"Extra expenses over the holiday period with kids home from school are an added cost to families living on low incomes," Waugh said.
Registered clinical psychologist at Victoria University Dr Dougal Sutherland said the struggle extended beyond physical needs for children living in poverty.
"Children are the victims of circumstance and can't escape the weight of poverty. Stress on the developing brain can have a major effect on mental health.
"Prolonged poverty can lead to a lack of hope and lower self-worth – major factors in crime and youth suicide," Sutherland said.
"The Salvation Army was facing unprecedented demand for its counselling services from both families and individuals," Waugh said.
"The organisation's counsellors saw daily the stress of poverty leading to poor mental health, family violence and behavioural problems in children," she said.
Together with other Salvation Army services, they are able to help these families build a better future, she said.
"It's incredibly heart-breaking to hear children take on the pressure of financial hardship and say they need to find ways to get money to help Mum and Dad," Waugh said.