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Understanding Financial Well-Being and Capability - A Revised Model and Comprehensive Analysis
Abstract and Figures
This is the second report of an international programme of research on financial well-being and its determinants, involving near identical surveys in Norway, Australia, New Zealand, Ireland and Canada - with other countries expressing an interest.
A series of publications is planned that presents the comparative analysis across countries.
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... Economic daily functioning is very important to human health and well-being and includes both the concepts of (i) financial capability, which is defined as the knowledge/literacy, skills, attitudes, and applied behaviors related to managing money, accessing financial resources, planning ahead financially, making financial choices, and getting financial related help (10)(11)(12) and (ii) financial well-being, which is defined as an individual's financial outcomes including their subjective feelings of financial stress and objective ability to meet current and future financial needs (11). Even without experiencing ABI, many adults experience financial capability challenges and financial well-being reductions (10)(11)(12). ...
... Economic daily functioning is very important to human health and well-being and includes both the concepts of (i) financial capability, which is defined as the knowledge/literacy, skills, attitudes, and applied behaviors related to managing money, accessing financial resources, planning ahead financially, making financial choices, and getting financial related help (10)(11)(12) and (ii) financial well-being, which is defined as an individual's financial outcomes including their subjective feelings of financial stress and objective ability to meet current and future financial needs (11). Even without experiencing ABI, many adults experience financial capability challenges and financial well-being reductions (10)(11)(12). ...
... Economic daily functioning is very important to human health and well-being and includes both the concepts of (i) financial capability, which is defined as the knowledge/literacy, skills, attitudes, and applied behaviors related to managing money, accessing financial resources, planning ahead financially, making financial choices, and getting financial related help (10)(11)(12) and (ii) financial well-being, which is defined as an individual's financial outcomes including their subjective feelings of financial stress and objective ability to meet current and future financial needs (11). Even without experiencing ABI, many adults experience financial capability challenges and financial well-being reductions (10)(11)(12). Globally, there are low rates of financial knowledge/literacy in the general population (13) and increased indicators of lower financial well-being (e.g., increased rates of high debt-to-asset ratios (11)). Reductions in financial capability and financial well-being create a cyclical relationship where decreased financial well-being reduces optimal decision-making and applied financial capability behaviors, and decreased financial capability is associated with reductions in financial well-being (14)(15)(16). ...
Objective:
To identify the contextual factors related to financial capability and financial well-being for adults living with acquired brain injury (ABI).
Design & method:
We conducted a qualitative descriptive study using photovoice and included 17 adults who live with ABI in Manitoba, Canada. Over 3-to-5 weeks, participants took photos of their financial capability (i.e. knowledge, skills, and behaviors related to managing finances) or their financial well-being (i.e. subjective and objective financial outcomes). Participants were interviewed about their photos. Five researchers iteratively and thematically analyzed interview transcripts.
Main outcomes/results:
Analysis identified the importance of the economic, social, technology, and physical or sensory context. Subthemes related to: (i) hard times finding financial resources; (ii) processes not making sense; (iii) getting help from the right person; and (iv) invisible disability bias and stigma.
Conclusions:
There is decreased literature about financial capability or financial well-being after ABI. The results of this study highlight the salience of finance to living with ABI and the importance of the context to addressing financial-related life participation for people living with ABI. Information about contextual factors related to finance can improve rehabilitation assessment and intervention practice as well as emphasize needed accessibility changes to financial environments.
... 4 Using evidencebased definitions and frameworks from the areas of finance and economics, FC is the knowledge, skills, attitudes/confidence, and applied behaviors related to managing money, accessing financial resources, planning and making choices related to finances, and securing financial-related help when needed. 5,6 FWB is a larger concept that encompasses FC, where FWB is the subjective or objective outcomes of financialor economic-related behaviors and activities within a socioeconomic context and influenced by other physical, sensory, and technological environmental factors. 6,7 Many people experience financial challenges, regardless of ABI status, and in general population studies reductions in FWB are associated with declines in cognitive functions, social relationship quality, mental and physical health, and general well-being. ...
... 5,6 FWB is a larger concept that encompasses FC, where FWB is the subjective or objective outcomes of financialor economic-related behaviors and activities within a socioeconomic context and influenced by other physical, sensory, and technological environmental factors. 6,7 Many people experience financial challenges, regardless of ABI status, and in general population studies reductions in FWB are associated with declines in cognitive functions, social relationship quality, mental and physical health, and general well-being. [8][9][10][11] The concepts of FC and FWB are even more pertinent to the lives and outcomes of people living with ABI, who can experience additional FC and FWB challenges after ABI. ...
... b Because of our small sample size, our primary analysis was descriptive analysis (ie, frequency counts or percentage) per question and per each participant group (ie, ABI-survivor vs close other). We completed exploratory nonparametric (nonprobability) inferential statistical analysis, specifically the chi-square test of independence or Fisher exact test, to examine associations between FC and FWB and key variables known to influence FC and FWB (ie, sex, current age, age at injury, and level of education 5,6,21,22 ). To facilitate some analyses and create adequate cell sample sizes for nonparametric inferential analyses, we collapsed some data response options to create binary categories that created large enough cell sizes. ...
Objective
To describe the financial capability (FC) and financial well-being (FWB) of adults living with acquired brain injury (ABI) from a lived experience perspective.
Design
People living with ABI completed a 32-item and close others a 22-item anonymous survey using either online or print/mail-in options.
Setting
Responses were collected from adults in the province of Manitoba (Canada) during August-October 2021.
Participants
Respondents were adults (18+) living with ABI (n=38) or close others of ABI survivors (n=19). Adults living with ABI experienced traumatic brain injury (n=22; 58%), stroke (n=8; 21%), or other ABI mechanisms (n=8; 21%). Nineteen (50%) respondents with ABI were men, 17 (45%) were women, and 1 (2.5%) was nonbinary; 95% were more than 1-year post-ABI. Close others were spouses/partners, parents, other family, and paid caregivers. Three of the 19 close others self-reported as men and 16 as women.
Interventions
n/a.
Main Outcome Measure(s)
n/a.
Results
For key FC indicators, 13 (34%) people living with ABI felt their current knowledge and skills were insufficient, and 26 (70%) felt that ABI had affected their ability to make financial decisions or complete financial activities. Fourteen of the 19 close others have worried about the finance-related choices, skills, or behaviors of the person living with ABI, and 17 felt that ABI symptoms had affected the FC of the person living with ABI. For key FWB indicators, 22 (58%) adults living with ABI felt stressed or anxious about finances at least some of the time. Seventeen (45%) of the adults living with ABI reported having trouble making ends meet at least some of the time.
Conclusions
Respondents reported FC limitations and FWB challenges for people living with ABI, which can be indicative of financial vulnerabilities and unmet needs. Future research should explore optimal ways to address these financial-related challenges after ABI.
... One key factor is condition mismatch, where the products and services offered simply don't align with the target population's needs or interests. Another factor is access limitations, where individuals do not meet minimum requirements to qualify for desired products or services (Salignac et al., 2019;Kempson & Poppe, 2018). Physical and geographic barriers also play a role, as the absence of local branches or service availability can significantly hinder access. ...
... The third component, financial knowledge, builds on literature from financial literacy (Lusardi & Mitchell, 2014) and financial capability research (Kempson & Poppe, 2018;Serido et al., 2013). Given increasingly complex financial systems, an individual's financial security is based on an adequate understanding of the system, along with positive financial skills and behaviors (Lusardi & Mitchell, 2014). ...
Crises events such as the COVID-19 pandemic can have a profound impact on consumers’ financial, physical, and mental health. This study explores the role of two resilience frameworks, namely the financial resilience framework and the resilient personality, in coping with physical and mental health challenges during the pandemic. The financial resilience framework encompasses economic resources, access to financial resources, financial knowledge and behavior, and social capital, while the resilient personality focuses on cognitive flexibility and the ability to tolerate ambiguity. The study aims to investigate whether these frameworks act as complements or substitutes in promoting resilience. GLM ANOVA is employed in this research to examine the effects of financial resilience and a resilient personality on physical and mental health outcomes. Findings from this study indicate that both the financial resilience framework and resilient personality may contribute to one’s mental and physical health. However, the financial resilience framework is a stronger predictor of a positive self-assessment for both health factors than a resilient personality.
... According to structural equation modeling results, there was a statistically significant impact (p < 0.05); thus, H4, which posited that financial behaviour would positively influence the financial well-being of single mothers in Malaysia, was supported. This result is in line with previous studies that highlighted the significant relationship between financial behaviour and financial well-being (Iramani & Lutfi, 2021;Kempson & Poppe, 2018;Mokhtar & Husniyah, 2017;Oquaye et al., 2022;Rahman et al., 2021;Sabri, Said, et al., 2022). ...
... LOC refers to the extent to which individuals perceive control over their future. The behaviors and preferences of individuals are influenced by LOC, as evidenced by studies conducted by Jorgensen et al.(2017),Kempson & Poppe (2018), andKesavayuth et al. (2018). In addition, the concept of LOC has been linked to financial satisfaction in a study conducted by Sumarwan and Hira in 1993. ...
Financial well-being is essential for people to live happily, and this is achievable by managing their finances. The high cost of living in Malaysia has a substantial influence on single mothers' financial well-being, worsened by the Covid-19. Despite attempts by the government and women's organizations to assist them, single mothers continue to confront obstacles such as financial difficulty and psychological discomfort. However, particular empirical studies on single mothers in Malaysia are scarce. Therefore, this study aims to fill these gaps by examining the factors influencing single mothers' financial well-being in Malaysia. This study adopts the Planned Behavior Theory, which explains behavioural factors.
Additionally, this study examines the mediational effect of Financial Behaviour on the financial well-being and performance of single mothers in Malaysia. The study is a cross-sectional survey, using a sample gathered from single mothers who received special allowance during the year 2020 in Malaysia. We also implement a proportionate stratified and simple random sampling technique within each state using a self-administered questionnaire. Of the total 422 questionnaires distributed, 343 usable questionnaires were valid for the analysis. The hypotheses proposed were examined using Structural Equation Modelling (SEM). The results showed that Financial Literacy, Work Flexibility, and Locus of Control positively impacted Financial behaviour. Moreover, the results suggested that Financial Behaviour was directly positively related to Financial Well-being. Meanwhile, Financial behaviour partially mediates the relationship between a) Financial Literacy and Financial Well being and b) Work Flexibility and Financial Well-being. On the other hand,
Financial Behaviour fully mediates the relationship between Locus of Control and Financial Well-being. This study’s results demonstrate connections between the determinants of financial well-being among single mothers in Malaysia. These research findings contribute to the literature by proposing a theoretical framework for understanding the factors influencing financial behaviour practices toward positive financial well-being.
Practically, these results benefit single mothers and serve as a
helpful reference for government officials, policymakers, and women’s welfare agencies when formulating policies to enhance the socio-economic status of vulnerable groups. Good financial behaviour will lead to a higher level of financial well-being and ultimately contribute to the overall socioeconomic development of
the country. When single mothers understand money better, have flexible work options, and feel in control of their lives, they can make better financial decisions.
KEYWORDS: Financial well-being, Financial behaviour, Financial literacy, Work flexibility, Locus of control
... Therefore, Sabri et al. (2020) contend that having bad financial habits frequently results in having financial problems, with a lack of financial awareness and knowledge being the main cause. A person's capacity and confidence to make good financial decisions is increased when they possess financial knowledge, which also helps them analyze their choices more sensibly (Mahdzan et al., 2019;Kempson & Poppe, 2018). Enhancing financial knowledge empowers individuals to adopt healthier financial practices. ...
... Conversely, lower scores than average in financial knowledge did not significantly influence the association concerning financial behavior and financial well-being. In support of this conclusion, Kempson and Poppe (2018) emphasized that people who possess a strong understanding of finance exhibit enhanced capacity and confidence in financial decision-making and associated areas, making it easier for them to make prudent financial decisions. Working students who are financially literate exhibit greater wisdom when assessing their financial decisions. ...
This study delves into the intricate relationship between financial behavior and financial
well-being among working students with financial attitude, internal locus of control, and
financial knowledge as financial literacy moderators. The investigation focused on 113
working students enrolled in seven distinct programs at Tarlac State University – College
of Business and Accountancy. Using correlation and regression analysis, the study found
that financial behavior, financial attitude, internal locus of control, as well as financial
knowledge, were significantly correlated and influenced financial well-being of the
working students. Notably, in the moderation analysis, the study also revealed that the
influence of financial behavior on financial well-being is partially moderated by financial
knowledge. Working learners with higher financial knowledge exhibit a more
pronounced progressive influence of financial behavior on their financial well-being,
emphasizing the importance of financial education in enhancing contentment or
satisfaction on financial status. Contrarily, both financial attitude and internal locus of
control did not exhibit a moderating effect on the relationship between financial behavior
and financial well-being. This emphasizes the importance of financial education in
helping working students make wise financial decisions and practices. Addressing the
factors identified in this study could contribute to the holistic development and welfare
of working students.
... In response to the growing emphasis on FWB, stakeholders have focused on different aspects such as financial inclusion [55], financial literacy [24], and financial behaviour [16]. The central aim of these studies is to improve FWB [56]. Sehrawat et al. highlight that comprehensive models of FWB have received limited research attention [16]. ...
While financial literacy is crucial in improving the population’s financial well-being, its effectiveness can be enhanced by exposure to financial information. This paper investigates the nexus between financial literacy, financial information consumption, and financial well-being in rural Ghana, framed within the perspectives of prospect theory and resource dependency theory. The study employed cross-sectional data from a survey of 663 rural households using simple random and cluster sampling with reflective-reflective constructs. The data were analysed using partial least squares structural equation modelling. The findings reveal that financial literacy and financial information consumption significantly enhance financial well-being among rural households in Ghana. Financial literacy also promotes financial information consumption. Notably, financial literacy’s impact on financial well-being is stronger when mediated by the consumption of financial information. These findings underscore the importance of improving financial literacy and information access to uplift financial well-being in rural areas. Moreover, the study highlights that financial literacy education is crucial as it plays a mediating role; recipients of financial education experience a more substantial impact. Such findings emphasise the importance of acquiring financial knowledge and effectively processing financial information to achieve financial prosperity, particularly in rural areas. These findings should motivate individuals, especially those in rural areas, to process financial information successfully rather than merely acquiring financial knowledge to attain financial prosperity.
... Mewse et al. (2010) found that both self-efficacy and locus of control greatly improved the predictability of logistic regression models of serious payment difficulties. Later research demonstrated that having a high financial locus of control had both a small direct effect on keeping up with payments on current commitments, all other things being equal, and a larger indirect effect through behaviors such as controlled spending, saving and constrained borrowing that were also important determinants of financial wellbeing (Kempson and Poppe, 2018). Dare et al. (2023) similarly found that financial self-efficacy was strongly positively related to financial wellbeing both directly and via positive financial behavior. ...
... Mewse et al. (2010) found that both self-efficacy and locus of control greatly improved the predictability of logistic regression models of serious payment difficulties. Later research demonstrated that having a high financial locus of control had both a small direct effect on keeping up with payments on current commitments, all other things being equal, and a larger indirect effect through behaviors such as controlled spending, saving and constrained borrowing that were also important determinants of financial wellbeing (Kempson and Poppe, 2018). Dare et al. (2023) similarly found that financial self-efficacy was strongly positively related to financial wellbeing both directly and via positive financial behavior. ...
Introduction
Societies place a responsibility on individuals to pay what they owe on time, establishing a coercive apparatus for debt collection and enforcement when they do not, coupled with consumer protection and debt resolution measures to protect the vulnerable.
Methods
An analysis of in-depth interviews with 28 people with both payment difficulties and vulnerabilities from ill-health, using Bandura's Social Cognitive Theory to explore the experiences of vulnerable defaulters as they try to exercise the personal responsibility placed on them by society.
Results
It finds that they encounter barriers in exercising the personal responsibility which primarily arise in encounters with inflexible and bureaucratic routines – of creditors, debt enforcement agents and even money advisers whose role is to help vulnerable people. These systematically undermine defaulters' self-efficacy, and leaving them facing prolonged periods of payment difficulties.
Discussion
The findings are discussed in the light of Bandura's Theory and lessons drawn for the policies and practices of creditors, debt enforcement bodies, and money advisers.
Online games are one of the entertainment activities highly favored by the Indonesian society. The level of consumption and spending in gaming is also continuously increasing in the gaming industry. Gamers in Indonesia themselves have a willingness of 45% to spend money while playing games. This research aims to determine the influence of financial knowledge, financial attitude, and mental accounting on the spending habits of gamers in Surabaya. The sampling was done purposively on gamers residing in Surabaya who play games for more than 7 hours per week. A total of 200 respondents in Surabaya participated in this study. Data were collected by distributing questionnaires online through Google Forms, which were disseminated to gamers and gaming communities in Surabaya via social media platforms such as Line and Instagram. The obtained data will be processed using SmartPLS 4 software. The results of the analysis in this study prove that financial knowledge, financial attitude, and mental accounting significantly influence the spending habits of gamers in Surabaya
Public health discipline and practice have prioritized work on poverty and populations at high risk for material deprivation, with less consideration for the full spectrum of financial circumstances relative to well-being. Public health can make a much-needed contribution to this area, which is currently dominated by the financial industry, focused on individual behaviors, and lacking the definitional consensus needed for research and evaluation. A population-level lens can reveal the social determinants and health consequences of real or perceived poor financial circumstances.
This article aims to improve conceptual understanding of financial circumstances among public health scholars and professionals. We identified concepts through a critical literature review of peer-reviewed and practice-based resources on financial well-being and financial strain. We developed a glossary of concepts related to financial circumstances and categorized concepts according to their level of influence using an approach informed by socioecological models. We provide a concept map that illustrates the relationships between concepts in the context of their levels of influence.
This article will help to advance an agenda on financial well-being promotion in public health research and practice. (Am J Public Health. 2024;114(1):79–89. https://doi.org/10.2105/AJPH.2023.307449 )
The survey instruments and details of research methods developed and used in a large-scale study in nine low and middle income countries. Undertaken for the World Bank under the Russia Trust Fund
A major study involving 12 low- and middle-income countries to develop and implement a survey to measures levels of financial capability
http://www.bristol.ac.uk/geography/research/pfrc/themes/fincap/measuring-levels-of-financial-capability-and-the-effectiveness-of-financial-education/
We use UK household survey data incorporating measures of financial literacy and behavioural characteristics to analyse the puzzling co-existence of high cost revolving consumer credit alongside low yield liquid savings in household balance sheets, which we term the ‘co-holding puzzle’. Approximately 20% of households in our sample co-hold, on average, £6,500 of revolving consumer credit alongside £8,000 of liquid savings. Co-holders are typically more financially literate, with above average income and education. However, we show co-holding is also associated with impulsive spending behaviour on the part of the household. Our results lend empirical support to theoretical models in which sophisticated households co-hold as a means of managing a self-control problem.
This paper examines the relationship between self-control, financial literacy and over-indebtedness on consumer credit debt among a sample of U.K. consumers using data from a household survey. Both lack of self-control and financial illiteracy are positively associated with non-payment of consumer credit and self-reported excessive financial burdens of debt. Consumers who exhibit self-control problems are shown to make greater use of quick-access but high cost credit items such as store cards and payday loans. We also find consumers with self-control problems are more likely to suffer income shocks, credit withdrawals and unforeseen expenses on durables, suggesting that lack of self-control increases exposure to a variety of risks. In most specifications we find a stronger role for lack of self-control than for financial illiteracy in explaining consumer over-indebtedness.
The purpose of this study is to explore the relationship between financial behaviors and financial well-being of college students
when controlling demographic and financial characteristics, financial education and financial dispositions. Data (N=15,797) was collected from college students age 18 and over via an online survey from 15 college campuses throughout the
United States during spring and fall of 2008. Results of means comparisons showed significant differences on the financial
well-being level by various socioeconomic factors and financial behaviors. In addition, regression analysis showed that budgeting,
saving, risky credit card behaviors, and compulsive buying were significantly related to financial well-being when controlling
for demographic information, financial characteristics, financial education, and financial dispositions.
KeywordsCollege students–Financial behavior–Financial dispositions–Financial education–Financial well-being
This article presents a new way of looking at and measuring financial literacy. Financial education work to date has focused on managing money, yet the survey described here shows that this is the area where levels of capability are highest. At least half of the UK population needs reminding that it is dangerous to live for the day and make no provision for changes in circumstance, unexpected expenditure, or retirement. In addition, with the low levels of financial capability identified by the survey, it is likely that mis-selling of financial products will continue in the UK. The authors conclude with policy priorities for the government.
Consumer vulnerability is of growing importance as a research topic for those exploring wellbeing. This book provides space to critically engage with the conditions, contexts and characteristics of consumer vulnerability, which affect how people experience and respond to the marketplace and vice versa. Focussing on substantive, ethical, social and methodological issues, this book brings together key researchers in the field and practitioners who work with vulnerability on a daily basis. Organised into 4 sections, it considers consumer vulnerability and key life stages, health and wellbeing, poverty, and exclusion. Methodologically the chapters draw on qualitative research, employing a variety of methods from interview, to the use of poetry, film and other cultural artefacts. This book will be of interest to marketing and consumer research scholars and students and also to researchers in other disciplines including sociology, public policy and anthropology, and practitioners, policy makers and charitable organisations working with vulnerable groups.
This paper exploits the emotional connections and viewer attentiveness of mainstream media to evaluate the economic impact of financial education messages on debt management delivered through a popular television soap opera in South Africa. The study uses a symmetric encouragement design to compare outcomes of individuals who were randomly assigned to watch a soap opera with financial messages, "Scandal!" to those of individuals who were invited to watch a similar soap opera without financial messages, "Muvhango." Both shows overlapped in evening primetime and had similar past viewership profiles. The financial storyline spanned two months and featured one of the leading characters of the show borrowing excessively and irresponsibly through hire-purchase, gambling, and ending up in financial distress; and eventually seeking help to find her way out. Two intermediate and one final follow-up surveys were conducted as part of the study. The analysis finds individuals assigned to watch Scandal had significantly higher financial knowledge of the issues highlighted in the soap opera storyline, in particular messages delivered by the leading character. On behavior, Scandal viewers were almost twice more likely to borrow from formal sources, less likely to engage in gambling, and less prone to enter hire purchase agreements. Messages promoting a national debt mediation helpline delivered by an external character did not sustain traction beyond immediate interest. Three qualitative focus groups highlight the importance of emotional connections with the leading character in motivating behavior change.
We measure how receiving information about coworkers’ savings behavior affects recipients’ savings choices. Low-saving employees were sent a simplified 401(k) plan enrollment or contribution increase form. A randomized subset of forms included information on the (high) fraction of coworkers either participating in or contributing at least 6% of pay to the plan. We document an oppositional reaction: peer information decreased the savings of (unionized) recipients who were not eligible for automatic enrollment in the 401(k). We find no significant evidence that peer information altered the savings decisions of recipients who had previously opted out of automatic 401(k) enrollment.