Toward a new conceptualization of financial well‐being

Abstract

Research on financial well-being is still in its nascent stage, despite being an important topic in consumer research. Research on the antecedents of financial well-being is even more limited. Using in-depth interviews with consumers and practitioners, and expert discussions, this article conceptualizes the construct of financial wellbeing from underdeveloped countries' perspective. We conceive financial well-being as a confluence of four situations-namely, meeting present and future financial commitments; feeling of financial security; freedom of choice; and improved quality of life. Our findings reveal that the objective and subjective financial measures are critical predictors of consumers' financial well-being. Financial behavior, which is caused by antecedents such as financial knowledge, personality traits, and mindful finance, intervenes this relationship. Based on this analysis, we propose five propositions concerning antecedent-based interventions for future scholarship in the field. The paper suggests a theoretical framework illustrating behavioral interventions in a given socio-economic environment to achieve financial well-being. Our results pave the way for the advancement of the theory in financial-well being and its antecedents in different socio-economic environments. The managerial contribution of this study lies in informing the marketers to contextualize their strategies to the financial well-being. We also inform the macroeconomic policymakers to design behavioral interventions to improve the financial well-being. 1 | INTRODUCTION Financial well-being of the individuals continues to attract multidisciplinary interest in recent times. Governments and policymakers use financial well-being to measure the success of economic prosperity and to plan future policy interventions. Corporations use financial well-being when making decisions regarding new products, market segmentation, and new market entries. Financial institutions condition their lending policies in accordance with the financial well-being of their consumers. Consumers are interested in improving their financial well-being in order to attain this eligibility. This multifaceted application renders consumer financial well-being highly relevant for theorists and policymakers. To inform policymakers, corporations, and consumers, the research community has been approaching financial well-being by (a) highlighting the objective and subjective measures of financial well-being (Delafrooz & Paim, 2011, Consumer Financial Protection Bureau, 2015a; Kempson, Finney, & Poppe, 2017), (b) emphasizing the relevance of financial education and financial behavior in financial well-being (Binti Azmi & Ramakrishnan, 2018; Grable & Joo, 2006), and (c) conforming disparity in financial wellbeing across different socio-economic environments (Kempson et al., 2017). Some studies have highlighted the characteristics of financial well-being, while others have attempted to identify its antecedents. In general, the existing conceptualizations of the term tend to inc...

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