Money worries

A credit crunch means that it is more difficult to get a loan or credit from banks, as there is less money available. This can cause businesses to have money problems, and causes the price of products to go up.

A credit crunch can be caused by several things. When an economy grows, people in that country are able to borrow more money from banks to buy things.

During a credit crunch, banks are not able to lend as much money to people any more, so it’s harder for people to borrow money, like if they need a mortgage to buy a house. When people have less money, they aren’t able to buy as much, so shops and businesses make even less money.

In a recession more people will be out of work because companies need to save money by cutting jobs so they don’t have as many people to pay wages to. This also means that there are fewer jobs for people to do.  People have less money to spend, so they don’t buy as many things, which makes it harder for shops and businesses to make money. Then the circle starts again, with shops and businesses cutting jobs to save on their wages bill.

You might already be affected by the credit crunch; maybe you have heard your parents, carers or teachers talking about it. You could be affected in the following ways:

• Your parents or carers might be worried about losing their jobs
• You might have less pocket money than before
• Your family might have to cut back on the amount of shopping they do and buy cheaper things
• Your family or your friends’ families might have to find ways to spend less money 
• Your school or youth club might also be looking for ways to spend less money
• The price of things you want to buy has gone up
• Local shops might close down.

If you have been affected by the credit crunch, or are worried about money and what will happen, you can talk to ChildLine on 0800 1111.

• Take a shower rather than a bath or don’t have the bath water too deep. This will reduce the cost of producing hot water..
• Turn off lights if you are the last person to leave a room
• Put a jumper on if you are cold rather than switching on or turning up the heating
• Switch the TV or games console off at the mains rather than leaving it on standby.

These might seem like small things, but they all add up to making a big difference.

If you want to talk about the credit crunch or are worried about your family, you can call ChildLine at any time on 0800 1111.  We are here for you no matter what your worry is.