As fears about the economy and employment grow stronger, parents should talk to their children about their financial situation and how it may affect holiday wish lists.

"Children do hear about the economic situation, but may not understand why it's happening or what it means," said Dr. John Sargent, professor in the Menninger Department of Psychiatry and Behavioral Sciences at Baylor College of Medicine and director of child and adolescent psychiatry at Ben Taub General Hospital.

"They also have feelings of uncertainty and fear about their family's situation, so it's important to have a conversation with them."

It's natural for parents to want to limit their spending as a way of protecting future financial stability. Parents should discuss their own financial situation among themselves and agree on how much they will spend this year during the holidays. Then, parents can have a conversation with their children to be sure they understand the situation and the holiday spending plan.

"Understand that children may be disappointed or confused by the situation. It's important to explain that their family is not the only one going through this, and that the family will get through the financial situation together," said Sargent.

Parents might be overcome with guilt and anger for not being able to afford each item on their little ones' holiday wish lists. An angry reaction to this guilt may be upsetting to a young child, he said.

"Many parents will react by angrily telling their children they can't afford the item they want," said Sargent.

Although parents may be upset or discouraged with their financial situation, children may feel that their parent is actually upset with them.

"There is nothing wrong with children asking for things they want, but it is also impossible for parents to indulge in their every wish or demand. Not granting every wish does not make you a bad parent," said Sargent.

If the holiday wishes turn into temper tantrums at the toy store, Sargent says the best way to deal with them is to ignore them. Recommend that the child add the item to the wish list, but don't snap at the child. If you do, it may be a sign there are other stresses in your life. Going together for a walk or to the playground is a good way to cool off and distract kids from talking about gifts they've seen on television or in catalogs, he said.

Sargent recommends slowing things down if the stress is overwhelming, as it can lead to overall poor health. Planning early holiday shopping can help alleviate some of the stress, as well as preparing and sticking to a list that fits in the budget. If the holidays are causing a real sense of despair, Sargent recommends seeking help and getting a mental health assessment. Depression can increase during this time of year, and any suicidal thoughts should be taken seriously.