Mental health
Financial stress and mental health
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Key points
Responses from the Household Income Labour and Dynamics in Australia (HILDA) survey show ...
From 2022 to 2023, the overall financial stress level rose from 11% to 13%.
Certain groups bear the greatest financial stress burden, especially the unemployed, single parents and renters.
Financial stress has a profound impact on mental health, while mental health challenges can increase vulnerability to financial stress.
Introduction
Financial stress refers to situations where households struggle to meet everyday financial commitments or access emergency funds due to limited financial resources (ABS 2023a). Amid persistent cost-of-living pressures and a steep rise in interest rates since May 2022, financial stress has emerged as a growing concern for Australian households. In response to inflation, the Reserve Bank of Australia increased the cash rate from a historic low of 0.1% in early 2022 to 4.35% by late 2023, significantly raising mortgage and loan repayment costs (RBA 2025), and rental prices (ABS 2023b).
A substantial body of evidence highlights the negative impact of financial stress on mental health. Financial stress can lead to worsening mental health conditions, including elevated levels of psychological distress, anxiety, and depression (Richardson et al. 2013; Sweet et al. 2013; Guan et al. 2022; Everard et al. 2025). International evidence from the 2008 Global Financial Crisis reinforces this connection. Across OECD countries, the crisis was linked to increased rates of anxiety, depression and suicide, particularly in regions hardest hit by job losses and austerity measures (Karanikolos et al. 2016). However, countries with robust social safety nets and universal health systems experienced fewer adverse mental health outcomes, underscoring the protective role of institutional support.
In Australia, the connection between financial stress and mental health became particularly visible during the COVID-19 pandemic. Psychological distress rose sharply in 2020, especially among younger Australians and those who lost work or faced income insecurity (Biddle et al. 2020). Financial stress levels declined temporarily following the introduction of emergency government payments, which eased financial pressure for many (Abbasi Shavazi et al. 2025). As emergency government supports were phased out and interest rates began to rise, financial stress and mental health concerns re-emerged as pressing public issues.
This report draws on data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey to examine how financial stress has evolved in Australia, which groups are most vulnerable, and how these stressors affect mental health, particularly in the context of recent economic shocks and ongoing cost-of-living pressures. The HILDA Survey’s long-term scope and comprehensive variables enable a detailed analysis of financial stress trends and their mental health impacts across different population groups.
How has financial stress changed over time in Australia?
From 2001 to 2023, Australia experienced three distinct surges in financial stress, each corresponding to significant economic disruptions. The first seen in HILDA data was in 2001, when financial stress peaked at 17% (Figure 1) amid rising household debt, increasing unemployment, and the effects of the early 1990s recession, the late 1990s Asian Financial Crisis and the early 2000s Dot-com crash. The second spike followed the 2008 Global Financial Crisis, pushing financial stress up to 13% by 2011 as households faced job losses and economic uncertainty.
The most recent and notable increase occurred in 2023, when financial stress rose sharply to 13%. This trend coincided with a series of rapid interest rate hikes by the Reserve Bank of Australia, starting in mid 2022 and peaking in late 2023.
Figure 1: Proportion of people experiencing financial stress in Australia, 2001 to 2023
Line graph showing financial stress in Australia from 2001 to 2023, with a sharp rise to 13% in 2023 amid interest rate hikes.
| Year | Financial stress (%) |
|---|---|
| 2001 | 16.61% |
| 2002 | 13.89% |
| 2003 | 13.59% |
| 2004 | 11.85% |
| 2005 | 12.36% |
| 2006 | 10.65% |
| 2007 | 11.77% |
| 2008 | 9.88% |
| 2009 | 11.02% |
| 2010 | |
| 2011 | 12.82% |
| 2012 | 12.24% |
| 2013 | 11.06% |
| 2014 | 11.64% |
| 2015 | 11.49% |
| 2016 | 11.18% |
| 2017 | 10.33% |
| 2018 | 11.22% |
| 2019 | 11.1% |
| 2020 | 10.87% |
| 2021 | 10.77% |
| 2022 | 10.57% |
| 2023 | 12.53% |
Note: Reported proportions are estimates subject to non-response and sampling error. See technical notes for more information.
Source: Household, Income and Labour Dynamics in Australia (HILDA) Survey, waves 1-9 and 11-23. Questions about financial stress were not included in the wave 10 survey in 2010.
Financial stress is measured objectively through reported experiences of financial stress. In each wave, the Self-Completion Questionnaire asks:
“Since January [survey year], did any of the following happen to you because of a shortage of money?”
- Could not pay electricity, gas or telephone bills on time
- Could not pay the mortgage or rent on time
- Pawned or sold something
- Went without meals
- Was unable to heat home
- Asked for financial help from friends or family
- Asked for help from welfare/community organisations
Respondents indicate which of these events occurred. While any one event can signal financial stress, some (such as going without meals) suggest more severe stress than others (such as late payment of bills). For the purposes of this report, people are classified as experiencing financial stress if they reported two or more of these indicators.
Subjective measures
While this report focuses on HILDA’s objective measure of financial stress, it is worth noting that other surveys, such as ANUpoll, capture subjective financial stress. These rely on perceptions of financial insecurity and future worry, for example, ANUpoll asks respondents whether they find it “difficult” or “very difficult” to live on their present income.
Who is more likely to experience financial stress in Australia?
Demographics
People in certain demographic groups report higher levels of financial stress. Sex differences are evident, with females consistently reporting higher levels of financial stress than males. Prior to 2015, younger people (aged 15-34) consistently reported higher stress levels than middle-aged adults (35-64). From 2015 onward, both age groups reported similar levels of financial stress, with 14% of each group affected in 2023. Older Australians (65+) consistently reported the lowest levels of financial stress, although their rates have shown a gradual upward trend over time. In contrast, cultural and linguistic diversity has not emerged as a significant factor associated with financial stress levels.
Females consistently reported higher levels of financial stress than males throughout the 2001–2023 period. In 2023, 14% of females reported experiencing financial stress, compared with 11% of males.
Before 2015, people aged 15-34 consistently reported higher levels of financial stress than those aged 35-64, with rates of 24% and 14% respectively in 2001. From 2005, financial stress among younger people declined more sharply and by 2015 the gap between the two groups had largely closed. By 2023, levels were nearly identical, at 14% for both those aged 15-34 and 35-64.
In contrast, people aged 65 and over consistently reported the lowest levels of financial stress across the period, although their rates have gradually increased from 3% in 2004 to 6% in 2023.
Before 2011, trends in financial stress were similar for people from culturally and linguistically diverse (CALD) backgrounds and people born in Australia or in English-speaking countries. From 2011 to 2019, differences increased, with people from CALD backgrounds reporting lower levels of financial stress than people born in Australia or in English-speaking countries. Since 2022, the financial stress levels were very similar for both groups of people.
There are some limitations in the HILDA Survey data regarding the representation of people from migrant backgrounds. The first wave of data was collected in 2001, but concerns were later raised about underrepresentation of migrants completing the survey, particularly in light of increased immigration since that time. To address this, a general top-up sample was added in 2011 to improve the coverage. A second top-up sample, focused exclusively on immigrants, was introduced between 2023 and 2025. At the time of this analysis, only the 2023 survey results were available (Laß et al. 2025).
Socioeconomic status
Employment status, family type and housing status are key social factors associated with financial stress. In 2023, the highest levels of financial stress were reported among unemployed people (30%), single parents with dependents (29%) (particularly single mothers (31%)), and renters (25%) (Figure 2).
Families with dependent children typically carry parenting responsibilities, which can increase financial pressure, especially in single-parent families where caregiving duties are not shared. In addition, people with other caregiving responsibilities, such as providing care for people who are elderly or living with disability were also slightly more likely to experience financial stress.
Financial stress also followed a clear gradient by income and education, with lower-income groups and those with lower educational attainment regularly reporting higher financial stress levels.
Figure 2: Proportion of people experiencing financial stress by family type, 2001-2023
Line graph showing that from 2001 to 2023, single parents with dependents consistently had the highest financial stress among family types.
| Year | Couple without dependents | Couple with dependents | Lone person | Single parent with dependents |
|---|---|---|---|---|
| 2001 | 10.21 | 14.86 | 19.59 | 41.31 |
| 2002 | 9.22 | 12.63 | 19.52 | 34.48 |
| 2003 | 8.94 | 12.21 | 19.18 | 30.48 |
| 2004 | 6.78 | 11.28 | 18.52 | 28.4 |
| 2005 | 7.24 | 12.1 | 17.78 | 28.91 |
| 2006 | 5.62 | 11.01 | 15.49 | 22.69 |
| 2007 | 8.66 | 11.1 | 14.67 | 27.15 |
| 2008 | 6.09 | 9.54 | 14.4 | 22.74 |
| 2009 | 6.81 | 10.76 | 13.23 | 24.45 |
| 2010 | ||||
| 2011 | 8.32 | 12.35 | 16.04 | 28.76 |
| 2012 | 7.53 | 12.46 | 15.52 | 30.79 |
| 2013 | 6.16 | 10.48 | 15.21 | 26.78 |
| 2014 | 6.12 | 11.88 | 15.57 | 24.13 |
| 2015 | 6.49 | 10.79 | 15.98 | 30.15 |
| 2016 | 6.82 | 9.64 | 16.2 | 25.89 |
| 2017 | 5.5 | 9.68 | 15.09 | 24.77 |
| 2018 | 7.29 | 9.41 | 14.31 | 27.89 |
| 2019 | 6.73 | 10.22 | 15.78 | 26.45 |
| 2020 | 6.05 | 10.55 | 14.84 | 25.52 |
| 2021 | 7.36 | 9.28 | 14.45 | 26.6 |
| 2022 | 7.42 | 9.04 | 12.82 | 25.69 |
| 2023 | 8.37 | 10.3 | 15.88 | 29.48 |
Note: Reported proportions are estimates subject to non-response and sampling error. See technical notes for more information.
Source: Household, Income and Labour Dynamics in Australia (HILDA) Survey, waves 1-9 and 11-23. Questions about financial stress were not included in the wave 10 survey in 2010.
People who were unemployed consistently reported significantly higher levels of financial stress compared with employed people. Unemployed people had particularly high levels of financial stress in the early 2000s, reaching a peak of 40% in 2002. During the COVID-19 pandemic, financial stress among unemployed people rose sharply to 32% in 2021, before declining to 23% in 2022. This reduction likely reflects the impact of government support measures introduced in 2020, including the JobKeeper and JobSeeker programs, as well as increases to income support payments in 2021. However, since 2022 rising cost-of-living pressures have contributed to another increase, with financial stress among unemployed people returning to 30% in 2023. By contrast, employed people reported substantially lower levels of financial stress, at 12% in 2023.
Family type is another important factor associated with financial stress. People who live alone or those with dependents consistently reported higher levels of financial stress. In 2023, single mothers living with dependent children recorded the highest levels (31%), followed by single fathers with dependent children (25%). People living alone were also more likely to experience financial stress than couples, with single men (17%) reporting slightly higher levels than single women (14%). All these groups experienced sharp increases in financial stress after 2022.
Couples, with and without dependents, experienced financial stress at lower levels and were relatively more stable. In 2023, only 10% couples with dependents and 8% couples without dependents experienced financial stress. Couples without dependents are more likely to be older, for example over 65 years, and generally older people were less likely to experience financial stress.
From 2001 to 2023, people with parenting responsibilities consistently reported significantly higher levels of financial stress (16% in 2023) compared to those without such responsibilities (11% in 2023). Notable peaks occurred around 2011 and rose sharply between 2022 and 2023. Similarly, people caring for others who were disabled or elderly were slightly more likely to experience financial stress, which rose sharply from 15% in 2022 to 19% in 2023, while those without caring responsibilities rose from 10% in 2022 to 12% in 2023.
Financial stress levels varied significantly across housing status groups. Renters consistently reported the highest levels of financial stress, while people who owned their homes consistently reported the lowest levels and relatively stable over time. The rise in interest rates since 2022 appears to have had a relatively limited impact on homeowners (only 7% in 2022 and 2023). In contrast, financial stress increased notably among renters, rising from 21% in 2022 to 25% in 2023. These trends highlight the heightened vulnerability of non-homeowners to economic pressures.
Income and education levels are also associated with financial stress. Financial stress consistently followed a clear gradient across income quintiles, with people in the lowest quintile reporting the highest levels (19% in 2023), while those in the highest quintile reported the lowest (5% in 2023). Educational attainment showed a similar pattern: people with a bachelor’s degree or higher consistently reported the lowest levels of financial stress (8% in 2023) compared to people with other post-school qualifications (16% in 2023).
To view comprehensive visualisations and detailed data on demographic and socioeconomic groups, open Figure FS.1: Financial stress by demographic and socioeconomic factors, 2001-2023 using the link below.
FS.1: Financial stress by demographic and socioeconomic factors, 2001-2023
Geography
Where people live is associated with financial stress levels, with higher stress reported in Tasmania, Inner Regional and Outer Regional areas (remoteness), and more disadvantaged communities (SEIFA).
People living in the state of Tasmania (16% in 2023) experienced slightly higher levels of financial stress than people living in other states. People living in the Australian Capital Territory and Northern Territory were excluded from this analysis due to smaller sample sizes leading to sampling error.
Financial stress was also more prevalent among people residing in more disadvantaged areas, as measured by SEIFA deciles. In 2023, 25% of people in the most disadvantaged decile reported financial stress, compared to just 6% in the most advantaged decile.
In terms of remoteness, financial stress has been slightly higher among people living in Inner Regional and Outer Regional areas compared to those in Major Cities. For example, in 2023, reported rates were 13% in Inner Regional areas and 16% in Outer Regional areas, compared to 12% in Major Cities. People living in Remote or Very Remote areas were excluded from this analysis due to smaller sample sizes leading to sampling error.
Financial stress and mental health in Australia
There is a well-established two-way relationship between financial stress and mental health. Financial stress can contribute to increased anxiety, depression, and psychological distress, while mental health challenges can reduce a person’s ability to work, manage finances, or seek support, increasing their risk of financial instability (Richardson et al. 2013; Sweet et al. 2013; Guan et al. 2022). Two key theories help explain this relationship. Social causation theory suggests that financial hardship can trigger or exacerbate mental health issues, particularly in contexts of economic uncertainty, material deprivation, and limited social support, effects that are especially pronounced among low-income or disadvantaged populations. In contrast, social selection theory posits that people with pre-existing mental health conditions, particularly severe disorders such as schizophrenia, are more likely to experience financial disadvantage due to reduced productivity, increased health-care needs, and stigma (Guan et al. 2022).
Mental health among financially stressed Australians
Between 2001 and 2023, mental health concerns increased across the population, with a notably sharper rise among people experiencing financial stress. People experiencing financial stress are significantly more likely to experience high or very high psychological distress, poor mental health, and to have been diagnosed with depression or anxiety (for more information about these terms used in this study, see the Technical notes).
By 2023, nearly 55% of financially stressed people reported high or very high levels of psychological distress, approximately 2.6 times the rate among those not under financial stress. Additionally, financially stressed people were 2.5 times more likely to report poor mental health, with a prevalence of 40% compared to 16% for the non-financially stressed (Figure 3). In 2021, 36% of financially stressed people reported a diagnosis of depression or anxiety, compared to 16% of those not experiencing financial stress.
Poor mental health is particularly prevalent among certain groups, including unemployed people, single parents, and renters. In 2023, nearly 56% of unemployed people, 45% of single parents with dependents, and 47% of renters experiencing financial stress reported poor mental health. Unemployment often leads to financial stress, loss of daily structure, and social isolation, factors that significantly contribute to poor mental health (Virgolino et al. 2022). Single parents with dependents may face limited employment opportunities while managing caregiving responsibilities alone, intensifying both emotional and financial strain (Stack and Meredith 2018). Renters, meanwhile, may experience housing insecurity and a lack of control over their living conditions, further exacerbating mental health challenges (Wood et al. 2023).
Figure 3: Prevalence of poor mental health by financial stress status, 2001-2023
Line graph showing that from 2001 to 2023, poor mental health was consistently more common among people with financial stress.
| Year | Financial stress | No financial stress |
|---|---|---|
| 2001 | 28.77 | 11.34 |
| 2002 | 26.49 | 11.63 |
| 2003 | 27.9 | 11.09 |
| 2004 | 32.3 | 12.32 |
| 2005 | 31.15 | 12.03 |
| 2006 | 32.65 | 11.72 |
| 2007 | 30.97 | 10.79 |
| 2008 | 30.26 | 10.77 |
| 2009 | 31.64 | 11.15 |
| 2010 | ||
| 2011 | 26.08 | 10.42 |
| 2012 | 28.63 | 11.11 |
| 2013 | 30.46 | 11.66 |
| 2014 | 32.64 | 12.07 |
| 2015 | 33.85 | 12.42 |
| 2016 | 32.7 | 13.19 |
| 2017 | 33.82 | 13.37 |
| 2018 | 32.02 | 14.08 |
| 2019 | 37.5 | 13.97 |
| 2020 | 38.55 | 16.64 |
| 2021 | 39.65 | 17.52 |
| 2022 | 42.87 | 16.75 |
| 2023 | 40.38 | 15.91 |
Note: Reported proportions are estimates subject to non-response and sampling error. See technical notes for more information.
Source: Household, Income and Labour Dynamics in Australia (HILDA) Survey, waves 1-9 and 11-23. Questions about financial stress were not included in the wave 10 survey in 2010.
People experiencing financial stress consistently report higher levels of psychological distress compared to those not under financial stress. Overall, the proportion of people reporting high or very high psychological distress has steadily increased over time. Among those not experiencing financial stress, the rate rose from 13% in 2007 to 21% in 2023. In contrast, among financially stressed people, the proportion increased from 36% to 55% over the same period. By 2023, people experiencing financial stress were 2.6 times more likely to report high or very high psychological distress than those not experiencing financial stress.
In 2023, people experiencing financial stress are 2.5 times more likely to report poor mental health compared to those not experiencing financial stress (Figure 3). According to the SF-36 Mental Health scale, the proportion of Australians reporting poor mental health averaged 15% between 2001 and 2023. This figure rose from 12% in 2011 to 20% in 2021, before slightly declining to 19% in 2023; still higher than levels seen before the COVID-19 pandemic. Among those experiencing financial stress, an average of 33% reported poor mental health over the same period. This proportion increased from 26% in 2011 to 43% in 2022, with a slight decrease to 40% in 2023.
Single parents with dependents and people living alone who experience financial stress are more likely to report poor mental health compared to those in couple households. This disparity has become more pronounced in recent years. In 2022, a peak of 57% of single parents with dependents experiencing financial stress also reported poor mental health, significantly higher than the rates observed among couples with dependents (32%), couples without dependents (38%), and people living alone (46%). While the proportion of financially stressed single parents reporting poor mental health declined to 45% in 2023, matching the rate among people living alone, it remained significantly higher than the rates observed among couple families with dependents (34%) and without dependents (36%).
People who were unemployed and experiencing financial stress were more likely to report poor mental health. This peaked in 2022, with 58% of unemployed people under financial stress reporting poor mental health, and only slightly improved to 56% in 2023.
Although people not in the labour force, such as retirees, students, or those unable to work, were less likely to report financial stress (13% in 2023 compared to 30% among unemployed people), those who did experience financial stress also reported high levels of poor mental health. Among this group, the proportion peaked at 50% in 2022 and declined slightly to 48% in 2023. In contrast, people not in the labour force who were not financially stressed reported poor mental health at levels similar to employed people who were also not financially stressed.
Renters experiencing financial stress were more likely to report poor mental health compared with homeowners. The proportion of financially stressed renters reporting poor mental health increased significantly from 32% in 2016 to 49% in 2022, before slightly declining to 47% in 2023. This rate is notably higher than that of homeowners experiencing financial stress, whose poor mental health prevalence was around 33% in 2023. While homeowners may face high mortgage repayments, home ownership can provide a sense of stability, control, and long-term security. As a result, the rate of poor mental health among financially stressed homeowners remains lower than the general financially stressed population. In contrast, renters often face added insecurity and instability, such as the risk of eviction, limited control over housing conditions, and frequent relocations (Wood et al. 2023), which can intensify the psychological burden of financial stress.
Information on depression and anxiety was collected in the HILDA Survey in 2009, 2013, 2017, and 2021. This question was only asked of respondents who had previously indicated that they had been diagnosed with a serious illness.
People experiencing financial stress are two to three times more likely to report a diagnosis of depression or anxiety compared to those not under financial stress. Across the broader population, the proportion of people reporting a diagnosis of depression or anxiety increased from 10% in 2009 to 18% in 2021. Among those experiencing financial stress, this proportion was significantly higher, rising from 23% in 2009 to 36% in 2021.
How health influences financial stress?
Physical and mental health significantly influence people's ability to cope with financial pressures, manage finances, and seek support; factors that can heighten vulnerability to financial stress (Guan et al., 2022). In 2023, 24% of peoples reporting poor general health also experienced financial stress. The association was even stronger for mental health, with 27% of those reporting poor mental health (Figure 4) or high to very high psychological distress experiencing financial stress.
Figure 4: Proportion of people experiencing financial stress by mental health status, 2001-2023
Line graph showing that from 2001 to 2023, financial stress was consistently more common among people with poor mental health than those with good mental health.
| Year | Good mental health | Poor mental health |
|---|---|---|
| 2001 | 13.8 | 33.58 |
| 2002 | 11.87 | 26.95 |
| 2003 | 11.25 | 28.23 |
| 2004 | 9.41 | 26.08 |
| 2005 | 9.92 | 26.69 |
| 2006 | 8.31 | 24.87 |
| 2007 | 9.37 | 27.71 |
| 2008 | 7.85 | 23.46 |
| 2009 | 8.71 | 26.03 |
| 2010 | ||
| 2011 | 10.85 | 26.95 |
| 2012 | 10.07 | 26.42 |
| 2013 | 8.91 | 24.51 |
| 2014 | 9.14 | 26.21 |
| 2015 | 8.89 | 26.04 |
| 2016 | 8.9 | 23.81 |
| 2017 | 8.06 | 22.5 |
| 2018 | 9.09 | 22.33 |
| 2019 | 8.3 | 25.08 |
| 2020 | 8.26 | 22.06 |
| 2021 | 8.09 | 21.39 |
| 2022 | 7.51 | 23.23 |
| 2023 | 9.21 | 26.64 |
Note: Reported proportions are estimates subject to non-response and sampling error. See technical notes for more information.
Source: Household, Income and Labour Dynamics in Australia (HILDA) Survey, waves 1-9 and 11-23. Questions about financial stress were not included in the wave 10 survey in 2010.
People with long-term health conditions, particularly mental health conditions, were more likely to experience financial stress. In 2023, 32% of people with a long-term mental health condition reported financial stress, more than double the rate among those with other long-term health conditions and triple the rate among those without any long-term condition (Figure 5). The impact was even more pronounced when combined with other factors, such as caregiving responsibilities. For example, 45% of people with both parenting responsibilities and a long-term mental health condition reported financial stress in 2023, significantly higher than those without caregiving duties.
Figure 5: Proportion of people experiencing financial stress by long term health condition status, 2001-2023
Line graph showing that from 2001 to 2023, financial stress was highest among people with mental health conditions, compared to other health groups.
| Year | Has other long term health condition | Has a long term mental health condition | Does not have a long term health condition |
|---|---|---|---|
| 2001 | 20.75 | 15.34 | |
| 2002 | 18.75 | 12.54 | |
| 2003 | 16.88 | 31.6 | 11.79 |
| 2004 | 14.74 | 32.22 | 10.11 |
| 2005 | 13.15 | 33.17 | 11.08 |
| 2006 | 11.55 | 30.81 | 9.36 |
| 2007 | 13.29 | 26.13 | 10.5 |
| 2008 | 12.25 | 24.72 | 8.46 |
| 2009 | 11.2 | 28.67 | 9.86 |
| 2010 | |||
| 2011 | 15.47 | 31.4 | 11.02 |
| 2012 | 14.75 | 28.3 | 10.64 |
| 2013 | 13.73 | 30.93 | 8.78 |
| 2014 | 14.58 | 33.76 | 9.23 |
| 2015 | 13.74 | 28.99 | 9.47 |
| 2016 | 12.93 | 28.76 | 9.45 |
| 2017 | 12.37 | 29.2 | 8.27 |
| 2018 | 14.08 | 30 | 8.71 |
| 2019 | 12.25 | 29.12 | 9.22 |
| 2020 | 12.42 | 29.51 | 8.73 |
| 2021 | 12.01 | 27.68 | 8.82 |
| 2022 | 11.81 | 29.45 | 8.17 |
| 2023 | 14.47 | 32.2 | 10.16 |
Note: Reported proportions are estimates subject to non-response and sampling error. See technical notes for more information.
Source: Household, Income and Labour Dynamics in Australia (HILDA) Survey, waves 1-9 and 11-23. Questions about financial stress were not included in the wave 10 survey in 2010. Questions about long term mental health conditions were only included from 2003.
Mental health shows a slightly stronger association with financial stress than general health. In 2023, 24% of people who rated their general health as poor reported financial stress, more than twice the rate of those with good general health (11%) (Figure 4). The link is even more pronounced for mental health: 27% of people with poor mental health or high or very high psychological distress reported financial stress, compared to just 8-9% among those with good mental health or low or moderate psychological distress.
Long-term health conditions can significantly affect a person's ability to cope with financial pressures, especially long-term mental health conditions. In 2023, 32% of people with a long-term mental health condition reported financial stress, three times the rate of those without any long-term condition (10%) (Figure 5). Those with other long-term health conditions reported a rate of 14%. These findings highlight the particularly strong impact of mental health conditions on financial wellbeing.
Males and females with long term mental health conditions follow similar trends over time in the proportions experiencing financial stress.
People with parenting responsibilities and a long-term mental health condition experience significantly higher levels of financial stress compared to those without parenting responsibilities. In 2023, 45% of people with both parenting responsibilities and a long-term mental health condition reported financial stress, compared with 29% of those who had a long-term mental health condition but no parenting responsibilities. This suggests that the added demands of parenting may further intensify the financial pressures faced by people managing long-term mental health challenges.
To view comprehensive visualisations and detailed data on financial stress and mental health, open Figure FS.2: Interaction of financial stress and mental health, 2001-2023 using the link below.
FS.2: Interaction of financial stress and mental health, 2001-2023
Parenting under pressure and child wellbeing
Single parent with dependents
Single-parent families are among the most disadvantaged demographic groups, disproportionately affected by financial stress and poor mental health outcomes. Female parents head approximately 85% of single-parent families (Laß et al. 2025). Single parents often face limited capacity for paid employment while carrying greater caregiving responsibilities, leading to higher expense-to-income ratios (Stack and Meredith 2018). This financial strain can prevent access to essential goods and services, such as timely medical care, adequate clothing, secure housing, and opportunities for social participation.
The pressures of sole caregiving also mean that single parents may lack emotional and practical support, increasing their vulnerability to stress and social isolation. Those who are employed often encounter workplace discrimination, with single mothers in particular facing a “dual disadvantage” of gender- and family-based bias. This group consistently reports higher rates of financial stress, greater reliance on social security payments, and increased risk of poor mental health (Marinos 2025).
Mental health outcomes among single parents are significantly worse than those of partnered parents, with single mothers especially at risk. The combination of financial stress, limited leisure time, heavy caregiving demands, and workplace inequality contributes to elevated levels of psychological distress.
Couples with dependent children
Couples with dependent children may experience considerable financial stress, with childcare costs placing a disproportionate burden on household budgets. This financial pressure is also strongly associated with poorer relationship outcomes, including reduced satisfaction, weaker coparental interaction and support, and increased partner conflict, underscoring its sustained impact on family wellbeing (Abbasi Shavazi et al. 2025).
Financial stress during childhood
Financial stress during childhood has been strongly linked to poorer mental health outcomes in adulthood, particularly depression. Evidence from cross-sectional data across 19 European countries shows that adults aged 25-40 who experienced financial strain as children had significantly higher depression scores (Bøe et al. 2017). Longitudinal evidence from a nationally representative study in South Korea similarly found that childhood financial difficulties increased the likelihood of developing depression later in life (Kim et al. 2016). While the influence of childhood financial stress on adult depression was weaker than that of current financial stress, its enduring consequences underscore the need for targeted family support and early intervention policies (Guan et al. 2022).
Conclusion
This report highlights the complex and reciprocal relationship between financial stress and mental health in Australia, particularly in the context of recent economic disruptions such as the COVID-19 pandemic and rising cost-of-living pressures. Drawing on longitudinal data from the HILDA Survey, the analysis shows that financial stress is not evenly distributed across the population. It disproportionately affects unemployed people, single parents, and renters, groups that also report significantly poorer mental health outcomes.
Financial stress is both a cause and consequence of mental health challenges. People experiencing financial stress are more likely to report high psychological distress, poor mental health, and diagnoses of depression or anxiety. At the same time, poor mental health, especially long-term mental health conditions, can reduce a person’s ability to manage financial responsibilities, maintain employment, or seek support, further deepening financial vulnerability. Long-term health conditions also significantly affect a person's ability to manage financial pressures, particularly long-term mental health conditions.
These challenges are intensified by intersecting factors such as employment status, family type, caregiving responsibilities, housing status, and geographic location. The data reveal that financial stress and mental health difficulties often co-occur in ways that reflect broader patterns of social and economic disadvantage.
Future direction
Financial stress not only directly affects people’s mental health but also influences their treatment seeking behaviours. Rising costs of mental health services are leading many Australians to delay or avoid seeking care, which may be contributing to the closure of psychology clinics and worsening their mental health issues (Dalzell 2025). Future research will explore how financial stress affects patterns of service utilisation and access to care.
To enhance the evidence base, future analyses will integrate national datasets such as the General Social Survey (GSS) with HILDA Survey data to provide richer cross-survey insights into the relationship between financial stress and mental health. Additionally, advanced statistical techniques, including regression modelling and life-course analysis, will be employed to better understand the delayed and cumulative effects of financial stress over time.
Where can I find more information?
You may also be interested in:
- Australia's mental health system
- Mental health services
- Prevalence and impact of mental illness
- Mental health treatment use
Financial stress can trigger or worsen mental health conditions for some people. If you’re feeling overwhelmed, anxious, or depressed about your situation, it’s important to seek support early to reduce the risk of more serious mental health impacts. The following services offer free and confidential support:
- Beyond Blue: Support for anxiety, depression, and mental wellbeing. Call 1300 224 636 or chat online.
- Black Dog Institute: Educational resources and support for mood disorders and mental health.
- Headspace: Mental health support for young people aged 12-25. Call 1800 650 890 or chat online.
- Lifeline: Crisis support and suicide prevention services. Call 13 11 14 or chat online
- Suicide Call Back Service: Support for people at risk of suicide or affected by suicide. Call 1300 659 467 or chat online.
- Kids Helpline: Free, confidential support for children and young people aged 5-25. Call 1800 551 800 or chat online.
- MensLine Australia: Free telephone and online counselling for Australian men, available anytime. Call 1300 78 99 78 or chat online
- ReachOut Australia: Online articles, forums, self-help tools, and peer support.
If you're experiencing financial stress due to changes in employment or income, the following resource may help:
Services Australia: Getting a Payment When Your Employment Ends
The Household, Income and Labour Dynamics in Australia Survey
Data reported in this section are sourced from the Household Income & Labour Dynamics in Australia (HILDA) Survey. The HILDA Survey is a household-based panel study that collects yearly information about economic and personal wellbeing, labour market dynamics and family life. This survey was first collected in 2001. Information collected includes family relationships, income and employment, and health and education. The HILDA Survey follows the lives of more than 17,000 Australians each year, aiming to tell the stories of the same group of Australians over the course of their lives (Melbourne Institute 2025).
Refer to the HILDA Survey website for more information.
Reported years
This report draws on HILDA Survey data from 2001 to 2023. While the survey has been conducted annually since 2001, not all questions were asked every year. The measures listed below were collected only in the specified years, while other indicators, such as general health status and mental health status, were collected annually:
- Financial stress: Not available for the year 2010.
- Psychological distress (K10 scale): Collected in 2007, 2009, 2011, 2013, 2015, 2017, 2019, 2021, and 2023.
- Long-term mental health condition: Collected annually from 2003 onwards.
- Diagnosed with depression or anxiety: Collected in 2009, 2013, 2017, and 2021.
Remoteness areas
It is important to note that while very remote areas of Australia were not included in the initial sampling process for HILDA, the data includes people who moved there in subsequent years.
Family type
In this report, people are classified by family type rather than household type. While these classifications often align, they diverge in cases where households include people who are not part of the same nuclear family, or when non-dependent children reside with their parents.
To be classified as having dependent children, the child must reside with the parent or guardian for at least 50% of the time. In cases where children live equally (50/50) across both parents’ households, they are allocated to the mother’s household for classification purposes. As a result, people whose dependent children reside with them less than 50% of the time are not classified as having resident dependent children.
The classification of family types does not differentiate single-parent families by the gender of the parent. As around 85% of single-parent families are headed by female parents, the sample size for male single-parent families is typically too small to support statistically reliable separate analysis. To ensure inclusivity and maintain analytical robustness, male single-parent families are grouped together with female single-parent families in most of the analyses.
General Health status and mental Health status
This report uses the SF-36 measures of general health and mental health derived from the HILDA Survey. The SF-36 Health Survey is a 36-item questionnaire designed to capture health outcomes from the patient’s perspective. Within HILDA, it is administered as part of the Self-Completion Questionnaire.
Scores for both general and mental health range from 0 to 100, with higher scores indicating better health status. Consistent with the HILDA Statistical Report (Laß et al. 2025), this report adopts the following thresholds:
- Poor general health: Score ≤37, representing approximately 10-15% of the population across HILDA survey waves.
- Poor mental health: Score ≤52, also corresponding to roughly 10-15% of the population over the survey period.
The 52-point threshold for mental health has also been applied in previous studies, supporting its use in this context (Roy & Schurer 2013; Botha et al. 2023).
Psychological distress
Psychological distress in this report is measured using the Kessler 10 (K10) scale, a widely used self-report tool that assesses symptoms of anxiety and depression. The K10 has been included in the HILDA Survey every two years since 2007. Psychological distress levels are classified according to the total score as follows (ABS 2001):
- Low or moderate: 10-21
- High or very high: 22-50
Diagnosed with depression or anxiety
Depression and anxiety data were collected in the HILDA Survey in 2009, 2013, 2017, and 2021. In these years, respondents were asked whether they had been diagnosed with depression or anxiety, but only if they had first indicated that they had been diagnosed with a serious illness lasting, or expected to last, six months or more.
Respondents who met both conditions, reporting a serious illness and specifying depression or anxiety, were classified as “diagnosed with depression and/or anxiety.”.
Weights
All estimates from our analysis presented in this report use weighted data. The HILDA data uses weights to make inferences about the Australian population from a sample. Weighted data represents the population's demographic characteristics by aligning the estimates with known external population benchmarks (Watson 2012). The benchmarks used in the weighting process for state, part of state/territory, sex and age come from the Estimated Residential Population figures produced by the ABS based on the Census, updated for births, deaths, immigration, emigration and interstate migration. The person benchmarks for labour force status and marital status come from the ABS Labour Force Survey. These benchmarks may change from release to release (Watson 2012). This process allows one to use survey responses to estimate population proportions.
Relative standard error
Relative Standard Error (RSE) is used to assess the reliability of estimates derived from HILDA Survey data. Estimates with an RSE between 25% and 50% are considered to have a high level of sampling error and should be interpreted with caution. Estimates with an RSE of 50% or more are regarded as subject to very high sampling error and are considered too unreliable for general use; such estimates should either not be published or clearly flagged as unreliable.
All values presented in this report fall within acceptable RSE thresholds, defined as less than 25%.
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