The amount of money you earn can have a significant impact on your mental health, new research has shown.

Australians who have higher incomes and greater wealth are more likely to experience better mental health throughout their lives, according to a long-term quantitative study by Perth’s Bankwest Curtin Economics Centre.

Researchers examined data from the Household, Income and Labour Dynamics in Australia (HILDA) survey and found both income and wealth were associated with people’s perception of economic security and a range of mental health outcomes, but had no bearing on physical health.

Income relates to employment, business, investments and allowances, while net wealth relates to assets such as housing, superannuation and financial equities. Both influence a person’s mental health, the study found, but income plays a greater role in shaping perception of economic security.

“This is because income can be used to purchase goods and services to fund consumption on a day-to-day basis, which is more likely to affect one’s perception of economic security on a day-to-day basis,” lead author Garth Kendall from the Faculty of Health Sciences at Curtin University said.

The study adds weight to previous research showing that those with higher incomes had better health and lived longer at a population level.

While the study found that economic insecurity takes a toll on mental health, further research is needed to determine its effect on physical health, Dr Kendall said.

At a time when wealth and income inequality is increasing across the globe, policies that seek to reduce unequal access to opportunities to earn income and wealth would likely reduce the socio-economic gap in health that currently exists globally in both low and high-income countries, he said.

The federal government recently established a Productivity Commission inquiry into the role workplace mental health has on Australia’s economy.

The 18-month inquiry will examine the “true impact” of mental illness on the economy, and look at ways to improve the population’s mental health and economic participation.

Financial insecurity and debt can exacerbate a range of health conditions according to Lauren Levin, policy director at Financial Counselling Australia, which runs the National Debt Helpline.

The NDH has received more than 130,000 calls this year from Australians struggling to cope with financial pressures.

“The more debts a person has, the higher the reported mental illnesses are,” Ms Levin said.

“People in debt are almost four times as likely to have phobia disorders, three times as likely to have panic disorders, and twice as likely to have obsessive compulsive disorder or generalised anxiety disorders.”

Promoting saving is a simple way to increase basic economic security, Ms Levin said.

“Everyone should have a savings buffer. Just being able to save on a regular basis translates into positive psychological wellbeing,” she said.

“Having a savings buffer means that when there is an unexpected expense, people have some capacity to weather the financial shock.”

Economic insecurity also contributes to mental health issues among young people according to youth counselling organisation Headspace, which last week received a $52 million government funding boost.

Recent research commissioned by the organisation found that 38 per cent of young adults aged 18-21 reported high or very high levels of psychological distress.

“Entering the workforce is becoming more and more difficult, with only half of young Australians aged 25 working more than 35 hours per week,” a Headspace spokesperson said.

“Financial stress stemming from unemployment and underemployment can negatively impact a young person’s mental health.”

If you’re struggling, call Lifeline on 13 11 14 or contact the National Debt Helpline on 1800 007 007