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Household finance and behavioural economics have relatively bridged the intricate relationship between household debt and financial sustainability. Most existing studies link household debt and financial management by combining the ability of households to meet current spending needs without compromising future disposable income. The study's domain, mostly included under the theme of financial literacy, focuses on household debt management at the micro level through external assistance such as credit facilities from private or government institutions. The data were derived from scholarly works indexed in Scopus, Web of Science (WoS) and ScienceDirect databases. Using the keywords “household debt” and “financial sustainability,” an advanced search strategy was employed, guided by the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) framework. The review process identified 40 relevant studies that met the inclusion criteria. Thematic analysis of the literature led to the development of three key discussion themes to (a) Household Debt, Financial vulnerability, and Well-being, (b) Macroprudential, Monetary, and Regulatory policy, and (c) Household debt, Growth, Inequality, and Structural impacts. Collectively, the findings discover that while household debt can stimulate short-term economic activity, its sustainability depends heavily on institutional quality, regulatory oversight, and socioeconomic structures. This review offers valuable insights for researchers, financial institutions, and policymakers alike to design informed strategies that balance household credit expansion with long-term financial sustainability.
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