A recent study has revealed that sticking to simple financial behaviors—such as regular saving and timely debt repayment—not only improves mental health and boosts morale, but also strengthens social bonds.
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Finance experts at the University of South Australia found that maintaining consistent savings and repaying debts on time has a positive effect on mental well-being.
According to Stack Daily, the study analyzed data from the “Household, Income and Labour Dynamics in Australia” (HILDA) survey—a long-term database that includes information on economic conditions, mental and physical health, employment patterns, family life, and personal experiences of more than 17,000 Australians aged 15 and older, collected between 2001 and 2021.
Researchers discovered that people who followed a steady financial routine—particularly regular saving and prompt debt repayment—reported better mental health, higher energy levels, stronger social connections, and greater overall life satisfaction.
Professor Raghavendra Banerjee from the University of South Australia explained that high debt levels and low savings negatively impact mental health.
He added, “We found that individuals who save regularly and set money aside experience the best mental health, while those who don’t save at all face psychological stress. The same principle applies to repaying debt.”
The study also showed that rising costs of essential services place an increasing financial burden on young people, who often have lower savings and higher debt, thereby increasing financial pressure and negatively impacting both their financial behaviors and mental health.
Notably, the study found that the positive mental health impact of regular saving and debt repayment was more pronounced among men than women.
Published in the journal Stress and Health, the study highlighted that consistent financial habits improve mental health regardless of social or economic status—even saving small amounts can yield meaningful benefits.
Professor Banerjee emphasized, “Financial stress is an extremely distressing experience that negatively affects both mental health and one’s financial future.”
He continued, “When someone is under financial pressure, they often can’t save or invest toward future goals, and may be forced to rely on borrowing just to meet basic needs—trapping them in a cycle of debt and high interest.”
