I Know I Should, But Do I Do It? Connecting Covert and Overt Financial Behaviors

Abstract

When it comes to money, clients often know what they should do, but they do not always do it. The purpose of this study was twofold: (a) to introduce a new scale to measure financial cognition and (b) to explore the link between thinking (i.e., covert behavior) and financial behavior (i.e., overt behavior). Social Cognitive Theory and Cognitive Behavioral Theory framed the study. Data were collected in two stages from 236 employees in a Midwestern region. Stage one results suggest a newly developed measure, the Financial Cognition Scale, shows acceptable reliability, and construct validity. Stage two found positive associations between the covert behaviors of financial cognition, financial knowledge, and financial self-efficacy and the overt behavior of financial behavior, and a negative association between financial anxiety and financial behavior. Implications for practitioners and researchers are presented.

Financial capability and financial anxiety: comparison before and during the COVID-19 pandemic

“…Previous literature suggests that self-efficacy can serve as a significant contributor to personal financial behavior and better financial outcomes (Farrell et al ., 2016; Tang, 2021). Financial self-efficacy is positively associated with overt financial behavior (Archuleta et al ., 2021).…”

“…Financial anxiety is linked to probable dyslexia, symptoms of anxiety, attachment anxiety and attachment dependency (Sochos and Latchford, 2016). Financial anxiety is negatively associated with overt financial behavior (Archuleta et al ., 2021) and financial satisfaction (Archuleta et al ., 2013).…”

“…Financial anxiety is an indicator of mental health problems reflected by economic pressure. Previous research demonstrates that financial capability factors such as financial knowledge, financial behavior and perceived financial capability have potential to reduce FA (Archuleta et al ., 2021; Xiao and Kim, 2022). Due the onset of the COVID-19 pandemic, consumers around the world suffered serious physical, psychological and economic shocks and levels of FA and health anxiety are increased, which adversely affected consumer well-being (Bareket-Bojmel et al ., 2021; Maaravi and Heller, 2020; Yakoboski et al ., 2021).…”