Pathways to financial well-being: Research brief
The Bureau conducted a study to analyze the associations between financial capability factors (i.e., financial knowledge, skill, and behavior), financial situation, and financial well-being. The study results provide evidence of a pathway to financial well-being. In that pathway, a person’s financial skill contributes to financial behavior, financial behavior contributes to financial situation, and financial situation contributes to sense of financial well-being. This applies when controlling for income and other relevant factors outside the domain of financial education. The results suggest that one’s confidence in one’s ability to achieve financial goals (financial self-efficacy) contributes to financial behavior as well. The results point to a strong potential role for financial education in improving individuals’ financial well-being.