The Impact of Financial Capability in Managing Income and Expenditure on Consumer Financial Satisfaction: Evidence from the USA

Abstract

Using the survey data of the National Financial Capability Study in 2018, this study aims to provide empirical insight into the impact of financial capability in managing income and expenditure (MIE) on consumer financial satisfaction. To produce more accurate results, the approach of the ordered logit regression is utilized. The results suggest a positive association between financial capability in MIE and consumer financial satisfaction, implying that consumers who can manage their spending within income tend to enjoy a higher level of satisfaction under current financial conditions. In addition, when an ordered probit regression is utilized, and the outliers of income and the heterogeneity of consumers’ annual income are taken into account, the results remain unchanged. Moreover, this study also verifies the role of perceived mathematical capability as a moderator. Hence, the findings enable policymakers and consumer educators to formulate effective measures to enhance consumer financial capability in MIE.