Family Financial Satisfaction: The Impact of Reference Points

Abstract

The Deacon‐Firebaugh model of family resource management provided the con ceptual framework for this study, which was designed to assess the direct effect of selected inputs on a composite measure of financial satisfaction. This measure reflected satisfaction with consumption level, family wealth, and financial secu rity. The inputs included family income, net worth, and the number of earners in the household (resources); the household's debt‐to‐income ratio and child‐ rearing commitments (demands); perceived change in financial condition over time; and a measure of financial aspirations. It was hypothesized that these last two variables would exert a significant direct impact on financial satisfaction. The data analyzed in this study were collected in two communities in each of three states. The responses from husbands and wives were analyzed separately, using multiple regression analyses. The results supported the hypothesis that the “ref erence point” variables (i.e., perceived change in financial condition and aspira tions for the future) exerted a significant direct impact on financial satisfaction. The full regression models, including eight inputs, accounted for between 30 and 40 percent of the variation in financial satisfaction. The results suggest that future research should further explore both the direct and the indirect influence of past financial experience and aspirations on family financial management and financial satisfaction.