Financial Education and Financial Satisfaction: Financial Literacy, Behavior, and Capability as Mediators

Purpose: To investigate the roles of financial literacy, financial behavior, and financial capability as mediating factors between financial education and financial satisfaction.Methodology: The data is from the 2012 National Financial Capability Study, a large national dataset with rich information on financial literacy related variables. Mediation analyses are used to answer research questions. Findings: Financial education may affect financial satisfaction, a measure of subjective financial well-being, through financial literacy, financial behavior, and financial capability variables. Results show that subjective financial literacy, desirable financial behavior and a financial capability index are strong mediators between financial education and financial satisfaction.Research limitations: The study has used cross sectional data that can only document associations between financial education, literacy, and satisfaction. Future research could use relevant longitudinal data to verify multiple benefits of financial education. Practical implications: The findings have implications for financial service professionals to take advantages of multiple benefits of financial education in content acquisition, confidence in knowledge and ability, and action taking when they communicate with their clients.Social implications: Policy makers on consumer financial education may use the information to advocate and promote effective education programs to improve consumer financial well being. Originality/value: This study is the first of this kind to directly examine the association between financial education and financial satisfaction using relevant mediating factors.