PERCEIVED FINANCIAL WELL-BEING AS ANTECEDENT OF PSYCHOLOGICAL WELL-BEING: EVIDENCE FROM BRAZIL

Abstract

Purpose: This study investigates how the relationship between perceived financial well-being and psychological well-being is influenced by income loss in the context of the adverse economic and social conditions resulting from the Covid-19 pandemic. Method: A survey conducted with 959 Brazilian respondents allowed the research hypotheses to be tested by means of multigroup structural equation models. Originality / Relevance: Individuals who reported having experienced larger income losses also reported lower levels of financial and psychological well-being. Among the predictors of psychological well-being we tested, expected future financial security is the most important. Results: Our findings show that after controlling for gender, age, and income, current money management stress and expected future financial security (the present and future dimensions of perceived financial well-being, respectively), but not financial knowledge, are statistically significant to explain psychological well-being. Theoretical / Methodological contributions: The role of financial knowledge to predict financial well-being is weakened in the presence of the psychological variables investigated, which has important implications for financial education efforts. Banks and other financial institutions can create tools to enhance personal awareness and responsibility over one’s financial future. Social / Managerial contributions: Managerial and societal implications include the provision of knowledge that may allow financial education programmes, economic empowerment interventions, and public policies aimed at reducing the negative impact of the perceived financial strain on well-being to be better targeted.