essay on importance of financial literacy

Essay on Financial Literacy for Students and Children

Importance of financial literacy, an introduction to financial literacy.

We go to schools, colleges, universities to complete our educated and start earning our livelihood. We take up jobs, practise professions or start our own businesses so that we can earn money to make our living. But which of these institutions make us capable of managing our own hard-earned money? Probably a very few of them. 

Our ability to effectively manage our money by drawing systematic budgets, paying off our debts, making buying and selling decisions and ultimately becoming financially self-sustainable is known as financial literacy. 

Financial literacy is knowing the basic financial management principles and applying them in our day-to-day life. 

Financial Literacy – What does it Involve? 

From simple practices like keeping a track of our expenses and understanding the need to spend money if we like a product to striking a balance between the value of time saved and money lost, paying our taxes and filing of tax returns, finalizing the property deals, etc – everything becomes a part of financial literacy. 

Get the huge list of 500+ Essay Topics here

As human beings, we are not expected to know the nitty-gritty of financial management. But managing our own money in a way that it does not affect us and our family in a negative way is important. We certainly do not want to end up having a day with no money at hand and hunger in our stomach. 

Why is Financial Literacy so Important?

Financial literacy can enable an individual to build up a budgetary guide to distinguish what he buys, what he spends, and what he owes. This subject additionally influences entrepreneurs, who incredibly add to financial development and strength of our economy. 

Financial literacy helps people in becoming independent and self-sufficient. It empowers you with basic knowledge of investment options, financial markets, capital budgeting, etc.

Understanding your money mitigates the danger of facing a fraud-like situation. A few strategies are anything but difficult to accept, particularly when they’re originating from somebody who is by all accounts learned and planned. Basic knowledge of financial literacy will help people with foreseeing the risks and argue/justify with anyone learned and well-informed.

What should you read on / get informed about in Financial Literacy?

• Budgeting and techniques of budgeting
• Direct and indirect taxation system
• Direct tax slabs
• Income and expense tracking 
• Loans and debt – EMI management 
• Interest rate systems: fixed versus floating
• Business and organisational transaction studies
• Elementary Book-keeping and Accountancy
• Cash in-flow and out-flow Statements
• Investment & personal finance management
• Asset management:
• Business negotiation skills and techniques
• Make or buy decision-making
• Financial markets 
• Capital structure – owner’s funds and borrowed funds
• Fundamentals of Risk Management
• Microeconomics and Macroeconomics fundamentals

While there are various media to learn about financial literacy, we recommend that you join a short-term, weekend programme which helps you get financially literate.

Customize your course in 30 seconds

Which class are you in.

• Travelling Essay
• Picnic Essay
• Our Country Essay
• My Parents Essay
• Essay on Favourite Personality
• Essay on Memorable Day of My Life
• Essay on Knowledge is Power
• Essay on Gurpurab
• Essay on My Favourite Season
• Essay on Types of Sports

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Download the App

The Importance of Financial Literacy

BRB Bottomline: Amidst a financial literacy crisis, unprecedented in scope and scale, where millions of Americans worry and struggle to make ends meet, why do we not mention financial literacy more? What is the cost of this epidemic in financial acumen and what are the steps we can take to rectify it?

For many of us, at the precipitous age between sheltered adolescence and mortifying adulthood, the very thought of managing our own finances is enough to induce panic-stricken vomiting and invites our basest tendencies to curl into the fetal position when under even the slightest duress. However, money really can be that terrifying—although it shouldn’t—and  there truly is an epidemic of missing financial acumen in our society that does warrant this response.

The State of Financial Literacy

We see the epidemic in the ballooning student debt that was $600 billion in 2006 and is nearly  $1.6 trillion  today. We see it in harrowing statistics such as how  one-third of Americans have $0 saved for retirement  or how nearly  40% of Americans carry credit card debt —with the average balance being $16,048. And, according to an independent report by  Forbes , the average cost of a four-year degree has doubled to nearly $105,000 over the last two decades, while real median wages have only risen a modest $5,000. While the cost of an education is increasing at astronomical rates, it seems the financial education of Americans isn’t matching the same upward trends.

And specifically for millennials research by the  National Endowment for Financial Education  conducted by GW University found that 69% of millennials awarded themselves a high self-assessment of financial knowledge, while only 23% showed basic financial literacy, and only 7% demonstrated high financial capability. Even having a college-backed education is associated with higher levels of debt across all sources of long-term debt (student loans, home mortgage, auto loan).

This disparity in perceived financial knowledge and actual financial knowledge can have immense and lasting repercussions. It’s one thing to not know a fact, but to believe that one knows, when in fact they don’t, will only work to exacerbate this endogenous and persistent problem.

Even basic financial literacy can have significant effects. According to a  2014 study by Lusardi and Mitchell  published in the Journal of Economic Literature, more financially-literate individuals are more likely to plan for retirement, invest in stocks, and make better refinancing decisions. These micro decisions—made daily and frequently—can have lasting long-term benefits.  Another paper by Lusardi and Bassa Scheresberg  found that financial illiteracy, especially among young adults aged 25-34, were more likely to engage with high-cost borrowing instruments such as payday loans, pawn shops, auto title loans, refund anticipation loans, and rent-to-own shops. These financial decisions, large and small, impact the wealth accumulation of individuals over a lifetime and contribute to generational cycles of poverty and social stratification.

But how do college students fare?

UC Berkeley students, in a nation-wide  Study on Collegiate Financial Wellness  conducted by the Ohio State University, reported very similar answers to their peers at 90 other institutions. To the statement, “I feel stressed about my personal finances in general,” 67% of students at four-year public universities (64.9% at UC Berkeley) agreed. On answering questions regarding financial knowledge, students at four-year public universities scored on average 3.38 out of 6 points, while the average UC Berkeley student scored 3.4 out of 6 points. The financial stress and crisis of students on our campus is a similar paradigm for students all over the country.

Students reported a significant amount of financial stress were found to have  lower academic performance while retaining a higher amount of debt , than those who did not hold this belief. College students with credit card debt of at least a $1000 were at  a higher connection to insufficient physical activity and binge drinking , among other unhealthy habits. And  78% of students who had attempted suicide  cited financial stress as a “primary reason” for their suicidal ideation.

And there are so many other metrics we can’t measure: We can’t see the effect of this epidemic on the number of children who miss meals at night because their families struggle to make rent and buy the groceries, or on the loss of potential contributions by brilliant students who drop out because they can’t afford the exorbitant cost of their education, or the number of missed workdays because a family can’t afford to see a doctor or keep affordable health insurance.

We often talk about social justice and inequality as rallying points for feel-good campaigns regarding systemic change. Lusardi and Mitchell, in their paper titled “Optimal Financial Knowledge and Wealth Inequality,” posit that financial literacy should be taught as something akin to human capital investment. (The idea that investing in people can increase productivity, and, in turn, profitability.) Their statistical analysis and estimates argue that over half of wealth inequality can be attributed to financial knowledge and the lack thereof.

Minorities and low-income households have less access to financial resources that only exacerbate the financial problems such demographics face. Students without savings accounts are less likely to go to college, and students with higher debt are more likely to drop out, further impacting their future earning potential. If we want to improve the lives of low-income and marginalized communities, then part of the answer exists within the discourse of financial education.

The Changing Landscape

The nature of our relationship with money has changed. Most people don’t carry a significant amount of cash on their person, instead opting for forms of virtual money and lines of credit. To be unable to see the transaction taking place before you—the physical exchange of money from your person to another—makes it that much easier to overspend and mismanage. In our modern-day society, with technology and innovation connecting us and our bank accounts at every turn—misleading ads and offerings of “best refinancing loan rates,” “cash advances” or “0% intro APR credit cards”—more than ever are the gaps in our financial acumen becoming dangerous blind spots with potentially life-changing ramifications.

As employer-provided direct benefit (pension) plans become increasingly rare in lieu of direct compensation (401k) plans, the burden of saving for one’s retirement falls on the financial acumen of the employee. This means that familiarity with financial instruments and long-term saving is crucial to one’s future. The individual must have the financial acumen to be able to save and contribute to their retirement fund while they are young, to reap the rewards of compounding interest.

As the next generation confronts ever more sophisticated financial instruments, it’s critical that financial education keep up.

However, the trends portend a different reality. In the United States, according to a  2018 survey by the Council for Economic Education , only 17 states have some form of personal finance requirement for high school graduation, and no new states have added such a requirement since 2016. Similarly, only 22 states require high schoolers to take an economics course prior to graduation. As clearly evidenced by the literature, financial literacy is crucial to the development and success of our youth, and of society. Yet, the workings of money elude the young American, and only later does it rear its unfamiliar, foreign head, and strike the hand originally meant to wield it.

If our education system is intended to prepare our youth to face the real world—to achieve success and live better lives than their predecessors—then why do we not emphasize the importance of their financial literacy?

Education Reform

Many of the financial literacy programs that exist cater to higher education students and young adults, presumably because this group faces the struggle of poor financial literacy most intimately and abruptly as they first enter the workforce or pay for exorbitant education costs; however, these programs are often reactive, rather than proactive. Financial literacy should be encouraged at the K-12 level to cement positive feedback loops of financial health.

At the state level, 40 states have financial literacy concepts embedded in their states’ curriculum, but, as mentioned above, only 17 states have graduation requirements for financial literacy. According to data by the National Conference of State Legislatures, 28 states and Puerto Rico pitched financial literacy legislation in the 2018 session, with 17 states enacting and adopting resolutions. While these numbers may seem encouraging, this is down from 2017 where 36 states had pending financial literacy legislation and 20 states enacted legislation or resolutions. More states should establish a discrete financial literacy requirement as it drives home the point that financial health is a uniquely important skill to learn.

Teachers, in order to educate students, need to be trained on financial topics and provided the resources necessary to teach these topics. A study of over 1200 K-12 teachers found that 89% believed that students should be required to take a financial literacy course to graduate high school, while less than 20% felt prepared or competent to teach such topics. Only 24 states provide tailored educational materials or resources designed to meet the states’ standards, as stated by an  independent report conducted by Brookings .

A study from Montana University  found that students from states with high school financial literacy requirements are more likely to apply for aid and receive more federal student loans while having less credit card debt and private loans. And these same students were linked to having higher credit scores after college, likely a consequence of their credit card and debt habits.

Program Recommendations

While much research has yet to be done regarding the most effective way to teach financial literacy, there are some common best practices. Financial literacy courses or curriculums need some sort of evaluative measure, whether it be a test or survey that compares pre-learning and post-learning levels of understanding. On one level this promotes accountability, but it also encourages active participation. Since financial literacy is so nuanced and diverse, learning through individual activities, field trips, and evaluative measures create interesting and engaging programs for children of all ages. 

Take Home Points

Mitchell and Lusardi, in the conclusion of their seminal paper on the  Economic Importance of Financial Literacy , wrote, “While the costs of raising financial literacy are likely to be substantial, so too are the costs of being liquidity-constrained, overindebted, and poor.”

This fight isn’t easy nor is it cheap. We must encourage lawmakers, both state-level and national, to prioritize financial literacy, support nonprofits and organizations working to rectify the disparity in financial knowledge, and empower schools and educators to teach their communities. There is much work and research to be done to improve the state of financial literacy in our nation and the world, but the cost of not doing so would be severe and lasting.

Subscribe for Free

We send new articles every week straight to your email., leave a reply cancel reply.

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

We are a student group acting independently of the University of California. All information on this website is published in good faith and for general information purposes only. Business Review at Berkeley does not make any warranties about the completeness, reliability and/or accuracy of this information. The Editorials section features views of the individual authors and do not reflect the position of our organization as a whole or of the greater UC Berkeley community. No article or portion of an article should be construed as providing financial, legal, or political advice. Any action you take upon the information you find on this website is strictly at your own risk. Business Review at Berkeley will not be liable for any losses and/or damages in connection with the use of our website.

Designed using Unos Premium . Powered by WordPress .

More From Forbes

Why financial literacy is important and how you can improve yours.

• Share to Facebook
• Share to Twitter
• Share to Linkedin

Equip yourself with financial knowledge.

“The best investment you can make, is an investment in yourself... The more you learn, the more you’ll earn.” — Warren Buffett

Financial literacy refers to your grasp and effective use of various financial skills, from budgeting and saving to debt management and retirement planning.

It equips you with the knowledge to make informed decisions, leading to greater monetary stability, less stress, and a higher quality of life.

Financial literacy empowers you to take control of your finances and navigate the challenges and opportunities that arise.

It is a crucial element in achieving financial health.

Key Components Of Financial Literacy

Budgeting and expense management.

Effective budgeting requires clearly understanding your financial inflows and outflows, setting realistic goals, and monitoring spending habits.

Expense management is about making conscious decisions to eliminate unnecessary expenses and prioritize essential ones.

By mastering budgeting and expense management, you can live within your means, avoid accumulating debt, and save for future goals.

Best High-Yield Savings Accounts Of 2024

Best 5% interest savings accounts of 2024, saving and investing.

Saving is setting aside a portion of your income for future use, while investing is putting that saved money into assets or ventures that can potentially yield returns.

While saving provides a cushion, investing allows your money to grow. Maximize the effects of compounding and the importance of diversification.

Debt Management

Being financially literate is about recognizing the impact of your credit score on interest rates, familiarizing yourself with the terms of debts, and creating a strategy to pay them off efficiently.

It also entails differentiating between good debt (such as student loans, which can be seen as an investment in your future) and bad ones (such as credit card bills for that latest iPhone, a luxury).

Retirement Planning

Financial literacy involves understanding pension plans, 401(k)s, and other retirement savings options, as well as Social Security, and how delaying benefits can increase monthly payouts.

A comprehensive retirement plan considers your expected lifespan, desired retirement lifestyle, and potential healthcare costs.

Insurance And Risk Management

Different products, such as health, life, auto, and property insurance, offer protection against various risks. Ensure adequate coverage based on your specific circumstances.

Other risk management strategies include creating an emergency fund and building your nest egg.

Understanding Financial Products And Concepts

Strengthen your knowledge of various financial products, from simple savings accounts to complex derivatives. You should also be familiar with basic concepts, such as compound interest, inflation, and taxation.

This knowledge ensures you can navigate the financial landscape, making informed decisions aligning with your goals and risk tolerance.

Key Components of Financial Literacy

Strategies For Improving Your Financial Literacy

Self-study and online resources.

Numerous online platforms, websites, and apps offer courses, articles, tutorials, and tools related to financial education.

From understanding the basics of budgeting to diving deep into investment strategies, you can pace your learning based on your comfort and needs. Podcasts, webinars, and video tutorials offer diverse formats catering to different learning styles.

However, it is essential to ensure that the sources of information are credible and up-to-date.

Accessing Formal Education And Awareness Programs

The foundation of financial literacy often begins with structured education . Schools, colleges, and universities offer basic money management, economics, and personal finance courses.

Beyond formal education, governments or financial institutions initiate awareness programs that target specific demographics, such as low-income families or senior citizens.

Nonprofits, such as the Financial Literacy Coalition , also provide resources to promote financial education. Maximize these resources to improve yourself.

Seeking Professional Advice

Financial advisors, planners, and counselors bring expertise and experience. They can offer personalized advice, considering your financial situation, goals, and risk tolerance.

Whether planning for retirement, investing in the stock market, or buying a home, professional advisors can help you navigate complex decisions. Moreover, as financial landscapes evolve, professionals can provide updated insights, ensuring you stay ahead.

Networking And Learning From Peers

There is immense value in shared experiences. Networking with peers, whether informally or through structured groups, can offer fresh financial management perspectives. Hearing about others’ financial successes and challenges can provide practical insights and lessons.

Moreover, peer discussions can lead you to new financial tools, products, or strategies you might not have encountered otherwise. In a world where financial trends and products evolve rapidly, staying connected with a network can keep you updated and informed.

Financial literacy is an indispensable skill in today’s world. Beyond financial health, it empowers individuals, reduces stress, and fosters a sense of security. It involves budgeting, savings, investments, retirement planning, debt and risk management, and understanding financial products and concepts.

You can improve your financial literacy through self-study, formal education, seeking professional advice, and networking with peers.

• Editorial Standards
• Reprints & Permissions

Home — Essay Samples — Economics — Corporate Finance — Importance of Financial Literacy

Importance of Financial Literacy

• Categories: Corporate Finance

About this sample

Words: 1983 |

10 min read

Published: Dec 5, 2018

Words: 1983 | Pages: 4 | 10 min read

Financial tools – financial literacy

• Financing activities include the borrowing and repayment of long-term liabilities.
• Investing activities include the purchase and sale of your long-term fixed assets, such as property, plant and equipment.
• Operating activities include your day-to-day operations.
• Budgeting Basics
• ensure you have enough money for your future projects.
• enable you to make confident financial decisions and meet your objectives
• ensure you can continue to fund your current commitments
• control your finances
• Banking and Financial Services
• The Impact of Interest Understanding the ins and outs of interest can impact your finances more than you likely realize, so it’s an important concept to gain a better understand of early on in life.
• The Credit-Debt Roller-coaster

Works Cited

• Bhatia, A. (2022). Financial Literacy and Entrepreneurship: A Review. International Journal of Research in Business Studies and Management, 9(4), 14-22.
• Cooper, D., & Ebert, R. (2020). Budgeting Basics for Small Business Owners. Journal of Small Business Management, 58(4), 722-740.
• Federal Reserve Bank of Kansas City. (2021). Cash Management Basics: A Guide for Small Business Owners. Retrieved from https://www.kansascityfed.org/~/media/files/publicat/psr/pdf/cash-management-basics.pdf
• Financial Consumer Agency of Canada. (2022). Banking and Financial Services. Retrieved from https://www.canada.ca/en/financial-consumer-agency/services/banking.html
• Hackston, D., & Dowling, M. (2023). Financial Literacy Rates Among Adults in Advanced and Emerging Economies. International Journal of Financial Education, 21(1), 18-35.
• Organization for Economic Co-operation and Development. (2017). OECD/INFE Core Competencies Framework on Financial Literacy for Adults. Retrieved from http://www.oecd.org/daf/fin/financial-education/International-Core-Competencies-Framework.pdf
• Pailella, P. (2016). Financial Literacy and Entrepreneurial Success: The Moderating Role of Financial Knowledge and Experience. Journal of Small Business Management, 54(4), 1175-1192.
• Parcheta, M. (2021). The Role of Financial Literacy in Women Entrepreneurship Development. European Financial and Accounting Journal, 16(2), 87-100

Cite this Essay

Let us write you an essay from scratch

• 450+ experts on 30 subjects ready to help
• Custom essay delivered in as few as 3 hours

Get high-quality help

Dr. Karlyna PhD

Verified writer

• Expert in: Economics

+ 120 experts online

By clicking “Check Writers’ Offers”, you agree to our terms of service and privacy policy . We’ll occasionally send you promo and account related email

No need to pay just yet!

Related Essays

5 pages / 2597 words

2 pages / 1060 words

5 pages / 2237 words

2 pages / 1045 words

Remember! This is just a sample.

You can get your custom paper by one of our expert writers.

121 writers online

Still can’t find what you need?

Browse our vast selection of original essay samples, each expertly formatted and styled

Related Essays on Corporate Finance

Overall, my time in Deloitte really highlighted how to apply the skills that I had already learned from my degree in Schulich, but also the skills that I should focus on in my 3rd year. I really stood by the problem-solving and [...]

Finance plays a crucial role in the lives of individuals and the functioning of organizations. It encompasses a wide range of activities, from personal financial planning to international trade and investment. This essay will [...]

Financial planning links the goals a business wants to achieve in the future and the resources it will need to achieve these goals. It is also concerned with evaluating the financial resource of a business. Financial [...]

In context of corporate governance, there are two vital elements that needed to be maintained in order to ensure efficiency and transparency of organizational operations. These two elements are accountability and performance. [...]

Equity crowdfunding Crowdfunding is a collective resource-pooling practice used to organizations that aggregate rather small amounts of capital in a limited time-frame from many individuals who share a common interest in a [...]

The 21st will bring about an all-embracing convergence of computing, communication, information and knowledge. This will radically change the way we live, work and think. The growth of high speed network, coupled with the [...]

Related Topics

By clicking “Send”, you agree to our Terms of service and Privacy statement . We will occasionally send you account related emails.

Where do you want us to send this sample?

By clicking “Continue”, you agree to our terms of service and privacy policy.

Be careful. This essay is not unique

This essay was donated by a student and is likely to have been used and submitted before

Download this Sample

Free samples may contain mistakes and not unique parts

Sorry, we could not paraphrase this essay. Our professional writers can rewrite it and get you a unique paper.

Please check your inbox.

We can write you a custom essay that will follow your exact instructions and meet the deadlines. Let's fix your grades together!

Get Your Personalized Essay in 3 Hours or Less!

We use cookies to personalyze your web-site experience. By continuing we’ll assume you board with our cookie policy .

• Instructions Followed To The Letter
• Deadlines Met At Every Stage
• Unique And Plagiarism Free

• Share full article

Advertisement

Supported by

student opinion

Should All Schools Teach Financial Literacy?

And should students have to understand topics like budgets, consumer credit, student debt, saving and investing in order to graduate?

By Shannon Doyne

Students in U.S. high schools can get free digital access to The New York Times until Sept. 1, 2021.

How well do you think you manage money? Has anyone ever taught you any money-management skills? In general, how “financially literate” do you think you are? For instance, do you know how to budget and save? How to set up a bank account? Apply for financial aid and college loans?

Does your school teach these skills already? If not, do you wish it did? Should passing a financial-literacy class be a requirement for graduating from high school?

In “ Pandemic Helps Stir Interest in Teaching Financial Literacy ,” Ann Carrns writes about the growing interest in teaching students personal financial skills in U.S. schools:

As of early 2020, high school students in 21 states were required to take a personal finance course to graduate, according to the Council for Economic Education , which promotes economic and personal finance education for students in kindergarten through high school. That was a net gain of four states since the council’s previous count two years earlier. “We are making progress,” said Billy J. Hensley, president and chief executive of the National Endowment for Financial Education, a nonprofit group that promotes effective financial education. “I do think the pandemic is bringing more attention to the topic,” he said, noting that after the financial crisis more than a decade ago there was also a flurry of financial literacy proposals in state legislatures. An increasing number of studies support the effectiveness of financial literacy education when taught by well-trained teachers, said Nan J. Morrison, chief executive of the Council for Economic Education. And more teachers now say they feel confident teaching the material. A study released in March by researchers at the University of Wisconsin and Montana State University found significant increases in teacher participation in professional development. Still, the rigor of high school financial education varies. Just six states require high school students to complete a semester-long, stand-alone personal finance course, the council’s 2020 report found. Some states permit shorter courses or include the content as part of another class. In states that don’t require financial instruction, some schools opt to teach it and do an excellent job, but others ignore the subject completely — and they tend to be schools in less affluent districts, Mr. Hensley said.

The article also outlines the specifics on what the curriculum might look like:

Many financial literacy advocates consider a full-semester course the gold standard for personal finance instruction. Rebecca Maxcy, director of the Financial Education Initiative at the University of Chicago, said many courses focused mainly on skills, like writing a check or filing taxes. While those lessons can be helpful, she said, it’s important for courses to include discussions of how personal values and attitudes about money influence behavior, as well as an examination of the financial systems and potential barriers that students will encounter in the world of money. Questions like “Who benefits when you open a bank account?” can prompt meaningful discussions, she said. Some curriculum options, however, offer more condensed, basic instruction. Everfi, a digital instructional company, offers a free seven-session program for high school financial literacy. Students take interactive, self-guided lessons in topics like banking, budgeting and college financing. Sidney Strause, a freshman at Marshall University in West Virginia, said she had taken Everfi’s course as a junior in high school. The lessons were assigned as part of another course she was taking, and typically took 45 minutes to an hour to complete. “It taught me how to budget and save,” she said. “It’s crucial to adulthood.” Sometimes she would do the lessons at home and discuss them with her mother, she said, which led her mother to create a budget and set financial goals.

Students, read the entire article, then tell us:

What, if anything, in this article resonates with you and your experiences with learning about money?

Do you think schools should offer courses on financial literacy? Should taking them be mandatory for graduation?

What topics should financial literacy instruction in schools cover? In what grade should students start learning about it?

One of the experts quoted in this piece says that it’s important for courses to include discussions of how personal values and attitudes about money influence behavior. What are your general attitudes toward money, and where do you think you learned these attitudes? For instance, how much does making money factor into your goals for a future career?

Why do you think that some people believe the interest in teaching students skills about managing money increased during the pandemic? In this time, did you experience or witness any events that made you wish you had some knowledge of personal finances — or that made you grateful for what you know?

Earlier this year, the price of GameStop stock soared when individual traders, including some teenagers, purchased many shares as a way to both make money and retaliate against large hedge funds that forecast the stock losing value. Did you learn about this situation as it happened? Did you participate? Did any of your teachers talk about it, and if so, what did they say? If you have specific thoughts to contribute, answer our Student Opinion question, “ Should All Young People Learn How to Invest in the Stock Market? ”

About Student Opinion

• Find all of our Student Opinion questions in this column . • Have an idea for a Student Opinion question? Tell us about it . • Learn more about how to use our free daily writing prompts for remote learning .

Students 13 and older in the United States and the United Kingdom, and 16 and older elsewhere, are invited to comment. All comments are moderated by the Learning Network staff, but please keep in mind that once your comment is accepted, it will be made public.

Financial Literacy: The Importance in the Modern World Essay

In previous years, the issue of investing has become popular among beginning investors who follow the advice of bloggers and put their money in unsafe securities or individuals who hope for the burgeoning future of NFTs and cryptocurrency. However, instead of blindly following the advice of impostor financial advisors or buying securities without having knowledge about them, the public should focus on overall financial literacy. From a very young age, every person should learn how to use their money wisely and how it can help not only save but multiply the savings and have enough for a carefree retirement.

The first reason why acquiring the skills of financial literacy is essential is its protection against inflation. At the given moment, the rate of inflation is 7.7%, which means that if money is simply in the deposit account, at the end of the year, its value will decrease by this number (U.S. Inflation Calculator). This is why if people desire to make a big purchase after having enough money for it, eventually, they will be trapped in a vicious circle of constant saving since the prices will be rising together with inflation.

Another point that representatives of younger generations must understand is that financial literacy enables skills of wise saving for retirement. According to The New York Times, schools do not have obligatory courses on 401(k)s and Individual Retirement Accounts, despite the fact that the majority of employees are now responsible for their own retirement plans (Lieber and John). As a result, many children, adolescents, and adults are unaware of the fact that if they start investing $5,000 annually at the age of twenty-two, by the age of 67, they will accumulate approximately $1 million dollars (Lieber and John). However, if they start at thirty-two and invest the same amount of money, they will only manage to generate $500,000 (Lieber and John). Thus, this is the compound interest effect that many people with a lack of financial literacy fail to understand.

Moreover, it is vital to see the benefits of saving in order to have a safety cushion. According to Forbes, two out of three Americans are spending their savings because they are concerned about inflation (Campisi). As a result, these individuals who refuse to save will not have an emergency fund, and if there is a crisis situation, they will have to seek loans. In comparison, those who have basic financial literacy skills know that panicking is the worst enemy, and they are prepared for such scenarios, which is why financial literacy is crucial.

Still, it is important to review other valid opinions regarding investing and saving. While it can be a helpful skill, sometimes financial literacy, along with consistent investing, can be disrupted by certain risks. For instance, the financial crisis of 2008 led to a loss of $2 trillion dollars (Merle). However, it is noteworthy that the results of such outcomes were external factors rather than personal actions.

Hence, it is necessary to learn the fundamentals of financial literacy from a young age in order to have a carefree retirement, emergency funds, and protection against inflation. I believe that it is unfortunate that children do not acquire this knowledge at school and, therefore, it should be either personal or parental responsibility to either learn or teach such skills. With such an approach, both children and adults will be more careful with money and be prepared for any hardship or crisis, being able to grow into financially independent people.

Works Cited

Campisi, Natalie. 2 Out Of 3 Americans Say They’re Blowing Through Savings to Cope With Inflation—Do This Instead . Forbes, 2022. Web.

Lieber, Ron and Todd S. John. How to Win at Retirement Savings . The New York Times, n.d. Web.

Merle, Renae. A Guide to the Financial Crisis — 10 Years Later . The Washington Post. Web.

U.S. Inflation Calculator. Current US Inflation Rates: 2000-2022 . U.S. Inflation Calculator, n.d. Web.

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2023, December 27). Financial Literacy: The Importance in the Modern World. https://ivypanda.com/essays/financial-literacy-the-importance-in-the-modern-world/

"Financial Literacy: The Importance in the Modern World." IvyPanda , 27 Dec. 2023, ivypanda.com/essays/financial-literacy-the-importance-in-the-modern-world/.

IvyPanda . (2023) 'Financial Literacy: The Importance in the Modern World'. 27 December.

IvyPanda . 2023. "Financial Literacy: The Importance in the Modern World." December 27, 2023. https://ivypanda.com/essays/financial-literacy-the-importance-in-the-modern-world/.

1. IvyPanda . "Financial Literacy: The Importance in the Modern World." December 27, 2023. https://ivypanda.com/essays/financial-literacy-the-importance-in-the-modern-world/.

Bibliography

IvyPanda . "Financial Literacy: The Importance in the Modern World." December 27, 2023. https://ivypanda.com/essays/financial-literacy-the-importance-in-the-modern-world/.

• Ways in Which NFTs Can Benefit Companies
• Non-Fungible Tokens and Marketing in Creative Industry
• Cryptocurrency in Latin American Countries
• Cryptocurrency and Its Taxation in Australia
• Interest Rate: Liquidity Management
• Cryptocurrency and Its Instability Issues
• The Cryptocurrency Concept Analysis
• The Art of Failure
• Cryptocurrency Schemes Creating Artificial Bubbles
• “Cryptocurrency and the Problem of Intermediation” by Harwick
• Aspects of the 2008 Financial Crisis
• Essential Points From the Financial Crisis
• Economic Aspect of a Vaccine Cost
• Strategies to Save and Protect Money
• Auctions for Selling Products and Gathering Data

• Our Programs
• Economic Opportunity
• Financial Empowerment Centers
• ALICE Lives Here
• Signature Events
• Find Support
• Donate Once
• Donate Monthly
• Will & Trust Donations
• Donate Cryptocurrency
• Time & Talent
• Volunteer in DC and Surrounding Areas
• Corporate Citizenship
• Affinity Groups and Regional Councils
• Equity Statement
• Partner Nonprofits
• Corporate Partners
• Stuff the Bus
• Project Community Connect
• Tee Up for Equity
• Weekend Hunger Backpack Program

Home - Blog - Financial Literacy for Youth: Why it Matters

Financial Literacy for Youth: Why it Matters

Jun 06, 2023

by United Way NCA

In 2023, many young people will enter adulthood without the essential financial knowledge and skills they need to make informed choices about their money.

Consider this: Young Americans owe over $1 trillion in debt, and 70% of millennials live paycheck to paycheck. These alarming statistics highlight an urgent need for financial education among young people. Early-adulthood financial decisions can have lifelong consequences. Equipping young people with the tools to manage their money effectively helps them avoid the cycle of debt and economic insecurity that plagues many Americans well into adulthood, giving them the foundation to build a secure financial future.

United Way National Capital Area (United Way NCA) recognizes financial literacy’s vital role in expanding economic opportunity in our community. United Way NCA’s five Financial Empowerment Centers across DC, Maryland and Virginia provide access to high-quality financial services and guidance—at no cost—to individuals and families of all ages to assist them in creating economic stability. Delve into a personal story of a single mother who utilized our financial empowerment centers to empower herself and her family today. We are specifically focused on the economic opportunity of our region’s ALICE population. ALICE—Asset Limited, Income Constrained, Employed—represents the nearly 500,000 community members in the National Capital Area who are employed and earn more than the Federal Poverty Level, but still struggle to make ends meet.

What is Financial Literacy?

Financial literacy is the combined knowledge and skills required to make responsible and informed financial decisions that contribute to a sense of financial security and well-being.

Knowledge of financial concepts like saving, investing, spending and borrowing is the foundation of financial literacy. In addition, understanding credit management, asset building and how to reduce debt and avoid scams is critical to a healthy financial life.

The Repercussions of Low Financial Literacy

Why is financial literacy important? Because low financial literacy threatens the well-being of individuals and families, especially in underserved and low-income communities. Without a solid financial foundation, our youth are more susceptible to predatory lending and costly errors in managing debts and expenses that can lead to lifelong financial inequity.

Additionally, low financial literacy can lead to missed wealth-building opportunities and reduced access to higher education and professional development training. When young people lack the financial knowledge they need to make informed decisions, they are more likely to become trapped in cycles of poverty and debt. For example, poor spending and borrowing habits often result in low credit scores, contributing to higher financial insecurity.

Investing in financial literacy helps bridge the opportunity gap that exists in our underserved communities and empowers youth with the tools they need to break down economic barriers and lead financially secure lives.

The Financial Literacy Gap

According to a July 2022 FINRA Foundation national financial capability study , a persistent financial literacy gap exists in the U.S. Further, the study found that young people, Black/African American, Hispanic/Latino and low-income households remain more vulnerable to the consequences of low financial literacy than other Americans.

The study also showed that the above groups were more likely to exhibit psychological symptoms of financial stress, and younger people were 38% more likely to miss mortgage payments and 26% more likely to make hardship withdrawals from retirement accounts.

These findings highlight the importance of investing in financial education and access to services to help individuals and families build assets and gain economic opportunity. This is especially true for younger people across all demographics.

Financial Literacy: The First Step Toward Financial Capability

Financial education is fundamental to improving financial health and well-being for our communities, but developing financial capability is the ultimate goal. Financial capability is what happens when financial literacy knowledge is practiced and applied until it becomes second nature and drives behavior that consistently leads to positive economic outcomes.

It gives individuals the confidence to make informed financial decisions, take advantage of opportunities and build financial security for themselves and their families.

United Way NCA seeks to improve the lives of underserved individuals in our community by increasing economic opportunity for individuals and families across our region.

Our Financial Empowerment Centers teach fundamentals of budgeting, saving, investing, borrowing responsibly and other personal finance topics useful in everyday life and long-term financial planning.

Empowered with the knowledge and skills required to make responsible financial decisions, individuals will build the financial stability necessary for a successful future.

United Way NCA Financial Empowerment Centers provide financial services and expert guidance at no cost in a welcoming, supportive and inclusive environment. Our goal is to be a trusted resource for individuals and families in the communities we serve. For support around credit building, debt management, saving, starting a business, homebuying or completing your taxes, contact a United Way NCA Financial Empowerment Center near you . When none are ignored, all will thrive.

Recent Posts

April is National Volunteer Month: The Benefits of Family Volunteering

Forging Your Own Path to Success: A Women's History Month Celebration

It’s Not Too Late to Take Advantage of Free Tax Services and Possibly Earn Larger Refunds

The Economic Importance of Financial Literacy: Theory and Evidence

In this paper, we undertake an assessment of the rapidly growing body of research on financial literacy. We start with an overview of theoretical research which casts financial knowledge as a form of investment in human capital. Endogenizing financial knowledge has important implications for welfare as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little) people know and identify the least financially savvy population subgroups. This is followed by an examination of the impact of financial literacy on economic decision-making in the United States and elsewhere. While the literature is still growing, conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps. A final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy.

The research reported herein was performed pursuant to a grant from the TIAA-CREF Institute; additional research support was provided by the Pension Research Council and Boettner Center at the Wharton School of the University of Pennsylvania. The authors thank Tabea Bucher-Koenen, Janet Currie, and Maarten van Rooij for suggestions, and Carlo de Bassa Scheresberg, Hugh Kim, Donna St. Louis, and Yong Yu for research assistance. Opinions and conclusions expressed herein are solely those of the authors and do not represent the opinions or policy of the funders or any other institutions with which the authors are affiliated The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

Mitchell serves as a Trustee for the Wells Fargo Advantage Funds and has received more than $10,000 from the TIAA-CREF Institute and RAND for research studies on retirement security.

MARC RIS BibTeΧ

Download Citation Data

Published Versions

More from nber.

In addition to working papers , the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter , the NBER Digest , the Bulletin on Retirement and Disability , the Bulletin on Health , and the Bulletin on Entrepreneurship  — as well as online conference reports , video lectures , and interviews .

An official website of the United States government

The .gov means it’s official. Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

The site is secure. The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

• Publications
• Account settings

Preview improvements coming to the PMC website in October 2024. Learn More or Try it out now .

• Advanced Search
• Journal List
• Springer Nature - PMC COVID-19 Collection

Impact of financial literacy on financial well-being: a mediational role of financial self-efficacy

Umer mushtaq lone.

1 Research Scholar, Department of Management Studies, University of Kashmir, Jammu and Kashmir, Hazaratbal, Srinagar, 190006 India

Suhail Ahmad Bhat

2 Department of Management Studies, University of Kashmir, Jammu and Kashmir, Hazaratbal, Srinagar, 190006 India

The purpose of this paper is to explore the impact of financial literacy on financial well-being among the business school faculties. Both the variables (financial literacy and financial well-being) are operationalized as multi-dimensional constructs to undertake the study. Moreover, the paper also endeavored to examine the mediating role of financial self-efficacy between financial literacy and financial well-being. The paper adopts a survey by questionnaire method to gather data from 203 business school faculty members through the simple random sampling (SRS) technique. Confirmatory factor analysis was used for scale validation, and structural equation modeling was used for hypotheses testing. Mediation was tested using percentile bootstrap with a 95% confidence interval. The study found a significantly positive impact of financial literacy as well as its dimensions on financial self-efficacy and financial well-being. It was also found that financial self-efficacy partially mediates the effect of financial literacy on financial well-being. Measurement of the constructs was done on subjective measures, and the study is limited to business school faculties only. The present research findings could be employed in crafting educational programs for business schools. These programs shall guide such institutions in imparting the knowledge and skills among students regarding their personal finances in terms of savings and retirement planning. The study was focused on the business school faculties of the Jammu and Kashmir region, who are less exposed to the financial literacy programs due to factors like frequent lockdown and internet shutdowns. Moreover, it is generally witnessed that salaried class people in Jammu and Kashmir pay less attention to long-term financial planning for retirement, which makes the present study more relevant. Therefore, this study will prove beneficial to all the employees, especially the business school faculties, to understand the importance of financial literacy and its subsequent effect on financial well-being.

Introduction

Personal financial decisions and money management have been highly valued in the present economic scenario (Sinha et al. 2021 ). The instability of the global economy has given rise to diverse and complex financial products, which has brought in new challenges thereby forcing people to face these complex financial decisions (Philippas and Avdoulas 2020 ). As a result, the importance of personal financial management skills has amplified and, as such, has caught the attention of academia and policymakers more recently. Moreover, employees face numerous financial challenges ranging from overwhelming financial information, products, and services to financial responsibility (van Rooij et al. 2011 ; Agarwalla et al. 2012 ). Further, on account of complex financial products as well as structural reforms in social protection and pension schemes, people are forced to assume greater responsibilities to make difficult financial decisions for securing their own financial well-being (van Rooij et al. 2011 ). Also, with an increasing number of working-class approaching retirement and most importantly, a changing focus on individual responsibility for personal finances, financial literacy has evolved into a necessary skill that everyone must possess in everyday life (van Rooij et al. 2011 ). Consequently, this has led to the diminishing role of governments and other employers in managing finances on behalf of employees (Agarwalla et al. 2012 ). Additionally, the recent global financial crisis has underscored the implication of financial literacy and the need to be financially educated to make reasoned financial decisions. Further, financial literacy gives rise to the financial attitude, which results in financial well-being (Philippas and Avdoulas 2020 ).

In the light of the above perspective, an individual who is financially literate can plan, borrow, invest, spend more wisely and take risk mitigation measures (Attridge 2009 ; Atkinson and Messy 2012 ; Moulton et al. 2013 ; Grohmann et al. 2014 ; Lusardi and Mitchell 2017 ). In other words, a financially literate people are able to make sound financial decisions which are critical for financial well-being. Pahlevan Sharif et al. ( 2020 ) argued that financial literacy is required for successful financial resource management to achieve financial well-being. Chijwani ( 2014 ) supporting the previous studies state that a low degree of financial literacy has the potential to result in poor financial decisions that will adversely affect the financial condition of people. In this context, financial challenges, like personal bankruptcies, health issues, early retirement, job losses, debt repayment stress, and failing to meet savings targets, will be dealt more efficiently and smoothly by those persons who are financially prepared compared to those who are ill-prepared. Thus, financially prepared persons will achieve more financial well-being than financially ill-prepared (Kamakia et al. 2017 ).

Given the significance of financial literacy in the overall improvement of financial well-being, there is scarce research in the extant literature across the discipline (Bruggen et al . 2017 ). In this context, the present study is an attempt to expand the existing literature more broadly by considering the business school faculties. Therefore, two different approaches can be used to understand the changing dynamics of an association between financial literacy and financial well-being. First, a direct relationship between financial literacy and financial well-being can be investigated. Second, the relationship between the two can be understood indirectly through financial self-efficacy. Because of its increased predictive potential, financial self-efficacy influences individual tasks or decisions directly when it is domain-specific and to perceive favorable results indirectly that people frequently expect (Noor et al. 2020 ). Moreover, individually desired behavior can be attained and controlled based on financial self-efficacy in order to achieve a specific result (Bandura 1977 , 2005 ). As a result, it is critical to have knowledge and confidence in order to make decisions (Danes and Haberman 2007 ). Further, individuals with appropriate financial knowledge and information are also self-assured in their ability to complete successful deals (Noor et al. 2020 ). In this context, financial self-efficacy (in terms of behavioral skills) can play a vital role as an intervening factor in the relationship between financial literacy and financial well-being. Business school faculty is considered financially more aware and literate; thus, they feel more confident in their ability to make sound personal finance decisions, which in turn may lead to improved financial well-being. However, there is very little empirical evidence to back this proposition. Therefore, the present study intends to fill this gap by investigating the mediating role of financial self-efficacy in the relationship between financial literacy and financial well-being among business school faculty. The target population of the present study included business school faculties of the Jammu and Kashmir region. It is noteworthy that Jammu and Kashmir is an erstwhile state of India, which was recently downgraded to a Union Territory (UT) status post the dilution of Article 370 of the Indian Constitution in August, 2019. The borders of the UT of Jammu and Kashmir to the east are bounded with the Union Territory of Ladakh and to the South with the states of Himachal Pradesh and Punjab. Moreover, borders of Jammu and Kashmir to the southwest are bounded with Pakistan and to the northwest with the Pakistan-administered part of Kashmir. The UT of Jammu and Kashmir is fundamentally and greatly service-based economy and to some extent agriculture-oriented. Thus, analyzing the relationship between financial literacy and financial well-being is more relevant especially in the business school faculty group. This is fundamentally because this population segment is less exposed to the financial literacy programs due to certain factors such as frequent lockdown and internet shutdowns. Moreover, it is generally witnessed that salaried class people in Jammu and Kashmir pay less attention to long-term financial planning for retirement which makes the present study more relevant (Gopalakrishnan et al. 2017 ). Further, they rely on their savings mostly in their bank accounts and usually do not take loan from the banks. Also, they have less exposure to the investment avenues like retirement funds, pension funds, stock market investment or mutual fund investments compared to the rest of India. Finally, on account of the recent decision by the Government of India to change the status of Jammu and Kashmir from state to union territory, more centrally sponsored schemes are now available in Jammu and Kashmir. Thus, business school faculties based on their background, area of specialization and knowledge, they have been preferred over other population groups of the Jammu and Kashmir region. Therefore, this study shall prove beneficial to all the employees especially the business school faculties to understand the importance of financial literacy and its impact on their financial well-being.

Theoretical background and literature

There is a large body of existing literature that links financial literacy with financial well-being. Hogarth ( 2006 ) and Shim et al. ( 2009 ) have established that financial literacy, financial fragility and financial behavior have an impact on financial well-being. Moreover, financial literacy fosters a positive financial attitude leading to financial well-being. These studies have established that financial literacy has a strong positive influence on financial well-being. Confirming the results of previous studies, Joo and Grable ( 2004 ) observe that increased levels of financial literacy result in financial contentment and eventually financial well-being. Xiao et al. ( 2014 ) opine that people possessing higher financial literacy are more financially satisfied. Similarly, Ali et al. ( 2015 ) postulate that financial literacy is the significant determinant of financial satisfaction which helps people in planning their spending and saving patterns. Likewise, Chu et al. ( 2017 ) state that the households that are more financially literate enjoy higher financial well-being as measured in terms of positive investment returns. Hilgert and  et al . ( 2003 ) suggest that financial management skills have a strong association with financial literacy. As a result, it is not surprising that retirement planning and the growth in retirement money is a primary pathway through which financial literacy influences financial well-being. People in many countries around the world are expected to assess and organize their savings to ensure that they have sufficient funds to cover for their old age and do not outlast their wealth. In order to do that, one must possess the working knowledge of basics of mathematical finance. In this context, the studies by Lusardi and Mitchell ( 2005 , 2007 ) have used basic mathematical finance concepts to evaluate whether an individual’s financial literacy influence his retirement planning and consequently his financial well-being. These authors have clearly established a significant positive impact of financial literacy on financial well-being. The study of Agnew et al. ( 2012 ) corroborating the views established by these results states that people with less financial understanding are more inclined to draw out from their pension funds. These findings have been confirmed by several other studies including Alessie et al. ( 2011 ), Fornero and Monticone ( 2011 ), Klapper and Panos ( 2011 ), and Sekita ( 2011 ).

Similarly, there are other strands of extant literature which have linked financial literacy to other dimensions of financial well-being. Studies like Stango and Zinman ( 2009 ), Behrman et al. ( 2012 ), van Rooij et al. ( 2012 ), Chu et al. ( 2017 ) have demonstrated that higher wealth accumulation is a result of higher financial literacy, which in turn results in the financial well-being of an individual. Studies like Lusardi and Tufano ( 2009 ), Santos and Abreu ( 2013 ), Tsai et al. ( 2016 ) have established that lower levels of financial literacy often result in excessive debt loads, credit problems, bankruptcy and over-indebtedness which eventually affects financial well-being negatively. Moreover, Scheresberg ( 2013 ) and Lusardi et al. ( 2011 ) have found that increased levels of financial knowledge lead to more precautionary savings and a greater ability to deal with financial emergencies. As a result, people feel more secure and thus achieve financial well-being. Additionally, several other studies have linked financial literacy to the financial costs of households. In this context, studies like Moore ( 2003 ), Lusardi and Tufano ( 2009 ), Gerardi et al. ( 2010 ), Mottola ( 2013 ), and Lusardi and Scheresberg ( 2013 ) have demonstrated that higher borrowing and mortgage costs, higher credit card costs, and increased mortgage defaults result from lower levels of financial literacy. All these financial costs and mortgage defaults are detrimental to financial well-being.

In addition to the above discussions, Bruggen et al . ( 2017 ) have observed that increased financial literacy leads to financial self-efficacy, and that is an essential factor for financial well-being. These authors identify financial self-efficacy as being able to control one’s finance which reflects an individual’s skill and ability to influence his/her financial matters. So, financial self-efficacy can be understood as the confidence of an individual stemming from his/her financial knowledge which eventually results in financial well-being. However, there is scanty literature available pertaining to this relationship, and it is even non-existent when viewed from the perspective of business school faculties. So, the present study will empirically analyze how the relationship between financial literacy and financial well-being is being mediated by financial self-efficacy.

On the basis of the above-discussed literature, the present study identifies financial preparedness for emergency, current money management stress and perceived financial security as constructs of financial well-being (endogenous variable), financial self-efficacy as intervening or mediating variable and financial awareness, financial experience and financial skill as constructs of financial literacy (exogenous variable).

Financial well-being

Financial well-being is conceptualized as the belief in one’s ability to maintain current and predicted ideal living standards as well as financial freedom (Bruggen et al . 2017 ). Moreover, CFPB 1 defines financial well-being as “a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.” Therefore, a person who is financially insecure leads a precarious life, which has an impact on his economic mobility and as a result, a trivial financial issue might quickly escalate into a long-term financial limitation (Gennetian and Shafir 2015 ). The comprehensive study by Bruggen et al . ( 2017 ) presents the multifaceted, complex and dynamic construct framework of financial well-being, which calls for further investigation into different perspectives. However, on the basis of the extant literature and need of the present study, the following three constructs have been identified and analyzed vis-à-vis financial literacy and financial self-efficacy. In the following sub-sections, the identified constructs of financial well-being are operationalized in the light of existing literature.

Financial preparedness for emergency

Financial preparedness for an emergency is conceptualized as an individual’s state of being financially prepared to deal with a financial shock that may hinder him or her from carrying out routine activities (Abrantes-Braga and Veludo-de-Oliveira 2019 ). Therefore, people who have financial stability and the security of meeting their financial obligations are more likely to experience more financial well-being in such a situation (Hagerty and Veenhoven 2003 ). The concept of financial well-being suggests that individuals must have the ability to withstand a financial interruption in order to attain financial well-being (Consumer Financial Protection Bureau, 2015) 2 . The concept of ‘financial preparedness for emergency’ captures this perspective of financial well-being and is likely to act as a driver for financial well-being. The previously stated concept of financial preparedness for an emergency is similar to what Bruggen et al . ( 2017 ) call “stimulating financially sound behavior.”

Current money management stress

Current money management stress is conceptualized as feelings of stress or worry about one's financial situation and inability to effectively manage money in order to meet financial obligations and live the desired life (Netemeyer et al. 2018 ). Despite the fact that the majority of research studies reveal a negligible relationship between income and financial well-being (Ng and Diener 2014 ), however, there is a growing body of research linking current money management stress and financial well-being (Brown et al. 2005 ; Johnson and Krueger 2006 ; Ruberton et al. 2016 ). In this context, Netemeyer et al. ( 2018 ) establish a negative relationship between the two. Therefore, people with enough cash in hand for meeting current requirements are most likely to have satisfied life (Ruberton et al. 2016 ). Similarly, Brown et al. ( 2005 ) observe that current money management stress in terms of excessive indebtedness results in psychological distress, a finding similar to the observation made by Rubertson et al . ( 2016 ).

Perceived financial security

Perceived financial security is understood as the individuals’ subjective appraisal of their economic resources and situations (Haines et al. 2009 ). It involves beliefs about having a financially secure future and achieving financial objectives (Netemeyer et al. 2018 ). Individual perceptions of economic problems and strains have been identified as one of the most severe chronic stresses that people face on a daily basis (Lynch et al. 2010 ; Kahn and Pearlin 2006 ). Therefore, perceived financial security captures the individuals’ level of satisfaction regarding their financial security. In this context, Netemeyer et al. ( 2018 ), while analyzing the causes and effects of perceived financial well-being, find perceived financial security one of the critical causes. The study establishes a positive relationship between the two. People who save/invest responsibly for future needs are significantly more satisfied than people with the same amount of income who save/invest less (Chancellor and Lyubomirsky 2011 ).

Financial literacy

Financial literacy is defined in this study as the understanding of basic economic and financial concepts required for the proper management of financial resources in order to achieve financial well-being (Hung et al. 2009 ). Financial well-being, on the other hand, as defined previously, is the belief in one’s ability to maintain current and predicted ideal living standards as well as financial freedom (Bruggen et al . 2017 ). In this context, financial literacy is believed to have a significant effect on people's financial well-being since financially literate people are more inclined to handle their personal resources, develop effective ways to save, invest and accumulate wealth over time (Nejad and Javid 2018 ). Therefore, people with proper financial knowledge have the potential to make reasonable financial decisions which will lead to the achievement of financial well-being. It can be inferred that as people gain more and more financial literacy, they tend to save and invest more and may even become more skillful about making daily financial choices (Lusardi and Mitchell 2007 ; Lusardi and Tufano 2008 ). Consequently, they achieve financial self-efficacy which eventually results in higher financial well-being (Netemeyer et al. 2018 ). On the basis of the review of extant literature and also the need for the present study, the following three constructs of financial literacy have been found to be more relevant. The following subsections present their conceptualization, their links with financial well-being and financial self-efficacy.

Financial awareness

Financial awareness is conceptualized as the general understanding of budgeting, knowledge about financial products and services offered by financial institutions, and basic concepts of finance to manage one’s personal finance and achieve his/her financial goals (Beal and Delpachitra 2003 ; Nga et al. 2010 ; Remund 2010 ; Chowdhry and Dholakia 2020). Financial awareness, as part of financial literacy, is an essential component of financial stability since it influences financial knowledge, which in turn drives decision-making (Mason and Wilson 2000 ; Khan 2015 ; Priyadharshini 2015 ). The antecedents of financial awareness in terms of both general awareness and product awareness have been ascribed to demographic factors (Nga et al. 2010 ). So, financially aware people will make reasoned financial decisions which will boost their confidence or financial self-efficacy and eventually feel more satisfied, i.e., higher level of financial well-being (van Rooij et al. 2012 ; Khan 2015 ; Priyadharshini 2015 ). Moreover, Guiso and Jappelli ( 2005 ) state that individuals that lack financial awareness limits financial knowledge related to financial products and services which ultimately influences decision-making and investment in financial markets. So, people with no or limited financial awareness will result in low financial self-efficacy and thus a low level of financial well-being. Based on the above-discussed literature, the following hypothesis is formulated:

Financial awareness has a significantly positive impact on financial self-efficacy.

Financial experience

Financial experience is understood as the experience of owning a financial product or sharing the experience of the same with others and is believed to improve financial literacy (Dewi et al. 2020 ). Moreover, financial experience is conceptualized as the engagement or participation in financial education programs that influence and improve financial literacy and eventually the financial behavior (Frijns et al. 2014 ). So, financial experience invariably induces an individual’s motivation to become financially literate (Frijns et al. 2014 ). Moreover, Mandell ( 2008 ) states that financial literacy programs in high schools which incorporate stock market games have resulted in a considerable increase in financial literacy scores of 6–8 percent. This is because stock market games are considered as experimental learning giving controlled exposure to markets without the fear of financial loss in real terms (Frijns et al. 2014 ). Further, financial experience and behavior have an impact on an individual's degree of financial knowledge, which leads to financial competency (Moore 2003 ). So, people with a great degree of financial competency by default develop financial self-efficacy which improves their financial well-being. On the basis of above discussion, the following hypothesis is proposed:

Financial experience has a significantly positive impact on financial self-efficacy.

Financial skill

Financial skill is conceptualized as the numerical and cognitive abilities of individuals, which may encourage them to analyze information, gain new skills, and even search the market for what is available (Lusardi 2012 ; Mitchell and Lusardi 2015 ). Moreover, Priyadharshini ( 2015 ) states that financial skills refer to the individuals’ ability to make information-based decisions to minimize the chances of entrapping themselves in financial complications. Further, people possessing financial skills help them to avail services like internet and mobile banking which eventually aid in the management of personal finances (Nejad and Javid 2018 ). Also, individuals relying on financial skills are less likely to contact customer services to resolve their issues (Nejad and Javid 2018 ). This indicates that financially literate people in terms of possessing necessary financial skills, make informed and effective financial decisions (Starcek and Trunk 2013 ; Lusardi and Mitchell 2017 ). Additionally, one of the underlying causes of the global financial crisis was the lack of basic financial skills in terms of the inability of understanding credit, complex financial products or investment instruments or the utilization of the existing banking system (Lusardi and Mitchell 2011 ). Further, budgeting, saving, borrowing, and investing are the four pre-requisites of financial literacy, which emphasize the importance of the capacity to apply knowledge and skills to manage money (Remund 2010 ). In this context, possessing necessary financial skills makes an individual gain financial self-efficacy which helps him/her eventually improve his/her financial well-being. On the basis of the literature discussed above, the following hypotheses are proposed:

Financial skill has a significantly positive impact on financial self-efficacy.

Financial literacy has a significantly positive impact on financial self-efficacy.

Financial self-efficacy

Financial self-efficacy is conceptualized as the confidence of an individual in his/her ability to acquire information for making effective financial decisions (Netemeyer et al. 2018 ). Therefore, the greater one's belief in one's financial capacity, the more favorable future results accumulate (Hadar et al. 2013 ; Bruggen et al . 2017 ). Moreover, financial self-efficacy helps in avoiding adverse financial behavior, and consequently, the financial anxiety accompanying that behavior (Hadar et al. 2013 ). Also, financial self-efficacy is believed to reinforce responses to challenging present events by making individuals to remain motivated to face obstacles (Kammeyer-Mueller et al. 2009 ). Therefore, financial self-efficacy should have positive association with the financial well-being. Further, it is believed that financial self-efficacy evokes a behavior to be disciplined to achieve long-term financial goals (Chen et al. 2001 ; Chowdhry and Dholakia 2016 ). Additionally, people with a high degree of financial self-efficacy have a belief that the financial decisions taken based on financial knowledge will eventually help them to secure their financial future (Netemeyer et al. 2018 ). This will resultantly enhance their perceived financial security level and will nurture their financial well-being. Based on the discussion of existing literature, the following hypotheses have been proposed:

Financial Self-efficacy has a significantly positive impact on financial well-being.

Self-efficacy mediates the impact of financial literacy on financial well-being.

Proposed model

The conceptual model has been developed on the basis of above-discussed literature pertaining to financial well-being and its various determinants. The present study has put forward a model that contains seven constructs in which financial well-being is depicted as endogenous variable (measured with three constructs, namely financial preparedness for emergency, current money management stress and perceived financial security). Financial literacy is exogenous variable (measured with three constructs, namely financial awareness, financial experience and financial skill) and financial self-efficacy represents a mediating variable measured with a single construct (Fig.  1 ). Both financial literacy and financial well-being are second order latent constructs developed from their dimensions. Overall impact of the second-order financial literacy construct as well as the individual impact of its latent constructs was observed in the financial self-efficacy. However, financial well-being was observed as second-order latent construct only.

Conceptual model

Materials and methods

The items measuring the various constructs have been adopted from previous research studies in the areas of financial literacy, financial self-efficacy, and financial well-being. Financial literacy is expressed in terms of three sub-dimensions viz., financial awareness, financial experience and financial skill and the items measuring these dimensions were borrowed from prior research studies of van Rooij et al. ( 2011 ) and Dewi et al. ( 2020 ). Financial self-efficacy is a unidimensional construct, and the items measuring it have been derived from the research studies of Mindra et al. ( 2017 ) and Losada-Otalora and Alkire ( 2019 ). Lastly, financial well-being is also expressed in terms of three dimensions viz., financial preparedness for an emergency, current money management stress, and perceived financial security. The items measuring these dimensions have been adopted from the research studies of Gutter and Copur ( 2011 ), Howell et al. ( 2013 ), Chatterjee et al. ( 2019 ), Abrantes-Braga and Veludo-de-Oliveira ( 2019 ). The scale items measuring different constructs undertaken in the study are shown in the Appendix I. Some of the scale items have been modified slightly in order to suit the requirements of the present study. The responses from the respondents were collected on a five-point Likert-type scale ranging from 1 (strongly disagree) to 5 (strongly agree).

Target population, sampling process, and data collection

The target population for the study comprises business school faculties of the Jammu and Kashmir region which approximately constitute 300 faculty members (both contractual and permanent). The business school faculties have mostly been selected from higher educational institutions (running post-graduate courses) and universities in the region. The underlying reason for the selection of business school faculties as the target population stems from the fact that they are believed to possess a basic knowledge about personal finance compared to other faculties in specific and to the overall population in general. The data collection from respondents was conducted via an online survey. There are two primary reasons for adopting an online survey. Firstly, on account of the COVID-19 pandemic, all educational institutions were closed and thus offline mode could not be availed. Secondly, the online mode is considered as the efficient and most acceptable approach to data collection (Hsiao et al. 2010 ; Lin and Wang 2015 ). The study used various different digital platforms such as messenger (like WhatsApp etc.) and e-mailing services to approach the respondents by constructing an online questionnaire. The questionnaire-link was sent to the respective respondent using above-mentioned digital platforms. The contact details of the respondents were obtained from the official websites of the different institutions, friends, acquaintances and peers (in case digital address was not available).

Further, to draw a required sample from the population, an itemized sampling procedure was used. In this procedure, 5–10 respondents are enough for each item in the questionnaire to avoid sampling error (Hinkin 1995 ; Hair et al. 1998 ). Subsequently, the current questionnaire has 30 items; therefore, a sample of 150–300 is adequate for the study. Since the current study has used simple random sampling, therefore, an effort was made to reach the maximum population and a total of 203 responses were recorded which forms around 67% of the ideal sample size under itemized sampling criteria.

Sample characteristics

Table ​ Table1 1 presents the sample characteristics in terms of the socio-demographic features of respondents. It is presented in the table that female respondents account for the highest percentage (72.4%) and male respondents account for the lowest percentage (27.6%). Age is categorized into three groups viz., 25–35, 36–45, 46–55 and above 56 (Table ​ (Table1). 1 ). So, in terms of age group, the highest percentage of responses is observed for the respondents falling in the group range of 25–35 (63.1%) and the lowest percentage of responses is observed in the case of respondents falling in the category above 56 (3.9%). Further, specialization acts as the course-teaching specialization of the respondents categorized into five areas viz., finance, human resource, information technology, marketing and tourism. The respondents possessing marketing specialization account for the highest responses (42.4%) and the lowest responses are observed in the case of respondents having human resource specialization (8.8%). Moreover, income has been taken as economic variable categorized into five groups viz., 25,000 – 50,000; 50,000 – 1,00,000; 1,00,000 – 1,50,000; 1,50,000 – 2,00,000 and above 2,00,000 (Table ​ (Table1). 1 ). The respondents in the monthly income group of 25,000 – 50,000 account for the highest percentage of responses (51.7%) and the lowest percentage is observed for the respondents falling in the monthly income range of 1,50,000 – 2,00,000.

Sample profile (N = 203)

Pilot study

Face validity and content validity of the questionnaire were evaluated during the pilot study, which initially consisted of 30 items measuring seven constructs. Face validity and content validity were evaluated by seeking feedback from research experts, personal finance experts, and psychometric experts regarding order, content, wording, sentence structure and layout of the questionnaire (Malhotra, 2010). The questionnaire was revised in light of various suggestions received from the experts. The expert evaluation of the questionnaire resulted in the omission of three items namely FA6, FE11 and CMMS28. Inputs regarding the content of the questionnaire were also collected from respondents, resulting in minor changes in few questions. After the qualitative evaluation, empirical testing of the questionnaire was carried out by drawing a sample of 63 respondents from the population. Respondents were approached through online mode only by sending email/instant messages that contain a link to a questionnaire. In order to validate the instrument, confirmatory factor analysis (CFA) was conducted on the data set. CFA results are discussed in the next section.

Data analysis

Confirmatory factor analysis (cfa).

A measurement model was developed in AMOS 22 and CFA was applied to the pilot study data of 63 respondents to evaluate its reliability and validity. CFA results were gauged on the basis of model fit indices, standardized CFA loadings, composite reliability, average variance extracted and discriminant validity (Hair et al. 1998 ). MLE (maximum likelihood estimation) has been employed to conduct CFA for the 7 constructs designated in the study. The initial model fit indices were observed to be χ 2 /df = 1.88; CFI = 0.842; RMR = 0.096; RMSEA = 0.094 (Hair et al. 2003 ). These model fit indices were slightly out of the acceptable range because of the poor loading of some items (below the threshold of 0.70). The items FA1, FE7, FPE23, CMMS31, and PFS35 were dropped on the ground of factor loading below the standard threshold of 0.70 (Byrne 2006 ). These items were successively removed from the CFA model, and model fitness was rechecked at each dropout. It took five iterations to clean the CFA model from items with poor loadings. The model fit indices after dropping all the poorly loaded items were found to be χ 2 /df = 1.72 (χ 2  = 527.54 & df = 303); CFI = 0.922; RMR = 0.090; RMSEA = 0.074 (appended as footnote to Table ​ Table2 2 ).

Results of confirmatory factor analysis and reliability/validity estimates

AVE- Average Variance Extracted, MSV- Maximum Shared Squared Variance, CR- Composite Reliability; The figures diagonally represent the square root of AVE;

Model fit indices include: Chi-square/df = 1.72; CFI = 0.922; RMR = 0.090; RMSEA = 0.074; Source: AMOS Output

The reliability and validity of the constructs were determined through composite reliability (CR), convergent validity and discriminant validity. CR was employed to determine the internal consistency, and its value was found to be above the acceptable threshold of 0.70 for all the 7 constructs as shown in Table ​ Table2 2 (Nunnally and Bernstein 1994 ). Convergent validity was established through AVE, which was found to be above the acceptable limit of 0.50 for all constructs (Table ​ (Table2). 2 ). Discriminant validity was determined by using Fornell–Larcker’s criterion (Fornell and Larcker 1981 ; Bagozzi and Yi 1988 ), which depicts that correlation among the different pairs of constructs should be lower than square root of AVE (Hair et al. 2010 ). The results of discriminant validity are presented in Table ​ Table2. 2 . It is depicted from the Table that the inter-construct correlation coefficient of all the constructs is below the square root of AVE (diagonally in bold figures), thus providing evidence for DV (Hair et al. 2010 ).

Results and discussion

The proposed research framework has been gauged by developing a structural model in AMOS graphics and was subsequently performed on the final data set of 203 through the MLE approach. To accomplish the objective of the study and test the various hypotheses, two structural models were developed. In the first structural model, financial literacy was treated as a higher-order latent construct (consisting of 3 dimensions, namely financial experience, financial awareness, and financial skill) and its impact was determined on financial self-efficacy and financial well-being (Fig.  2 ). The model fit indices of the first structural model were found to be in the acceptable ranges indicating that data fits the model (χ 2 /df = 1.56 (χ 2  = 495.5 & df = 316); CFI = 0.910; RMR = 0.069; RMSEA = 0.053). In the second structural model, impact of the dimensions of financial literacy (financial awareness, financial experience and financial skill) was directly determined on financial self-efficacy and financial well-being (Fig.  3 ). The model fit indices of the second structural model were found to be in the acceptable ranges indicating that data fits the model (χ 2 /df = 1.57 (χ 2  = 494 & df = 314); CFI = 0.910; RMR = 0.068; RMSEA = 0.053).

(SEM – I). Model fit indices include: Chi-square/df = 1.56; CFI = 0.910; RMR = 0.069; RMSEA = 0.053; Source: AMOS Output

(SEM – II). Model fit indices include: Chi-square/df = 1.57; CFI = 0.910; RMR = 0.068; RMSEA = 0.053; Source: AMOS Output

The SEM results (of both the structural models) presented in Table ​ Table3 3 show standardized path estimates, critical ratios and R 2 estimates. It is depicted from the table that financial literacy has a significant impact on financial self-efficacy. Thus, hypothesis H1 is supported with standardized regression estimates (SRE) of 0.71 (critical ratio of 4.47 significant at 0.05). Further, the results illustrate that the R 2 of 0.50 (shown in brackets in Fig.  2 ) indicates that financial literacy explains 50 percent of the variance in financial self-efficacy. Table ​ Table3 3 results reveal that financial awareness, financial experience and financial skill significantly impact financial self-efficacy. Therefore, hypotheses H1a, H1b and H1c are supported with SRE of 0.25 (critical ratio of 2.69), 0.24 (critical ratio of 2.42); and 0.28 (critical ratio of 3.09), respectively. From the SEM results, it is observed that financial awareness has the highest effect among the three constructs of financial literacy. The underlying reason for such highest effect stems from the fact that unless an individual becomes aware of personal financial matters, it is difficult to have proper knowledge about such things and, as such, will not be able to develop relevant skills. Moreover, financial skill is seen to have a higher effect than financial experience vis-à-vis financial self-efficacy, which points to the fact that more skillful people feel more confident compared to those who only have financial experience. This means that financial experience acts only as an impetus for financially literate people (Frijins et al . 2014 ). However, developing skills out of such experience is more important because it is a financial skill that ultimately facilitates one’s sail into increased confidence (Nejad and Javed 2018 ). Therefore, individuals with greater financial skills are more likely to make effective financial decisions (Starcek and Trunk 2013 ; Lusardi and Mitchell 2017 ). This indicates that business school faculties that possess higher financial knowledge in terms of financial awareness, financial experience and financial skill are more likely to feel confident about that and, as such, achieve higher financial self-efficacy.

Results of SEM

* Indicates significant at 0.05; FL- Financial Literacy; FSE- Financial Self-efficacy; FA- Financial Awareness; FE- Financial Experience; FS- Financial Skill; FWB- Financial Well-being Source: AMOS Output

The results further reveal that R-square value of 0.32 (shown in brackets in Fig.  3 ) indicates that financial awareness, financial experience and financial skill explain 32 percent of the variance in financial self-efficacy. Further Table ​ Table3 3 illustrates that financial self-efficacy has a significant impact on financial well-being. Thus, hypothesis H2 is supported with an SRE of 0.82 (critical ratio of 5.83). This is explained by the fact that people with higher financial self-efficacy elicit a response to self-discipline, which helps to overcome challenges and eventually accomplishes long-term financial goals (Kammeyer-Mueller et al. 2009 ; Chen et al. 2001 ; Chowdhry and Dholakia 2016 ). Moreover, financial self-efficacy induces a strong belief in an individual regarding financial decisions, when based on sound financial knowledge, will help to secure future financially (Netemeyer et al. 2018 ). Consequently, an improvement is evidenced in one’s perceived financial security which gets manifested into improved financial well-being. In this context, business school faculties who have attained greater financial self-efficacy feel more motivated and are able to make sound personal finance decisions like retirement planning, cash management, debt management. Such people are more satisfied and result in their increased financial well-being. It is noteworthy that financial well-being becomes more important when an individual belonging to the Jammu and Kashmir region is facing numerous challenges which threaten his well-being. The challenges in the form of political and security situation in the said region have been volatile on account of hostilities between three nuclear-armed countries including India, Pakistan and China. The results further reveal that R-square value 0.68 (shown in brackets in Fig.  3 ) indicates that financial self-efficacy explains 68 percent of the variance in financial well-being.

Mediation analysis

Mediation hypothesis H3 was tested by employing one of the empirical approaches given by Nitzl et al. ( 2016 ). According to this approach, mediation analysis is performed using percentile bootstrap confidence interval method (with 3000 bootstraps resample) to obtain standardized direct, indirect and total effects at 95 percent CI in AMOS (Preacher and Hayes 2008 ; Hayes and Scharkow 2013 ). The results obtained are shown in Table ​ Table4 4 which reveal that the direct relationship between financial literacy & financial well-being and financial self-efficacy & financial well-being is significant. However, in the presence of financial self-efficacy (mediator), the direct effects are still significant and the ratio of indirect to total effects is less than 50 percent. These results provide strong support to our predicted relationship between financial literacy and financial well-being both directly and indirectly through the mediation effect of financial self-efficacy. From the results, it is deciphered that financial literacy is an underlying cause of financial well-being as the highest direct effect estimate was reported. These findings are consistent with the findings of Lusardi and Mitchell ( 2007 ) and Lusardi and Mitchell ( 2008 ). Thus, an individual’s financial knowledge does not alone guarantee him improved financial well-being; instead, an induced behavior manifested in greater self-belief about managing personal finances is also evidenced (Netemeyer et al. 2018 ). It is important to note that the overall sample population of business school faculties (which include finance, marketing, human resource, information technology and tourism) validate the results. One possible and important reason for such validation seems to be that nowadays faculties undergo FDPs (faculty development programs) wherein not only subject-related issues are discussed rather issues pertaining to personal finance are also highlighted. Thus, on the basis of direct, indirect and total effects, given in Table ​ Table4, 4 , hypothesis H3 is partially supported.

Mediation analysis results

* Indicates significant at 0.05; FL- Financial Literacy; FWB- Financial Well-being; FSE- Financial Self-efficacy Source: AMOS Output

Contribution and implications

The present study contributes to existing research on determinants of financial well-being in multiple ways. While the prior research works focused on the students, women, and other salaried class people, this study is exclusively related to business school faculties, virtually non-existent in the literature. Moreover, the present study analyzes the impact of financial literacy on the financial well-being of business school faculties through a mediator, i.e., financial self-efficacy. Financial self-efficacy is seen to develop self-assuredness in an individual which can enhance personal finance management skills. In addition to financial literacy, financial self-efficacy plays an important role in magnifying the financial well-being of an individual. This finding has not received much attention in the existing literature. Finally, the present study employs subjective measures for all the constructs instead of objective measures. The underlying reason for such a choice was necessitated by the fact that subjective measures address the inherent limitations of objective measures. They provide insight into how the individuals perceive financial literacy, financial self-efficacy and perceived impact on financial well-being from an individual’s perspective.

The findings of the study have implications for policymakers, educational institution administrators, financial analysts, financial planners, and most importantly the business school faculties themselves. The findings could be employed to develop financial education programs that will help business school faculties to impart the knowledge and skills to manage their personal finances in terms of savings and retirement planning and thus improve their overall financial well-being. Moreover, people with low levels of financial literacy are most vulnerable to online frauds, internet phishing scams and financial cybercrimes. All such activities are aimed at credit card thefts, capturing user credentials and gaining illegal access to bank accounts of individuals. So, business school faculties can disseminate the financial knowledge to other people, who can become financially literate, which can help them to protect themselves from such frauds. Additionally, students who are the beneficiaries of the educational loans have little experience in servicing such loans properly. The dissemination of financial knowledge from business school faculties to students has the potential to become a life-long pursuit for financial education. Thus, students, by virtue of being financially literate, can develop personal financial management skills which can increase their financial well-being.

The mediating role of financial self-efficacy has been partially established in the study which also holds important implications for managers and policymakers. Individuals that possess a greater sense of self-assuredness in their personal finance management skills are more likely to deal with any financial hardships as a ‘challenge to be mastered, rather than threats to be avoided.’ In this context, individuals that have a greater sense of self-belief in their capabilities have more appetite for taking risks and have stronger likelihood of making stock market investments or taking loans. However, those individuals that are low on financial self-efficacy exhibit financially risk-averse behavior and are more likely to go for a savings account. Apart from financial literacy that has an important implication for managers and policymakers for financial programs, financial self-efficacy in itself has an important role in personal finance behavior. The managers and policymakers can use the results related to mediating role of financial self-efficacy to devise their strategies and policies for better outcomes.

Limitations and directions for future research

There are certain limitations of the present study which deserve attention and could potentially become areas for future research. First, the survey sample is restricted to business school faculties of the Jammu and Kashmir region only; thus, future researchers need to be cautious while generalizing the results of this study. Moreover, the business schools operate in an environment where there is constant threat to their personal well-being, which emanates from the political and security instability of the region. In order to increase the generalizability of the current theme, more coverage to the sample should be given beyond business school faculties by considering other adult population. As depicted from the R-square results, financial self-efficacy and financial well-being is only 32 and 68 percent explained by financial literacy, respectively. Therefore, there is scope for more factors that could explain financial self-efficacy and financial well-being of an individual. Finally, the present has used financial self-efficacy as a unidimensional construct. Thus, future research could identify more dimensions for financial self-efficacy so that policies to improve financial well-being could be more effectively designed and implemented.

In an economic environment characterized by rapid changes with increased financial uncertainty, the ability to make effective and sound personal financial decisions has gained importance. An individual who is financially more literate has the ability to spend wisely and plan to secure future financial needs to attain improved financial well-being. In this context, the present study attempted to evaluate the impact of financial literacy on financial well-being. Although several studies have been conducted across different sections of the society including adults, students and other salaried class people. However, studies on business school faculties are non-existent in the extant literature and, as such, make the contribution of the present study more vital and relevant. The study has used structure equation modelling (SEM) to test the proposed hypotheses. The SEM results reveal that business school faculties that are financially literate in terms of financial awareness, financial experience and financial skill are more likely to have financial self-efficacy which helps in improving their financial well-being. Further, the results of mediation analysis depict that financial self-efficacy partially mediates the impact of financial literacy on financial well-being. It is deciphered from the findings of the present study that people not only from finance backgrounds have shown positive results regarding financial well-being but people from other disciplines also have given a positive response. Also, the present is more relevant in the context of the Jammu and Kashmir region as people belonging to this region always have a looming threat to their well-being. Such threat particularly emanates from political and security instability on account of hostilities between the nuclear-armed countries surrounding the region.

Biographies

is a full-time Ph. D scholar at the Department of Management Studies, University of Kashmir, Srinagar, (India). His research interests include corporate finance, investment management, asset pricing, market efficiency, financial economics, risk management, accounting and personal finance. He can be reached at: [email protected].

Dr Suhail Ahmad Bhat

is a faculty at the Department of Management Studies, University of Kashmir, Srinagar. His research interests include e-consumer behaviour, green marketing, social marketing, sustainable development, personal finance, CRM and different facets of CRM in the service industry. He has published papers in national and international journals such as International Journal of Bank Marketing, Vikalpa, Decision, Global Knowledge, Memory and Communication, Vision, International Journal of Tourism Cities, FIIB Business Review, Pacific Business Review International, Abhigyan, and Productivity. Dr Suhail is the corresponding author and can be reached at: [email protected]

• FA1- I am aware of the interest rates being charged by banks and other financial institutions.
• FA2- I am familiar with the fundamentals of personal finance management.
• FA3- I often make a list before shopping.
• FA4- I always compare financial products before making a decision.
• FA5- I often gather information related to financial issues.
• FA6- I am always willing to discuss financial issues.
• FE7- I always hold emergency savings.
• FE8- I always maintain financial records.
• FE9- I have an experience in managing personal assets.
• FE10- I have an investing experience in stock market.
• FE11- I plan how I will spend and invest my money.

Financial Skills

• FS12- I evaluate personal financial statement on regular basis.
• FS13- I manage risks through purchasing insurance.
• FS14- I regularly evaluate my debt position.
• FS15- I always try to diversify my investments.
• SE16- I am confident in my ability to manage my funds.
• SE17- I can plan for the future from the money saved in my bank.
• SE18- I possess the potential to take/raise loan from the bank.
• SE19- I use financial skills efficiently to manage my financial goals.
• FPE20- If I lose my job today, I will be able to cover my expenses until I find a new one.
• FPE21- I regularly manage to save some money from my income.
• FPE22- I have been able to save enough money to secure my future life.
• FPE23- I believe I would never have desirable things in my life due to my bad financial condition.
• FPE24- I consider credit limits as extra cash (as cash buffer) whenever I plan my budget.
• CMMS25- My finances have complete power over my life.
• CMMS26- Whenever I think I am in charge of my finances, something happens to throw me off track.
• CMMS27- I am not able to enjoy life on account of being too much preoccupied with my money.
• CMMS28- I am frequently concerned about my personal finances in general.
• CMMS29- I am worried about meeting my normal monthly living expenses.
• CMMS30- I have moderate level of financial stress today.
• CMMS31- I am satisfied with my current financial situation.
• PFS32- I frequently borrow money to pay off my debts.
• PFS33- I plan to secure my future financially.
• PFS34- The financial goals that have set will be accomplished.
• PFS35- I am not worried about my current financial situation.

Declarations

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

1 https://files.consumerfinance.gov/f/documents/201705_cfpb_financial-well-being-scale-technical-report.pdf.

2 https://files.consumerfinance.gov/f/201511_cfpb_report_fiscal-year-2015.pdf.

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Contributor Information

Umer Mushtaq Lone, Email: ni.ude.kou@enolqathsumremu .

Suhail Ahmad Bhat, Email: ni.ca.ytisrevinurimhsak@liahusdamha .

• Abrantes-Braga FDMA, Veludo-de-Oliveira T. Development and validation of financial well-being related scales. International Journal of Bank Marketing. 2019; 37 (4):1025–1040. doi: 10.1108/IJBM-03-2018-0074. [ CrossRef ] [ Google Scholar ]
• Agarwalla, P.S.K., Barua, P.S., Jacob, P.J. and Varma, P.J.R. 2012. A survey of financial literacy among students , young employees and the retired in India executive summary acknowledgments, Indian Institute of Management, Ahmedabad, pp. 1–32.
• Agnew, J., Bateman, H. and Thorp, S. 2012. Financial literacy and retirement planning in Australian. Australian School of Business Research Paper, WP No. 2012ACTL16, pp. 1–22.
• Alessie R, Van Rooij M, Lusardi A. Financial literacy and retirement preparation in the Netherlands. Journal of Pension Economics Finance. 2011; 10 (4):527–545. doi: 10.1017/S1474747211000461. [ PMC free article ] [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Ali A, Rahman MSA, Bakar A. Financial satisfaction and the influence of financial literacy in Malaysia. Social Indicators Research. 2015; 120 (1):137–156. doi: 10.1007/s11205-014-0583-0. [ CrossRef ] [ Google Scholar ]
• Atkinson A, Messy FA. Measuring Financial literacy: results of the OECD/international network on financial education (INFE) pilot study. Mexico: OECD; 2012. [ Google Scholar ]
• Attridge M. Employee work engagement: best practices for employers-the issue and why it is important to business. Research Works. 2009; 1 (2):1–13. [ Google Scholar ]
• Bagozzi RP, Yi Y. On the evaluation of structural equation models. Journal of the Academy of Marketing Science. 1988; 16 (1):74–94. doi: 10.1007/BF02723327. [ CrossRef ] [ Google Scholar ]
• Bandura, A. 2005. The evolution of social cognitive theory. In K. G. Smith, & M. A. Hitt (Eds.), Great minds in management (pp. 9–35). Oxford: Oxford University Press.
• Bandura A. Self-efficacy: toward a unifying theory of behavioral change. Psychological Review. 1977; 84 (2):191. doi: 10.1037/0033-295X.84.2.191. [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Beal DJ, Delpachitra SB. Financial literacy among Australian university students. Economic Papers. 2003; 22 (1):65–78. doi: 10.1111/j.1759-3441.2003.tb00337.x. [ CrossRef ] [ Google Scholar ]
• Behrman JR, Mitchell OS, Soo CK, Bravo D. How financial literacy affects household wealth accumulation. American Economic Review. 2012; 102 (3):300–304. doi: 10.1257/aer.102.3.300. [ PMC free article ] [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Brown S, Taylor K, Wheatley Price S. Debt and distress: evaluating the psychological cost of credit. Journal of Economic Psychology. 2005; 26 (5):642–663. doi: 10.1016/j.joep.2005.01.002. [ CrossRef ] [ Google Scholar ]
• Brüggen EC, Hogreve J, Holmlund M, Kabadayi S, Löfgren M. Financial Well-being: a conceptualization and research agenda. Journal of Business Research. 2017; 79 (1):228–237. doi: 10.1016/j.jbusres.2017.03.013. [ CrossRef ] [ Google Scholar ]
• Byrne BM. Structural equation modeling with eqs: basic concepts, applications, and programming. Mahawah, NJ: Lawrence Erlbaum; 2006. [ Google Scholar ]
• Chancellor J, Lyubomirsky S. Happiness and Thrift when (spending) less is (Hedonically) more. Journal of Consumer Psychology. 2011; 21 (2):131–138. doi: 10.1016/j.jcps.2011.02.004. [ CrossRef ] [ Google Scholar ]
• Chatterjee D, Kumar M, Dayma KK. Income security, social comparisons and materialism: determinants of subjective financial well-being among Indian adults. International Journal of Bank Marketing. 2019; 37 (4):1041–1061. doi: 10.1108/IJBM-04-2018-0096. [ CrossRef ] [ Google Scholar ]
• Chen G, Gully SM, Eden D. Validation of a new general self-efficacy scale. Organizational Research Methods. 2001; 4 (1):62–83. doi: 10.1177/109442810141004. [ CrossRef ] [ Google Scholar ]
• Chijwani M. A study of financial literacy among working women in Pune. International Journal for Scientific Research & Development. 2014; 1 (11):20–22. [ Google Scholar ]
• Chowdhry N, Dholakia UM. Know thyself financially: How financial self-awareness can benefit consumers and financial advisors financial. Planning Review. 2020; 3 (1):1–14. [ Google Scholar ]
• Chu Z, Wang Z, Xiao JJ, Zhang W. Financial literacy, portfolio choice and financial well-being. Social Indicators Research. 2017; 132 (2):799–820. doi: 10.1007/s11205-016-1309-2. [ CrossRef ] [ Google Scholar ]
• Danes SM, Haberman HR. Teen financial knowledge, self-efficacy, and behavior: a gendered view. Journal of Financial Counseling and Planning. 2007; 18 (2):48–60. [ Google Scholar ]
• de Bassa Scheresberg C. Financial literacy and financial behavior among young adults: evidence and implications. Numeracy. 2013; 6 (2):5. doi: 10.5038/1936-4660.6.2.5. [ CrossRef ] [ Google Scholar ]
• Dewi VI, Febrian E, Effendi N, Anwar M, Nidar SR. Financial literacy and its variables: The evidence from Indonesia. Economics & Sociology. 2020; 13 (3):133–154. doi: 10.14254/2071-789X.2020/13-3/9. [ CrossRef ] [ Google Scholar ]
• Fornell C, Larcker DF. Evaluating strucutral equation models with unobservable variables and measurement error. Journal of Marketing Research. 1981; 18 (1):39–50. doi: 10.1177/002224378101800104. [ CrossRef ] [ Google Scholar ]
• Fornero E, Monticone C. Financial literacy and pension plan participation in Italy. Journal of Pension Economics & Finance. 2011; 10 (4):547–564. doi: 10.1017/S1474747211000473. [ CrossRef ] [ Google Scholar ]
• Frijns B, Gilbert A, Tourani-Rad A. Learning by doing: The role of financial experience in financial literacy. Journal of Public Policy. 2014; 34 (1):123–154. doi: 10.1017/S0143814X13000275. [ CrossRef ] [ Google Scholar ]
• Gennetian LA, Shafir E. The persistence of poverty in the context of financial instability: Abehavioral perspective. Journal of Policy Analysis and Management. 2015; 34 (4):904–936. doi: 10.1002/pam.21854. [ CrossRef ] [ Google Scholar ]
• Gerardi, K., Goette, L., and Meier, S. 2010. Financial literacy and subprime mortgage delinquency, Federal Reserve Bank of Boston.
• Gopalakrishnan, P., Mathur, S., Rath, P., Vats, A. and Ramadorai, T. 2017. Report of the household finance committee.
• Grohmann, A., Kouwenberg, R. and Menkhoff, L. 2014). Financial Literacy and Its Consequences in the Emerging Middle Class Financial Literacy and Its Consequences in the Emerging Middle Class, Kiel Institute for the World Economy (WP No. 1943): 1–36.
• Guiso L, Jappelli T. Awareness and stock market participation. Review of Finance. 2005; 9 (4):537–567. doi: 10.1007/s10679-005-5000-8. [ CrossRef ] [ Google Scholar ]
• Gutter M, Copur Z. Financial Behaviors and financial well-being of college students: Evidence from a national survey. Journal of Family and Economic Issues. 2011; 32 (4):699–714. doi: 10.1007/s10834-011-9255-2. [ CrossRef ] [ Google Scholar ]
• Hadar L, Sood S, Fox CR. Subjective knowledge in consumer financial decisions. Journal of Marketing Research. 2013; 50 (3):303–316. doi: 10.1509/jmr.10.0518. [ CrossRef ] [ Google Scholar ]
• Hagerty MR, Veenhoven R. Wealth and Happiness revisited-growing national income does go with greater happiness. Social Indicators Research. 2003; 64 (4):1–27. doi: 10.1023/A:1024790530822. [ CrossRef ] [ Google Scholar ]
• Haines VA, Godley J, Hawe P, Shiell A. Socioeconomic disadvantage within a Neighborhood, perceived financial security and self-rated health. Health and Place. 2009; 15 (1):383–389. doi: 10.1016/j.healthplace.2008.01.011. [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Hair, J., Bush, R.P., and Ortinau, D. J. 2003. Marketing research 2nd ed. Richard D Irwin; Homewood, US.
• Hair, J.F., Black, W.C., Babin, B.J. and Anderson, R.E. 2010. Multivariate data analysis . 7th ed. Pearson, New York.
• Hair J, Anderson R, Tatham R, Black W. Multivariate data analysis. 5. Upper Saddle River, NJ: Prentice-Hall; 1998. [ Google Scholar ]
• Hayes AF, Scharkow M. The relative trustworthiness of inferential tests of the indirect effect in statsitical mediation analysis: Does method really matter? Psychological Science. 2013; 24 (1):1918–1927. doi: 10.1177/0956797613480187. [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Hilgert, M.A., and Hogarth, J.M. 2003. Household financial management: The connection between knowledge and behavior, Federal Reserve Bulletin. Washington, DC : US Gov. Print. Vol. 89.2003, 7, p. 309–322.
• Hinkin TR. A review of scale development practices in the study of organizations. Journal of Management. 1995; 21 (5):967–988. doi: 10.1177/014920639502100509. [ CrossRef ] [ Google Scholar ]
• Hogarth, J.M. 2006. Financial Education and Economic Department. In International conference hosted by the Russian G8 Presidency in Cooperation with the OECD.
• Howell RT, Kurai M, Tam L. Money buys financial security and psychological need satisfaction: Testing need theory in affluence. Social Indicators Research. 2013; 110 (1):17–29. doi: 10.1007/s11205-010-9774-5. [ CrossRef ] [ Google Scholar ]
• Hsiao KL, Lin JCC, Wang XY, Lu HP, Yu H. Antecedents and consequences of trust in online product recommendations. An Empirical Study in Social Shopping Online Information Review. 2010; 34 (6):935–953. [ Google Scholar ]
• Hung, A.A., Parker, A.M. and Yoong, J.K. 2009. Defining and measuring financial literacy, RAND corporation, Working Paper series WR-708.
• Johnson W, Krueger RF. How money buys happiness: Genetic and environmental processes linking finances and life satisfaction. Journal of Personality and Social Psychology. 2006; 90 (4):680. doi: 10.1037/0022-3514.90.4.680. [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Joo SH, Grable JE. An exploratory framework of the determinants of financial satisfaction. Journal of Family and Economic Issues. 2004; 25 (1):25–50. doi: 10.1023/B:JEEI.0000016722.37994.9f. [ CrossRef ] [ Google Scholar ]
• Kahn JR, Pearlin LI. Financial strain over the life course and health among older adults. Journal of Health and Social Behavior. 2006; 47 (1):17–31. doi: 10.1177/002214650604700102. [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Kamakia MG, Mwangi CI, Mwangi M. Financial literacy and financial wellbeing of public sector employees: A critical literature review. European Scientific Journal, ESJ. 2017; 13 (16):233. doi: 10.19044/esj.2017.v13n16p233. [ CrossRef ] [ Google Scholar ]
• Kammeyer-Mueller JD, Judge TA, Scott BA. The role of core self-evaluations in the coping process. Journal of Applied Psychology. 2009; 94 (1):177–195. doi: 10.1037/a0013214. [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Khan KA. Financial awareness and investment preference of working women in kampala. Uganda International Journal in Management and Social Science. 2015; 3 (9):62–70. [ Google Scholar ]
• Klapper L, Panos GA. Financial literacy and retirement planning: The Russian case. Journal of Pension Economics & Finance. 2011; 10 (4):599–618. doi: 10.1017/S1474747211000503. [ CrossRef ] [ Google Scholar ]
• Lin MJ, Wang WT. Examining E-commerce customer satisfaction and loyalty: An integrated quality-risk-value perspective. Journal of Organizational Computing and Electronic Commerce. 2015; 25 (4):379–401. doi: 10.1080/10919392.2015.1089681. [ CrossRef ] [ Google Scholar ]
• Losada-Otálora M, Alkire L. Investigating the transformative impact of bank transparency on consumers financial well-being. International Journal of Bank Marketing. 2019; 37 (4):1062–1079. doi: 10.1108/IJBM-03-2018-0079. [ CrossRef ] [ Google Scholar ]
• Lusardi, A., and Mitchell, O. 2007. Financial literacy and retirment planning: new evidence from the rand American life panel. Michigan Retirement Research Center, University of Michigan (Paper No. 157).
• Lusardi A. Numeracy, financial literacy, and financial decision-making (No. 17821) Cambridge: National Bureau of Economic Research; 2012. pp. 1–14. [ Google Scholar ]
• Lusardi A, de Bassa Scheresberg C. Financial literacy and high-cost borrowing in the United States (No w18969) Cambridge: National Bureau of Economic Research; 2013. pp. 1–41. [ Google Scholar ]
• Lusardi, A. and Mitchell, O.S. 2005. Financial literacy and planning: Implications for retirement well-being (No. w17078), National Bureau of Economic Research. Oxford University Press. No. w17078, pp. 17–39.
• Lusardi A, Mitchell OS. Planning and financial literacy: how do women fare? American Economic Review. 2008; 98 (2):413–417. doi: 10.1257/aer.98.2.413. [ CrossRef ] [ Google Scholar ]
• Lusardi A, Mitchell OS. Financial literacy around the world: An overview. Journal of Pension Economics & Finance. 2011; 10 (4):497–508. doi: 10.1017/S1474747211000448. [ PMC free article ] [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Lusardi A, Mitchell OS. How ordinary consumers make complex economic decisions: Financial literacy and retirement readiness. Quarterly Journal of Finance. 2017; 7 (3):1–31. doi: 10.1142/S2010139217500082. [ CrossRef ] [ Google Scholar ]
• Lusardi A, Schneider DJ, Tufano P. Financially fragile households: Evidence and implications (No. 17072) Cambridge: National Bureau of Economic Research; 2011. [ Google Scholar ]
• Lusardi A, Tufano P. Debt literacy, financial experiences, and overindebtedness (No. 14808) Cambridge: National Bureau of Economic Research; 2009. [ Google Scholar ]
• Lynch JG, Netemeyer RG, Spiller SA, Zammit A. A generalizable scale of propensity to plan: The long and the short of planning for time and for money. Journal of Consumer Research. 2010; 37 (1):108–128. doi: 10.1086/649907. [ CrossRef ] [ Google Scholar ]
• Mandell L. Financial Literacy in High School. In: Lusardi Annamaria., editor. Overcoming the saving slump: how to increase the effectivenss of financial education and saving programs. Chicago: University of Chicago Press; 2008. pp. 257–279. [ Google Scholar ]
• Mason, C.L.J., and Wilson, R.M.S. 2000. Conceptualising financial literacy, loughborough: Business school, Loughborough University, 2000:7.
• Mindra R, Moya M, Zuze LT, Kodongo O. Financial self-efficacy: A determinant of financial inclusion. International Journal of Bank Marketing. 2017; 35 (3):338–353. doi: 10.1108/IJBM-05-2016-0065. [ CrossRef ] [ Google Scholar ]
• Mitchell OS, Lusardi A. Financial literacy and economic outcomes: Evidence and policy implications. The Journal of Retirement. 2015; 3 (1):107–114. doi: 10.3905/jor.2015.3.1.107. [ PMC free article ] [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Moore DL. Survey of financial literacy in washington state: Knowledge, behavior, attitudes, and experiences. Washington: Washington State University; 2003. [ Google Scholar ]
• Mottola G. In our best interest: Women financial literacy, and credit card behavior. Numeracy. 2013; 6 (2):1–17. doi: 10.5038/1936-4660.6.2.4. [ CrossRef ] [ Google Scholar ]
• Moulton S, Loibl C, Samak A, Michael Collins J. Borrowing capacity and financial decisions of low-to-moderate income first-time homebuyers. Journal of Consumer Affairs. 2013; 47 (3):375–403. doi: 10.1111/joca.12021. [ CrossRef ] [ Google Scholar ]
• Nejad MG, Javid K. Subjective and objective financial literacy, opinion leadership, and the use of retail banking services. International Journal of Bank Marketing. 2018; 36 (4):784–804. doi: 10.1108/IJBM-07-2017-0153. [ CrossRef ] [ Google Scholar ]
• Netemeyer RG, Warmath D, Fernandes D, Lynch JG., Jr How am I doing? Perceived financial well-being, its potential antecedents, and its relation to overall well-being. Journal of Consumer Research. 2018; 45 (1):68–89. doi: 10.1093/jcr/ucx109. [ CrossRef ] [ Google Scholar ]
• Ng W, Diener E. What matters to the rich and the poor? subjective well-being, financial satisfaction, and postmaterialist needs across the world. Journal of Personality and Social Psychology. 2014; 107 (2):326. doi: 10.1037/a0036856. [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Nga JK, Yong HL, Sellappan RD. A study of financial awareness among youths. Young Consumers. 2010; 11 (4):277–290. doi: 10.1108/17473611011093916. [ CrossRef ] [ Google Scholar ]
• Nitzl C, Roldan JL, Cepeda G. Mediation analysis in partial least sqaures path modeling: Helping researchers discuss more sophisticated models. Industrial Management and Data Systems. 2016; 116 (9):1849–1864. doi: 10.1108/IMDS-07-2015-0302. [ CrossRef ] [ Google Scholar ]
• Noor N, Batool I, Arshad HM. Financial literacy, financial self-efficacy and financial account ownership behavior in Pakistan. Cogent Economics & Finance. 2020; 8 (1):1806479. doi: 10.1080/23322039.2020.1806479. [ CrossRef ] [ Google Scholar ]
• Nunnally, J., and Bernstein, I.H. 1994. Psychometric Theory, 3rd. ed. McGrawhill, New York, NY.
• Pahlevan Sharif S, Naghavi N, Sharif Nia H, Waheed H. Financial literacy and quality of life of consumers faced with cancer: A moderated mediation approach. International Journal of Bank Marketing. 2020; 38 (5):1009–1031. doi: 10.1108/IJBM-10-2019-0355. [ CrossRef ] [ Google Scholar ]
• Philippas ND, Avdoulas C. Financial literacy and financial well-being among generation-Z University Students: Evidence from Greece. European Journal of Finance. 2020; 26 (4–5):360–381. doi: 10.1080/1351847X.2019.1701512. [ CrossRef ] [ Google Scholar ]
• Preacher KJ, Hayes AF. Asymtotic and sampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods. 2008; 40 (3):879–891. doi: 10.3758/BRM.40.3.879. [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Priyadharshini H. From financial literacy to financial well-being: A study of the level of financial literacy of women teaching faculty in educational institutions in coimbatore region. Coimbatore: Bharathiar University; 2015. [ Google Scholar ]
• Remund DL. Financial literacy explicated: The case for a clearer definition in an increasingly complex economy. Journal of Consumer Affairs. 2010; 44 (2):276–295. doi: 10.1111/j.1745-6606.2010.01169.x. [ CrossRef ] [ Google Scholar ]
• Ruberton PM, Gladstone J, Lyubomirsky S. How your bank balance buys happiness: The Importance of “cash on hand” to life satisfaction. Emotion. 2016; 16 (5):575–580. doi: 10.1037/emo0000184. [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Santos E, Abreu M. Financial literacy financial behaviour and individuals’ Over-indebtedness. Lisbon: Technical University of Lisbon; 2013. pp. 1–30. [ Google Scholar ]
• Sekita S. Financial literacy and retirement planning in Japan. Journal of Pension Economics and Finance. 2011; 10 (4):637–656. doi: 10.1017/S1474747211000527. [ PMC free article ] [ PubMed ] [ CrossRef ] [ Google Scholar ]
• Shim S, Xiao JJ, Barber BL, Lyons AC. Pathways to life success: A conceptual model of financial well-being for young adults. Journal of Applied Developmental Psychology. 2009; 30 (6):708–723. doi: 10.1016/j.appdev.2009.02.003. [ CrossRef ] [ Google Scholar ]
• Sinha NK, Kumar P, Priyadarshi P. Relating Mindfulness to Financial Well-being through Materialism: Evidence from India. International Journal of Bank Marketing. 2021; 39 (5):834–855. doi: 10.1108/IJBM-07-2020-0375. [ CrossRef ] [ Google Scholar ]
• Stango V, Zinman J. Exponential growth bias and household finance. The Journal of Finance. 2009; 64 (6):2807–2849. doi: 10.1111/j.1540-6261.2009.01518.x. [ CrossRef ] [ Google Scholar ]
• Starček, S., and Trunk, A. 2013. The Meaning and Concept of Financial Education in the Society of Economic Changes. In International Conference ‘Active Citizenship by Knowledge Management & Innovation’, held at Zadar, Croatia, pp. 1443–1452.
• Tsai MC, Dwyer RE, Tsay RM. Does financial assistance really assist? The impact of debt on wellbeing, health behavior and self-concept in Taiwan. Social Indicators Research. 2016; 125 (1):127–147. doi: 10.1007/s11205-014-0835-z. [ CrossRef ] [ Google Scholar ]
• van Rooij M, Lusardi A, Alessie R. Financial literacy and stock market participation. Journal of Financial Economics. 2011; 101 (2):449–472. doi: 10.1016/j.jfineco.2011.03.006. [ CrossRef ] [ Google Scholar ]
• Van Rooij MC, Lusardi A, Alessie RJ. Financial literacy, retirement planning and household wealth. The Economic Journal. 2012; 122 (560):449–478. doi: 10.1111/j.1468-0297.2012.02501.x. [ CrossRef ] [ Google Scholar ]
• Xiao JJ, Chen C, Chen F. Consumer financial capability and financial satisfactiaon. Social Indicators Research. 2014; 118 (1):415–432. doi: 10.1007/s11205-013-0414-8. [ CrossRef ] [ Google Scholar ]