The Impact of Healthy Financial Habits on Mental Well-being

Maintaining consistent savings and managing debt responsibly are key financial behaviors that can significantly boost mental health, according to recent research conducted by experts at the University of South Australia. A study published in the journal Stress and Health highlights how positive financial practices—such as saving regularly and paying off credit card debt on time—are linked to better mental resilience, increased vitality, social functioning, and overall well-being.

The research analyzed data from the Household, Income and Labor Dynamics in Australia (HILDA) survey, which includes information on socioeconomic status, health, employment, family circumstances, and life experiences of over 17,000 Australians from 2001 to 2021. Findings revealed that individuals who consistently saved money and controlled their debts reported higher levels of mental health, regardless of their socioeconomic background.

Professor Rajabrata Banerjee explained that while the negative effects of high debt and low savings on mental health are already known, there was a lack of detailed understanding of how positive behaviors—like regular savings and debt repayment—can mitigate financial stress and promote mental wellness. The study further indicated that financial strain, especially due to rising utility costs, disproportionately impacts younger populations with minimal savings and high debt, exacerbating their mental health challenges.

Interestingly, the research found that the positive impact of savings habits on mental health was more pronounced among men than women, possibly reflecting ongoing gender dynamics in financial management.

Importantly, the study underscores that good financial behaviors contribute to mental health improvements across all socioeconomic groups. Even small savings efforts amid high expenses can help improve mental resilience. Conversely, financial hardship often leads to reliance on borrowing, high-interest payments, and debt cycles that worsen emotional wellbeing.

Banerjee emphasized that fostering healthy financial practices is essential for building long-term stability, independence, and access to opportunities, all of which can lead to reduced stress and enhanced mental health. In times of rising living costs and ongoing mental health crises, adopting positive financial habits can serve as a crucial strategy for improving overall quality of life.

Source: [https://medicalxpress.com/news/2025-06-good-money-habits-contribute-mental.html]