The Influence of Objective Financial Well-Being on Life Satisfaction

Abstract

In recent years, the importance of financial well-being as the ultimate goal of financial education is still increasing throughout the world. Financial well-being refers to the ability to maintain the current and desired standard of living in the present and in the future together with financial freedom. We examine the relationship between the objective well-being (as captured by the liquidity ratio, the debt-to-asset ratio, the debt-to-income ratio) and self-assessment life satisfaction using Household Financial and Consumption Survey’s data (HFCS) from Slovakia in 2017 and 2021. We found a positive relationship for the liquid ratio and a negative relationship for the debt-to-asset ratio with the life satisfaction across the entire observation period. The negative debt-to-income ratio was confirmed only in 2021. Gender, age, education, financial literacy and employment status also had a significant impact on household’s life satisfaction.