A Structural Determinants Framework for Financial Well-Being

Fan, Lu; Henager, Robin

This study develops a conceptual framework that provides a broad understanding of financial well-being. Using the 2018 National Financial Capability Study and structural equation modeling methods, this study provides empirical evidence for the proposed framework by identifying significant direct and indirect determinants of financial well-being. Previous personal financial wellness and financial satisfaction-related research provides a theoretical rationale for the construction of the conceptual framework in the current study. The results reported the relationships among these determinants, including financial perceptions and knowledge factors, financial stress, short- and long-term positive financial behavior, and financial satisfaction. The findings indicate that financial satisfaction, short-term financial behavior, perceived financial capability showed positive and direct associations with financial well-being, whereas financial stress and long-term financial behavior were negatively and directly associated with financial well-being. Financial perception and knowledge factors, financial stress, and short-term financial behavior also showed significant indirect relationships with financial well-being. The findings of this study contribute to the literature on financial well-being and provide significant policy and practical implications. Implications for financial practitioners and policy makers are discussed.