Saving regularly and managing debt boosts mental health

A new study from the University of South Australia has found that financial habits like regularly saving money and consistently paying off credit card debt can significantly improve mental health across all socioeconomic groups.

Using 20 years of data from more than 17,000 Australians in the national Household, Income and Labor Dynamics in Australia survey, researchers examined the link between financial behaviors and mental health outcomes. The analysis showed that individuals who practiced stable financial habits reported higher levels of mental well-being, including improved vitality, social functioning and general quality of life.

The study also explored how financial burden, including the rising cost of utilities like electricity, gas and water, influenced mental health and savings behavior. It found that sharp increases in living costs particularly affected younger Australians, leading to increased financial strain and poorer mental health outcomes.

Men appeared to experience a slightly greater mental health benefit from saving regularly, reflecting broader gender patterns in financial decision-making in Australia. However, the positive effects of stable financial habits were evident across both genders and all income levels.

“Stable financial behaviors led to good mental health irrespective of whether an individual is from a higher or lower socioeconomic background, signifying that even saving a small amount when expenses are high, can lead to better mental health,” according to the study. 

Read more: University of South Australia 

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