found that anxiety and depression flourished within families suffering from marital discord which negatively impacted the quality of parenting. Needless to say, as children begin to suffer the emotional effects of a family crisis, their health and well-being is placed in jeopardy.

Children may not always know the reason for their parent's stressors, but most can observe and internalize the differences in their behavior and emotions. Research indicates that even infants can sense a change in their parents anxiety, stress, and body language and will often change their own behavior and/or emotions by becoming cranky or fussy. Older children often act out their new anxieties (this varies from child to child) by becoming withdrawn or having behavioral issues that were not present before the family's financial hardships.

Teens in particular can feel conflicted about their role - or lack of it - in their family's financial woes. Many internalize and carry the biggest burden of a family's financial hardship and struggle with the loss of items such as Xboxes and cell phones that once helped them normalize their adolescent existence. The stress of financial burden may also trigger negative behavior as teens are at a stage of development that dictates self-absorption and encourages them to explore their independence and to create their own identity separate from their parents. Thus, teens initially may not appear to care about their parents stress and struggles as they tend to focus on how the hardships directly impact them. On the flip side, older teens are better able to see beyond themselves and may try to directly identify with their parents struggles by making them their own. While this psychological act of courage warrants merit, the danger lies in the fact that teens will take on their parents financial burdens by becoming the parent in the relationship, leading teens to find themselves in a situation that they cannot control and are developmentally unequipped to handle.

Communication by Age

To help kids cope, parents need to communicate in age appropriate ways to give children some control by providing them with the opportunity to help solve family problems which serves to strengthen the family. The key is to respect your child's feelings by allowing them to feel some sense of control and normalcy in a financially chaotic family structure. It's a fine line parents must walk between giving their children too little or too much information, but one that ultimately can be met with compromise and openness. How do parents begin the conversation? By understanding their children's stage of development and ability to comprehend and analyze information.

Toddlers and preschoolers. Give credit where credit is due, your toddlers and preschoolers are much wiser than you think. Chances are they will hear and see information and images on TV, playgroups, or at preschool that are scary. They will also notice subtle changes in items they once enjoyed but the family can no longer afford like the loss of their beloved GoGurt or occasional trips to McDonalds for a Happy Meal. Gently and reassuringly confirm his observations. You might say, "I know we can't get your favorite type of yogurt this week, but maybe we can try another brand you'll like just as well." This acknowledges that there are financial changes in the grocery budget without going overboard.

School-age children (under 12). Children this age are keenly aware of the world around them and some of the dangers it imposes, but their cognitive abilities tend to be based on black and white thinking. They may have a difficult time seeing the gray area and thus every scare or fear that creeps into their conscious mind may feel very real. Parents can help their children think about the gray area by being realistic and straightforward. For example, you can remind your tween that just because she sees long unemployment lines on the evening news that doesn't mean her family will struggle in the same way.

Teens. Teenagers are able to grasp more information but still may have difficulty with critical thinking. While teens can handle more details about the economy and engage in some degree of problem solving, they still need reassurance. A parent who is layed off may let their teen know that the loss of their job may provide new prospects by switching to a different industry or field of study. Engage your teen. Ask her what she thinks about the situation at home or in the world around her. Teens will feel more secure being part of the solution as opposed to part of the problem, which will serve to decrease depression and anxiety about what they see as an uncertain future.

About the Author

Elizabeth Donovan

Elizabeth Donovan, M.A., is a psychotherapist and writer. Her work has appeared in magazines including BabyTalk, Parents, and Parenting.

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