Income more important than financial literacy for improving wellbeing

Abstract

As advocates of financial literacy education, it is a hard pill to swallow when data show little impact on financial behaviors. Unfortunately, expectations that university students with higher levels of financial literacy have reduced money management stress and positive financial behavior, leading to higher levels of financial wellbeing, were expunged in this study. We did find, however, that being older and having higher levels of income contributed most significantly and consistently to explain- ing better financial wellbeing. Proponents of financial literacy education should not despair but instead recognize the limits to transferring financial knowledge and set financial literacy and well- being goals based on evidence of what works.