Financial Literacy and Financial Anxiety in Malaysia: Determinants and Behavioural Influences

Abstract

In reaction to economic uncertainty, there has been a rise in financial anxiety, which is defined as the psychological distress brought on by financial circumstances. The current study looks into how financial literacy—which encompasses financial behaviour, impulsivity, vulnerability, and knowledge—affects financial anxiety among Malaysians. The data gathered from 389 individuals served as the basis for the analysis. The findings show that the most important predictor of financial anxiety is financial vulnerability, most especially the inability to pay monthly obligations. A major contributing factor to reckless spending is the heightened anxiety that accompanies rash financial decisions. On the other hand, forming sound financial practices, such making on-time bill payments and keeping a careful eye on funds, significantly reduces financial stress. The study shows that misunderstandings of financial concepts exacerbate anxiety, underscoring the necessity for proper financial education. Demographic factors including age, gender, and marital status have an impact on financial anxiety. In particular, stress tends to be somewhat higher in younger people, women, and unmarried people. These findings emphasise the need for tailored financial literacy programs that address behaviour and knowledge gaps, promote financial self-control, and provide specific help to excluded groups. The study underscores the critical role that financial literacy plays in mitigating financial anxiety and improving overall financial well-being. It contends that in order to effectively address these challenges, future interventions should prioritise the use of behavioural change strategies and practical financial education.