Financial Well-Being in the United States: The Roles of Financial Literacy and Financial Stress

Abstract

This paper examines the role of financial stress in explaining the relationship between financial literacy and financial well-being among individuals in the United States. The 2018 FINRA National Financial Capability Study dataset is used for the empirical analyses of this study. The results found that financial literacy was positively associated with financial well-being. The study also found that the association between financial literacy and financial well-being was mediated by perceived financial stress experienced by individuals. Additionally, the results from the moderated mediation model showed that while financial stress mediated the association between financial literacy and financial well-being, the association between financial stress and financial well-being was moderated by financial literacy. Financial education was positively associated with financial literacy in this study. The broader implications of the main findings of this study for individuals’ sustainable financial well-being are presented for policymakers, financial educators, and financial counselors and planners.