This study evaluated the applicability of the family economic stress model (FESM) in understanding the influences of economic hardship on child mental health during a nationwide economic recession in Finland. The information was gathered from 527 triads of 12-year-olds and their mothers and fathers from a population sample. The structural equation models showed that the FESM fit the data well, indicating its generalizability in Finnish society. The results confirmed that a reduction in disposable family income constitutes a risk for child mental health through increased economic pressure and negative changes in parental mental health, marital interaction, and parenting quality. Controlling the children's prerecession mental health substantiated that economic hardship can lead to deterioration in children's mental health. Alternative models based on fully recursive analyses revealed reciprocal influences between parents and their children over time: Children's prerecession mental health problems predicted compromised parenting, which in turn contributed to children's internalizing and externalizing symptoms during the recession.