Financial Literacy and Financial Wellbeing of Public Sector Employees: A Critical Literature Review

Abstract

There is a great concern from researchers, government, and professional bodies about how consumers, households, students and employees manage their finances. A great number of people from both developed and developing countries are reported to be financially illiterate. Employees today are facing serious challenges in financial decision making that seems to emanate from the changes in financial markets and in social security pension schemes. They have access to financial literacy sessions at their workplaces yet this is not always reflected in the kind of lives they live. This provokes the question ‘does a more financially literate employee enjoy better financial wellbeing than a less literate person?’ The current study therefore seeks to critically review the literature to establish the documented relationship between financial literacy and financial wellbeing and possible intervening and moderating variables. The existing literature gaps are identified and recommended for further research. The results from the literature review indicate that financial literacy and financial wellbeing are defined and measured differently. Additionally, there seem to be a positive relationship between financial literacy and financial wellbeing but this relationship is intervened and moderated by financial decisions and demographic factors respectively.

The Impact of Behavioral Finance Factors and the Mediating Effect of Investment Behavior on Individual’s Financial Well-being: Empirical Evidence from Pakistan

“…These results support the view of (Taft et al, 2013:Kamakia et al, 2017 which finds individuals who have a good financial literacy take financial wellbeing better and, individuals FWB that are consistently changed their logic and reasoning. Additionally, no statistically significant differences were found in the subgroups by demographic variables.…”

Financial literacy in the COVID-19 pandemic: pressure conditions in Indonesia

“…Several other studies that also linked financial literacy with financial wellbeing, such as the study of Sabri & Zakaria (2015) and Zulfiqar & Bilal (2016), which claimed that financial literacy positively affects financial wellbeing. However, Kamakia, Mwangi & Mwangi (2017) concluded that financial literacy does not affect financial wellbeing.…”

“…A person's level of financial literacy determines their ability to manage their resources properly throughout life. A person being able to manage funds/cash owned by being able to feel prosperous concerning his finances and conversely a decrease in one's wellbeing can arise due to poor financial management behaviour (Gerrans et al, 2014;Kamakia, Mwangi, & Mwangi, 2017;Zulfiqar & Bilal, 2016). Someone who has good financial literacy is shown by the behaviour in managing finances properly, that person can be said to be prosperous in terms of his finances, and to be claimed prosperous, a person must have high financial literacy by exhibiting good management behaviour (Mudzingiri, Mwamba, & Keyser, 2018;Munoz-Murillo et al, 2020).…”

Elevating Financial Literacy Among Non-Governmental Organizations (NGOs) Rulers: Cognitive Understanding of Financial Knowledge, Skills and Responsibility

“…Almost 70% of Malaysians are in need of financial literacy support. Financial knowledge, ability and attitude towards financial matters is known as financial literacy (Kamakia et al, 2017;Remund, 2010). It leads to sound decision making and enhance an individual's financial well-being.…”