Mind Over Money: The Hidden Influence of Mental Health on Debt Management

Panel A: Alternative Debt Classifications (Logit)

	Short-term Debt	Long-term Debt

Poor Mental Health	−0.0312^** (0.043)	−0.1501^* (0.051)

Controls	YES	YES
Observations	1333	1333
McFadden pseudo R²	0.1101	0.2035

Panel B: Alternative Models – Excluding Age (Probit)

	BNPL	Credit Card	Personal Loan	Mortgage

Poor Mental Health	−0.0132^** (0.024)	−0.0582^** (0.041)	−0.0612^** (0.022)	−0.1051^** (0.020)

Controls	YES	YES	YES	YES
Observations	1333	1333	1333	1333
McFadden pseudo R²	0.1245	0.1843	0.0784	0.1999

Panel C: Alternative Models – Excluding Income (Probit)

	BNPL	Credit Card	Personal Loan	Mortgage

Poor Mental Health	−0.0169^** (0.024)	−0.1002^* (0.069)	−0.0759^*** (0.008)	−0.1815^* (0.093)

Controls	YES	YES	YES	YES
Observations	1333	1333	1333	1333
McFadden pseudo R²	0.1244	0.1411	0.0698	0.1264

Probit Regression Results for the Likelihood of Holding Debt

	BNPL	Credit Card	Personal Loan	Mortgage
Poor Mental Health	−0.0176 (0.04)	−0.0583 (0.048)	−0.0686^* (0.04)	−0.1202^** (0.049)
Female	0.0869^*** (0.021)	0.0093 (0.023)	0.0209 (0.019)	0.0157 (0.023)
Region (Ref: Auckland)
Northland	−0.0062 (0.052)	−0.1420^** (0.065)	0.054 (0.057)	−0.039 (0.059)
Waikato	0.0038 (0.04)	−0.0661 (0.046)	−0.0255 (0.031)	−0.0157 (0.044)
Bay of Plenty	0.0984^* (0.052)	−0.0323 (0.049)	0.0614 (0.042)	−0.0235 (0.05)
Wellington	−0.0023 (0.036)	−0.051 (0.042)	0.021 (0.031)	0.0358 (0.039)
Other North Island	0.0880^** (0.038)	−0.1051^*** (0.04)	0.0703^** (0.034)	0.0623 (0.04)
Canterbury	−0.0003 (0.033)	−0.0047 (0.038)	0.0546^* (0.032)	0.1288^*** (0.038)
Otago	0.0082 (0.051)	−0.0525 (0.058)	0.0319 (0.043)	0.0577 (0.055)
Other South Island	−0.0357 (0.04)	0.0095 (0.049)	0.0629 (0.042)	0.0676 (0.049)
Education (Ref: Lower Secondary and below)
Upper Secondary	−0.0509 (0.041)	−0.0083 (0.048)	−0.0443 (0.036)	−0.0192 (0.048)
Vocational education	0.0526 (0.038)	0.0361 (0.04)	0.0072 (0.033)	0.0186 (0.041)
Undergraduate and Postgraduate	−0.0457 (0.035)	0.1096^*** (0.038)	−0.0107 (0.031)	0.0217 (0.039)
Income (Ref: Low Income)
Middle Income($60k–$100k)	0.0032 (0.027)	0.1950^*** (0.031)	0.0570^** (0.023)	0.2079^*** (0.029)
High Income($100k+)	−0.0041 (0.026)	0.2565^*** (0.03)	0.0679^*** (0.023)	0.3382^*** (0.03)
Age (Ref: 18–24)
25 – 34	−0.0013 (0.05)	0.1564^*** (0.05)	0.021 (0.039)	0.1401^*** (0.043)
35 – 49	−0.0746 (0.048)	0.3477^*** (0.048)	0.0827^** (0.039)	0.3305^*** (0.043)
50 – 64	−0.1952^*** (0.047)	0.4123^*** (0.049)	−0.0248 (0.037)	0.2888^*** (0.044)
65+	−0.2908^*** (0.045)	0.5805^*** (0.047)	−0.0967^*** (0.035)	0.0157 (0.043)
Race (Ref: New Zealand European)
Maori	0.0647^* (0.037)	−0.0534 (0.04)	0.0525 (0.034)	−0.0419 (0.038)
Pacific Peoples	0.0431 (0.061)	−0.1882^** (0.086)	0.0577 (0.063)	−0.1787^*** (0.059)
Asian	−0.014 (0.038)	0.0179 (0.047)	−0.0285 (0.031)	−0.1312^*** (0.04)
Indian	0.1082^* (0.063)	−0.053 (0.069)	−0.0269 (0.045)	−0.1029^* (0.061)
Other	−0.1489^*** (0.046)	−0.2036^** (0.091)	−0.0633 (0.053)	−0.0246 (0.093)
Illness preventing work for 2+ months	0.0863^** (0.037)	−0.0642 (0.042)	0.0237 (0.032)	−0.0432 (0.043)
Death of partner	0.0058 (0.088)	0.0017 (0.107)	0.084 (0.07)	0.0507 (0.096)
Job loss or redundancy leading to unemployment	0.0308 (0.035)	−0.0158 (0.045)	0.0509 (0.032)	−0.0728^* (0.042)
Left work to care for family members or friends full-time	−0.0723 (0.058)	0.0576 (0.072)	0.0231 (0.047)	0.1241^* (0.065)

Observations	1333	1333	1333	1333
McFadden pseudo R²	0.1345	0.1901	0.0836	0.2074

Oaxaca Decomposition of Long-Term Debt Disparities by Mental Health Status

Panel 1: Difference in Estimates

	Coefficient

Good Mental	0.4402^*** (0.014)
Poor Mental	0.2500^*** (0.051)
Difference	0.1902^*** (0.053)

Panel 2: Explained the difference

	Coefficient	Percentage Explained

Financial Accessibility Score (0–100)	0.0868^*** (0.020)	77.22%
Formal Channel Score (0–100)	0.0021 (0.003)	1.94%
Informal Channel Score (0–100)	−0.0109^* (0.006)	−9.70%
Financial Confidence Score (0–100)	−0.0002 (0.001)	−0.18%

Total	0.1124^** (0.049)	69.29%

Observations	1333

Probit Regression Results for Debt Levels

	High Mortgage Debt
Poor Mental Health	−0.0941^* (0.052)
Female	0.0443^* (0.025)
Region (Ref: Auckland)
Northland	−0.0073 (0.066)
Waikato	−0.0473 (0.048)
Bay of Plenty	0.0146 (0.060)
Wellington	0.0174 (0.044)
Other North Island	0.0492 (0.047)
Canterbury	0.1484^*** (0.043)
Otago	−0.0000 (0.060)
Other South Island	0.1175^** (0.058)
Education (Ref: Lower Secondary and below)
Upper Secondary	0.0429 (0.054)
Vocational education	0.0655 (0.047)
Undergraduate and Postgraduate	0.1182^*** (0.045)
Income (Ref: Low Income)
Middle Income($60k–$100k)	0.2275^*** (0.033)
High Income($100k+)	0.3664^*** (0.032)
Age (Ref: 18–24)
25 – 34	0.1228^*** (0.042)
35 – 49	0.3172^*** (0.042)
50 – 64	0.2326^*** (0.042)
Race (Ref: New Zealand European)
Maori	−0.0256 (0.042)
Pacific Peoples	−0.2102^*** (0.064)
Asian	−0.1478^*** (0.044)
Indian	−0.1053 (0.067)
Other	−0.1520^** (0.076)
Illness preventing work for 2+ months	−0.0545 (0.049)
Death of partner	0.0793 (0.120)
Job loss or redundancy leading to unemployment	−0.0896^* (0.047)
Left work to care for family members or friends full-time	0.1146 (0.070)
Observations	1043
McFadden pseudo R²	0.2059

The Role of Parental Guidance

	Low Guidance Group		High Parental Guidance Group

	Personal Loan	Mortgage	Personal Loan	Mortgage
Poor Mental Health	−0.1034^** (0.050)	−0.1560^*** (0.058)	0.0126 (0.070)	0.1129 (0.094)
Female	0.0090 (0.024)	0.0513^* (0.028)	0.0188 (0.031)	−0.0686^* (0.040)
Region (Ref: Auckland)
Northland	0.1019 (0.080)	0.0247 (0.076)	0.0000 (.)	−0.1839^** (0.088)
Waikato	−0.0248 (0.042)	0.0595 (0.054)	−0.0305 (0.041)	−0.1345^* (0.074)
Bay of Plenty	0.0694 (0.057)	−0.0705 (0.060)	0.0885 (0.085)	0.0608 (0.088)
Wellington	−0.0197 (0.039)	−0.0251 (0.047)	0.0981^* (0.055)	0.1339^** (0.068)
Other North Island	0.0235 (0.041)	0.0590 (0.050)	0.1606^*** (0.062)	0.0407 (0.071)
Canterbury	0.0086 (0.038)	0.1026^** (0.047)	0.1184^** (0.055)	0.1619^** (0.066)
Otago	0.0449 (0.056)	0.0306 (0.067)	−0.0206 (0.058)	0.0960 (0.098)
Other South Island	0.0518 (0.050)	0.0498 (0.055)	0.0083 (0.083)	0.0703 (0.109)
Education (Ref: Lower Secondary and below)
Upper Secondary	−0.0723 (0.045)	−0.0220 (0.060)	0.0159 (0.060)	−0.0352 (0.085)
Vocational education	−0.0127 (0.041)	−0.0243 (0.050)	0.0539 (0.056)	0.1088 (0.076)
Undergraduate and Postgraduate	−0.0260 (0.039)	−0.0108 (0.047)	0.0472 (0.053)	0.0726 (0.072)
Income (Ref: Low Income)
Middle Income($60k–$100k)	0.0560^* (0.029)	0.2312^*** (0.035)	0.0718^* (0.038)	0.1580^*** (0.055)
High Income($100k+)	0.0534^* (0.029)	0.3332^*** (0.036)	0.0912^** (0.041)	0.3588^*** (0.058)
Age (Ref: 18–24)
25 – 34	0.0334 (0.049)	0.1316^** (0.055)	0.0298 (0.068)	0.2064^*** (0.068)
35 – 49	0.1163^** (0.049)	0.3405^*** (0.054)	0.0597 (0.069)	0.3862^*** (0.069)
50 – 64	0.0179 (0.047)	0.3090^*** (0.055)	−0.0704 (0.063)	0.2988^*** (0.070)
65+	−0.0695 (0.045)	0.0190 (0.053)	−0.1228^** (0.061)	0.0763 (0.072)
Race (Ref: New Zealand European)
Maori	0.0446 (0.041)	−0.0807^* (0.043)	0.0828 (0.063)	0.0207 (0.071)
Pacific Peoples	0.1328 (0.096)	−0.1058 (0.084)	0.0614 (0.095)	0.0000 (.)
Asian	−0.0599 (0.039)	−0.1704^*** (0.052)	0.0178 (0.048)	−0.1305^** (0.063)
Indian	−0.0969^* (0.055)	−0.0908 (0.117)	0.0118 (0.056)	−0.1542^** (0.072)
Other	−0.0055 (0.100)	−0.1106 (0.125)	0.0000 (.)	0.1156 (0.129)
Illness preventing work for 2+ months	−0.0496 (0.044)	−0.0630 (0.052)	0.1457^*** (0.047)	0.0261 (0.084)
Death of partner	−0.0636 (0.106)	0.0283 (0.146)	0.1960^*** (0.074)	0.0223 (0.116)
Job loss or redundancy leading to unemployment	0.0694^* (0.040)	−0.1030^** (0.050)	−0.0233 (0.063)	0.0249 (0.080)
Left work to care for family members or friends full-time	0.0639 (0.067)	0.1675^* (0.091)	−0.0638 (0.060)	0.0579 (0.092)

Observations	852	852	428	437
McFadden pseudo R²	0.0889	0.2323	0.179	0.2262

Descriptive Statistics

Variables	Mean	SD	Min	Med	Max
Debt Ownership

Buy Now Pay Later (BNPL)	0.20	0.40	0.00	0.00	1.00
Credit Card	0.61	0.49	0.00	1.00	1.00
Personal Loan	0.14	0.34	0.00	0.00	1.00
Mortgage	0.33	0.47	0.00	0.00	1.00
High Mortgage Debt	0.28	0.45	0.00	0.00	1.00
Long-term Debt	0.41	0.49	0.00	0.00	1.00

Mental Health

Good Mental	0.93	0.25	0.00	1.00	1.00
Poor Mental	0.07	0.25	0.00	0.00	1.00

Financial access, information, and confidence

Financial Accessibility Score (0–100)	23.88	13.18	0.00	21.43	100.00
Formal Channel Score (0–100)	11.23	13.04	0.00	11.11	100.00
Informal Channel Score (0–100)	12.99	15.07	0.00	12.50	100.00
Financial Confidence Score (0–100)	74.48	20.80	0.00	75.00	100.00
Early Parental Guidance	0.35	0.48	0.00	0.00	1.00

Demographics

Gender(%)
Male	0.48	0.50	0.00	0.00	1.00
Female	0.52	0.50	0.00	1.00	1.00
Region(%)
Auckland	0.33	0.47	0.00	0.00	1.00
Northland	0.04	0.18	0.00	0.00	1.00
Waikato	0.09	0.28	0.00	0.00	1.00
Bay of Plenty	0.06	0.24	0.00	0.00	1.00
Wellington	0.11	0.32	0.00	0.00	1.00
Other North Island	0.13	0.33	0.00	0.00	1.00
Canterbury	0.13	0.34	0.00	0.00	1.00
Otago	0.05	0.21	0.00	0.00	1.00
Other South Island	0.06	0.24	0.00	0.00	1.00
Education(%)
Lower Secondary and below	0.13	0.34	0.00	0.00	1.00
Upper Secondary	0.13	0.34	0.00	0.00	1.00
Vocational education	0.27	0.45	0.00	0.00	1.00
Undergraduate and Postgraduate	0.46	0.50	0.00	0.00	1.00
Income(%)
Low Income(<$60k)	0.38	0.49	0.00	0.00	1.00
Middle Income($60k–$100k)	0.29	0.45	0.00	0.00	1.00
High Income($100k+)	0.34	0.47	0.00	0.00	1.00
Age(%)
18 – 24	0.10	0.30	0.00	0.00	1.00
25 – 34	0.19	0.40	0.00	0.00	1.00
35 – 49	0.25	0.44	0.00	0.00	1.00
50 – 64	0.24	0.43	0.00	0.00	1.00
65+	0.20	0.40	0.00	0.00	1.00
Race(%)
New Zealand European	0.73	0.44	0.00	1.00	1.00
Maori	0.10	0.30	0.00	0.00	1.00
Pacific Peoples	0.03	0.17	0.00	0.00	1.00
Asian	0.08	0.27	0.00	0.00	1.00
Indian	0.04	0.19	0.00	0.00	1.00
Other	0.02	0.14	0.00	0.00	1.00

Socio-economic life events

Illness preventing work for 2+ months	0.08	0.27	0.00	0.00	1.00
Death of partner	0.01	0.12	0.00	0.00	1.00
Job loss or redundancy leading to unemployment	0.09	0.28	0.00	0.00	1.00
Left work to care for family member or friend full time	0.03	0.17	0.00	0.00	1.00

References

Authors

Metrics

Articles in this issue

DOI: https://doi.org/10.2478/fprj-2026-0011 | Journal eISSN: 2206-1355 | Journal ISSN: 2206-1347

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Language: English

Published on: Jul 21, 2026

Published by: Financial Advice Association of Australia

In partnership with: Paradigm Publishing Services

Publication frequency: 2 issues per year

Keywords:

BNPL,

Related subjects:

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Political economics,

Economic theory, systems and structures,

Business management,

Business management, other,

Industries,

Banks, financial service provider, insurers

© 2026 Shen Yu, Wei-Huei Hsu, Jiali Fang, published by Financial Advice Association of Australia
This work is licensed under the Creative Commons Attribution 4.0 License.

Volume 12 (2026): Issue 3 (September 2026)