Influence of Financial Behavior, Financial Stress and Locus of Control on Financial Well-Being among B40 Households in Selangor During the Pandemic

Abstract

Economic disadvantage disproportionately affects B40 households with income shocks. This paper aims to analyse the effects of financial well-being on 428 respondents from B40 households in Selangor districts using non-probability sampling (purposive stratified sample). SPSS Version 26 was used to perform regression analyses to determine factors influencing financial behaviour, financial stress, and locus of control. The fitness of the financial wellbeing model indicated an R-square value of 0.386. The model explained 38.6 per cent of the variances in financial well-being. Financial well-being was explained by the model's factors comprising financial behaviour, financial stress, internal and external locus of control. Model indicated (F = 65.70; p = .000) were valid models based on the ANOVA output. Financial behaviour and internal locus of control were shown to positively impact financial well-being; whereby financial stress was negatively influencing financial well-being. Financial stress occurs when a person's financial resources are insufficient to meet basic financial needs. Henceforth, those under a lot of financial stress must engage in proper financial activities to be more financially independent. In conclusion, ensuring responsible practices, including excellent financial behaviour practices, strong financial stress management, and high internal locus of control strengthened would assist households in completing their financial management.

Analysing the Predictors of Financial Stress and Financial Well-Being among the Bottom 40 Percent (B40) Households in Malaysia

“…Financial stress recorded the lowest agreement level in 'I have high blood pressure due to financial difficulties' (1.93). According to Magli et al [17], financial stress has a detrimental effect on an individual's financial status. The deterioration of these qualities will have a negative impact on an individual's financial well-being.…”

“…Mokhtar & Abdul Rahman [16] found that financial stress, work environment, locus of control, and financial behaviour were associated with financial well-being. Magli et al [17] analysed the impact of financial behaviour, financial stress, and locus of control as independent variables on the financial well-being of B40 households in Selangor. They discovered that financial behaviour and locus of control positively impact financial well-being by reducing financial stress.…”

A Study of Retirement Preparedness among Malaysian Female Millennials

“…Further, studies have found financial management practices to be the major factor influencing retirement confidence (Sabri and Juen, 2014) and financial resources for retirement (Herrador-Alcaide, Hernandez-Solis & Topa, 2021). The increase in living costs for Malaysians in today's challenging economic condition has made consumers more conscious of their financial management since such practices will impact their economic status (Magli et al, 2021). Thus, based on the findings of these previous studies, the following hypothesis is proposed: H3: There is a significant positive relationship between financial management practices and retirement preparedness among Malaysian female millennials.…”

The Behavioral Dynamics of Financial Vulnerability

“…Locus of control is a psychological construct that refers to an individual's perception of their ability to influence the events and outcomes of their life (Magli et al, 2021;Spector et al, 2002). Those with an internal locus of control attribute their success to their own abilities and efforts, while those with an external locus of control attribute their success or failure to external factors beyond their control, such as luck or chance (Cappelen et al, 2020;Churchill & Smyth, 2021;Schultz & Schultz, 2016).…”

“…They may face income delays, unexpected financial losses, and significant changes in their circumstances, and will need to persevere through these challenges. Financial vulnerability can impact individuals and families from all income brackets, not solely those with lower incomes (Magli et al, 2021). The ordered probit model has been employed in a study, which identified income, marital status, education, and financial behavior as key factors that significantly contribute to financial vulnerability (Daud et al, 2019).…”