This chapter discusses the concepts of consumer financial capability and financial wellbeing and their relationship based on the research literature. Consumer financial capability refers to the ability of using appropriate financial knowledge and performing desirable financial behaviors to improve financial wellbeing. Financial knowledge can be measured by objective indicators such as financial quiz scores or subjective indicators such as self-perceived financial knowledge level. Financial wellbeing can be measured by both objective and subjective indicators. Objective measures of financial wellbeing include income, expenditure, debt, asset, and combinations of these indicators such as net worth and debt/income ratio. Subjective measures include financial satisfaction, income satisfaction, saving satisfaction, and satisfaction on other categories of financial resources. Research indicates consumer financial capability related factors contribute to financial wellbeing.
CITATION STYLE
Xiao, J. J. (2016). Consumer Financial Capability and Wellbeing. In Handbook of Consumer Finance Research: Second Edition (pp. 3–17). Springer International Publishing. https://doi.org/10.1007/978-3-319-28887-1_1
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