Financial hardship and psychological distress among Aboriginal and Torres Strait Islander children

This study analysed data from the Longitudinal Study of Indigenous Children to explore the relationship between family financial hardship and child psychological distress. When families experienced financial shortages or stress, children and parents/carers experienced more psychological distress. Positive child–mother relationships and community support were protective factors against child psychological distress.

Why is this important?

• Aboriginal and Torres Strait Islander peoples in Australia are more likely to experience financial stress and hardship than non-Indigenous Australians. Aboriginal and Torres Strait Islander people, including young people, also face disproportionate mental health challenges.
• Financial hardship makes it harder for parents to meet their children’s material and emotional needs. This can adversely impact child wellbeing and mental health.
• There is a gap in knowledge about how family financial hardship affects the psychological health of Aboriginal and Torres Strait Islander children in Australia.

What did they do?

• The authors examined the association between family financial hardship and psychological distress of Aboriginal and Torres Strait Islander children in Australia.
  • Financial hardship (money shortages and money worries) was measured using 2008–2020 data from the Longitudinal Study of Indigenous Children (LSIC).
  • Psychological distress (e.g. feelings of being nervous, restless, jumpy, without hope, sad) was measured using 2020 LSIC data when participants were aged 12–17 years.
• The authors also considered whether a range of other variables were associated with children’s psychological distress. These included parent/carer mental health, the strength of the mother–child relationship and the overall health of carers and children.

What did they find?

• The authors found that Aboriginal and Torres Strait Islander children and their primary parent/carer experienced higher psychological distress when there was family financial hardship or stress.
• The effect of financial hardship or stress on psychological distress was greater for parents/carers than for their children. The authors suggest that parents/carers may try to shield or protect children from the impacts of financial stress.
• For parents/carers, feeling concerned or anxious about not having enough money was just as likely to cause psychological distress as actual financial hardship (i.e. not being able to meet basic financial needs).
• Children were less likely to experience adverse psychological effects as a result of financial hardship when they had a positive relationship with their mother and/or a community environment where there were ‘fun things to do’.

What does this mean for practice?

• Practitioners should be aware of the relationship between family financial hardship and psychological distress among Aboriginal and Torres Strait Islander children. They should also be aware of the potential protective effects of positive child–parent/carer relationships and community support.
• Practitioners should recognise signs of financial hardship and stress. Services should use screening tools that include indicators related to financial worry and cultural expectations.
• The authors recommend adopting a holistic approach to identifying and addressing financial stress that considers culturally informed financial literacy support, in addition to parenting or child-specific support services, where appropriate.

This summary is one of the child mental health research highlights for May 2026, prepared by the Australian Institute of Family Studies (AIFS).