The impact of the cost of living crisis on youth mental health has been laid bare in a new report showing more than half (55 per cent) of Australians aged 15-19 are concerned about financial security.

The report, led by Orygen researchers and drawing on responses from almost 20,000 people aged 15-19 to the 2023 Mission Australia Youth Survey, shows the proportion of young people who identify ‘the economy and financial matters’ as one of the most important issues facing Australia has almost tripled in two years (from 11 per cent to 31 per cent).

Lead author and Senior Research Fellow at Orygen, Dr Kate Filia, said it was particularly concerning that almost one in five young Australians experienced financial hardships in the past year, given the strong links to poor social outcomes such mental ill-health, housing instability and education challenges.

“We found that 17 per cent of young people experienced financial hardships – and that’s really serious things like not being able to pay bills or rent, going without meals, not being able to pay for school expenses or needing to seek support from a charity,” Dr Filia said.

“We know the cost of living crisis is impacting many people across Australia – and we’re seeing this play out in the challenges young people face and how they feel about their future prospects.

“We also found that when young people reported experiencing financial hardships or concerns about financial security, they also reported worse mental health and wellbeing.”

The report found that twice as many young people who reported financial hardships or financial security concerns reported living with mental health conditions, compared to those who did not report these hardships or concerns.

Dr Filia said that financial stress could also exacerbate mental health issues, creating a vicious cycle where poor mental health made it harder for young people to take up educational and employment opportunities, limiting their ability to achieve financial stability.

“We know adolescence is a critical time for laying the foundations of future success, and that financial stress among young people impacts mental health, relationships, and physical health,” Dr Filia said.

“We’re seeing young people trying to transition to financial independence at a time of increasing financial inequality, low wages, insecure work and housing unaffordability – it’s really tough to navigate this transition if you’re struggling to balance work and study, or don’t have a stable place to live.”

The report found that 50 per cent of those who experienced concerns about both financial security and financial hardship reported unstable housing, which includes having no fixed address, having to stay away from home due to safety concerns or spending time in transitional accommodation.

Mission Australia Executive of Practice, Evidence and Impact, Marion Bennett, expressed deep concern about the financial distress faced by young people and its profound impact on their lives.

“Financial struggles can deeply affect a young person’s chances of getting a good start in life and can often push them into poverty and homelessness,” Bennett said.

“These challenges make it hard for young people to fully engage in school and work and can also strain their social connections and sense of belonging. This often leads to feelings of hopelessness and a growing disconnect from educational and job opportunities, which only deepens their disadvantage and struggles.

“With the current housing emergency and rising living costs, finding a stable and affordable home is becoming increasingly difficult for young people. This only adds to their financial and mental health challenges,” she said.

“By increasing youth housing options, such as youth-specific social housing and Youth Foyers, we can offer these young people a safe and supportive environment which is crucial for helping them build a brighter, more hopeful future.”

The report also found that poorer mental health outcomes were reported by young women and young people from typically marginalised groups including those identifying as gender diverse, Indigenous, culturally or linguistically diverse, or those living with disabilities. The authors noted that systemic and social pressures and/or discrimination could also potentially exacerbate financial hardships and limit young people's future economic mobility.

The report recommended a raft of measures to combat increasing financial stress and hardship faced by young people, including developing a social transition passport, better education around financial literacy and more housing options that young people can afford.

Key recommendations:

  • A social transition passport: a co-designed app helping young people navigate financial requirements and available support.
  • Increased financial support to reduce experiences of financial hardship. This includes increased rates of JobSeeker, Youth Allowance, and Commonwealth Rent Assistance.
  • More housing options for young people, including dedicated youth-specific social housing and Youth Foyers. Young people need a range of safe, secure, affordable housing options with age-appropriate support services connected to them.
  • Improved educational pathways, as educational attainment is an important predictor of future employment, welfare and health outcomes.
  • Participation in community activities, which provides young people with opportunities for social engagement that benefit their wellbeing and provides contact points with young people for support services.
  • Connection to sources of support, including evidence-based, age-appropriate sources of online support and information for young people.

COUNTING THE COST OF LIVING — THE IMPACT OF FINANCIAL STRESS ON YOUNG PEOPLE REPORT

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