Objectives: This study aimed to examine the effects of poverty on child well-being and family functioning among low-income families. Specifically, it explored the role of parental stress, family dynamics, and contextual strain on children’s behavioral and emotional outcomes. Using a sample of families receiving welfare support, the research sought to assess the impact of conditional cash transfer programs and the involvement of Child Protective Services on child development and family well-being. Methods: This cross-sectional study involved 99 children aged 8–12 from low-income, welfare-assisted families recruited from the Porto Metropolitan Area. Parental stress, parenting attitudes, family functioning, and child outcomes were assessed using standardized questionnaires. Families with and without Child Protective Services involvement were compared, and a cumulative index of contextual strain was developed to measure the multidimensional impact of stressors on child outcomes. Results: The results revealed that 53% of children exhibited clinical or borderline internalizing behaviors, 47% showed externalizing behaviors, and 39% experienced low psychological well-being. High levels of parental stress, low parenting competence, and significant contextual strain were associated with poorer child outcomes. Families involved with Child Protective Services showed no significant differences in parent or family characteristics, but children from these families exhibited fewer behavioral problems. Conclusions: The study highlights the pervasive impact of poverty and contextual strain on child development, emphasizing the need for more comprehensive interventions. Family functioning and parental stress are critical factors influencing child well-being, pointing to the importance of addressing these areas through targeted welfare and support programs to reduce the intergenerational transmission of poverty and improve child outcomes.
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