They say money can’t buy happiness — but how you handle it just might.
A surprising new study has found that one financial behavior is consistently linked to lower anxiety and greater life satisfaction.
The research — published in the aptly-named journal Stress and Health — controlled for income, meaning you don’t need to make bank in order to enjoy the mental health benefits.
It seems that good fiscal management — meaning regularly saving money and paying off your credit cards on time — is the true key to bliss.
The findings were based on the data of over 20,000 Australians over the course of 20 years and used the Mental Health Inventory-5 — a scientifically validated screening instrument for anxiety and depression — to calculate results.
A 1% uptick in saving habits was linked to a 0.475% improvement in mental health scores, while a 1% increase in consistent credit card payments led to a 0.507% boost, which is more significant than it sounds.
Most importantly, people who made the same amount of money but had different fiscal management styles showed very different levels of happiness and peace of mind.
While many studies have shown a correlation between income and life satisfaction, this study is unique in that it indicates good financial habits — rather than a fat paycheck — can significantly improve mental health.
These results held steady through major economic upheavals, including the 2008 financial crisis and the COVID-19 pandemic.
The researchers believe being fiscally responsible can help reduce “financial strain” — that constant background stress of not knowing if you can cover bills, emergencies or unexpected costs.
It can also have an unpleasant domino effect.
“When individuals are financially strained, they often can’t save as much or invest, so they miss out on growth and meeting those goals they might have set for the future,” study co-author Rajabrata Banerjee, a professor of applied economics at the University of South Australia, said in a statement.
“People can also become reliant on borrowing to meet their basic needs, and this can lead to high interest payments and continuous debt cycles.”
The researchers also hope these findings might inspire people to take actionable steps to control their financial — and, subsequently, mental — health.
“That’s why healthy financial behavior is important to build stability and long-term security, allowing goal achievement, independence and access to opportunities, as well as reduced stress and good mental health,” he said.
Interestingly, the benefits were more pronounced for men when it came to saving habits — though both genders saw improvements across multiple measures of well-being, including emotional resilience and social functioning.
The researchers also looked at whether the relationship worked the other way around — that is, if poor mental health led to worse financial decisions — but found almost no evidence of that.
So go ahead and set up that auto-pay — because clearing your balance leads to a balanced mind.
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