Mental health has a bigger impact on financial wellbeing than spending habits, an ANZ report reveals, with young Australians lagging behind

Mental health has a bigger impact on financial wellbeing than spending habits, an ANZ report reveals, with young Australians lagging behind
  • Young Australians report a lower sense of financial wellbeing than older cohorts, a new ANZ report says.
  • It outlines how factors like mental and physical health play into a sense of financial wellbeing.
  • It also suggests health plays a larger role in financial wellbeing than an individual’s saving and spending habits.
  • Visit Business Insider Australia’s homepage for more stories.

Young Australians report a significantly lower sense of financial wellbeing than older cohorts, according to a new ANZ report, with mental health, home ownership, and earning potential each weighing on a respondent’s sense of security.

In its seventh Financial Wellbeing report, released Wednesday, ANZ says just 29% of Australians have ‘no worries’, with a financial wellbeing rating between 80 to 100.

Some 43% are classified as ‘doing okay’, with a score of between 50 and 80. Below them, 17% of respondents were ‘getting by’, with a score of between 30 and 50.

A full 11% of Australians are ‘struggling’, with a financial wellbeing score of between 0 and 30.

The results clearly skew against younger Australians, with young parents reporting the lowest overall score, at 58, followed by young, child-free respondents, at 59. Older families report a score of 64, with retirees the clear winner, claiming an average score of 77.

Mental health a key factor

Those findings mirror conventional knowledge about the spread of earnings and net worth across age brackets, but the ANZ report does not look purely at dollars and cents to reach its conclusions.

Drawing from a system devised by the University of Bristol’s Emeritus Professor Elaine Kempson, the ANZ report assesses how social, physical, and mental factors shade one’s sense of financial stability.

Through this lens, the report found mental health has an extremely strong correlation to financial security.

The research found that among those ‘struggling’ with their financial wellbeing, 68% reported their mental health was ‘fair’ or ‘poor’. However, just 8% of respondents whose financial stability ranking was over 80 said the same.

via ANZ

Experiencing poor mental or physical health was one of the “most significant” disruptors to a sense of financial wellbeing, the report found.

“In fact, it had a larger impact on personal financial wellbeing than an individual’s saving and spending behaviours, accounting for 13.7% of the overall financial wellbeing score,” the authors wrote.

So strong is the link between economic stability and overall health that well-off respondents were less prone to report poor mental and physical health, regardless of their age.

“Even though people in this [financially stable] group were generally older, they were less likely on average to report poor physical or mental health,” the report found.

More work is needed to quantify link between mental health and financial wellbeing, ANZ added.

Visions for the future

Unlike prior iterations of the report, the most recent edition considered how ‘feeling secure for the future’ can shade an individual’s sense of financial wellbeing.

Young Australians lagged behind older generations across those forward-looking metrics, suggesting heightened levels of anxiety are dragging down the financial wellbeing score for younger respondents.

Singles under 40 with no children ranked their earning potential at just 46 out of 100, while more senior Australians felt more comfortable in their ability to rake in an income.

Housing, a key determinant of financial security in the later years of life, also appears to be out of reach for a majority of young respondents.

One in five respondents aged between 18-24 said they did not feel owning a home was a realistic goal for them, with those aged 24-34 trailing close behind.

That figure tapered off as respondents increased in age, with only one in 10 respondents aged 65 and above saying home ownership felt unrealistic.

The ties between feeling secure and being secure are so tightly interlinked that financial wellbeing can effectively build upon itself, the report’s authors said.

“An improvement in financial wellbeing, whatever the original cause, has the potential to be self-reinforcing through the improvement on financial confidence and control,” said Prescience Research’s David Blackmore, a contributing researcher.