Socioeconomic Sustainability for Low-Income Households: The Mediating Role of Financial Well-Being

Abstract

Financial literacy contributes to the economic well-being of every country. Specifically, the financial literacy level of low-income households is crucial in the process of developing and building economic potential. Moreover, the knowledge, attitude, and behavior of families are essential to the financial sustainability and money-wise behavior of low-income households. Thus, financial literacy and financial well-being are vital for low-income households to survive in highly competitive marketplaces and sustain their socioeconomic status. This study intends to examine the impact of financial literacy on the socioeconomic status of low-income households. A self-administered survey questionnaire was employed, and the sample consists of 282 randomly selected respondents from low-income households in Malaysia. The data were analyzed using the Structural Equation Modelling procedure in IBM-SPSS-AMOS 26.0 to examine the causal effect. The results showed that financial literacy (consisting of financial knowledge, financial behavior, and financial attitudes) has a positive and significant impact on the socioeconomic status of low-income households. Moreover, financial well-being also mediated the effect of financial literacy on socioeconomic status. The research results provide new ideas and perspectives for improving money-wise mechanisms and the socioeconomic sustainability of low-income households.

Determinants of the financial wellbeing of individuals in an emerging economy: an empirical study

“…The present study reflects that financial wellbeing is positively influenced mainly due to four determinants and confirms the findings, e.g. financial literacy (Adam et al, 2017;Tahir et al, 2021;Thomas and Gupta, 2021;Munisamy et al, 2022;Prakash et al, 2022), financial risk-tolerance, financial socialization (Zhao and Zhang, 2020) (Gutter and Copur, 2011;Mokhtar and Husniyah, 2017;Sabri et al, 2020;She et al, 2021;Prakash et al, 2022). However, financial stress (Mokhtar and Husniyah, 2017;Choi et al, 2020;Fan and Henager, 2022;Prakash et al, 2022), socio-demographic factors such as age (Chatterjee et al, 2019;Garc ıa-Mata et al, 2022), education, gender (Chatterjee et al, 2019), occupation and marital status has a negligible impact on financial wellbeing.…”

“…Financial wellbeing can improve families' socio-economic status. It means that if households adopt a method of financial wellbeing in their financial management, there is a higher socio-economic status (Munisamy et al. , 2022).…”

“…Financial wellbeing can improve families' socio-economic status. It means that if households adopt a method of financial wellbeing in their financial management, there is a higher socio-economic status (Munisamy et al, 2022). The study's results highlight that financial literacy, financial risktolerance, financial socialization, financial stress, and socio-demographic factors significantly Table 6.…”

“…The workers have greater financial wellbeing than the homemakers and unemployed (Garc ıa-Mata et al, 2022). On financial wellbeing, some well-known studies have been done in Malaysia (Sabri et al, 2020;She et al, 2021;Anthony et al, 2022;Munisamy et al, 2022); India (Chatterjee et al, 2019;Mahendru et al, 2022;Prakash et al, 2022), USA (Anvari-Clark and Ansong, 2022), Swedish (Barrafrem et al, 2021), Greece (Philippas and Avdoulas, 2020), and West Africa (Adam et al, 2017). After observing the relevant articles, it is clear that little empirical evidence shows the determinants of individuals' financial wellbeing.…”

“…They also observed that greater financial literacy led to more wealth in the community and higher economic growth. Many studies have reported that financial literacy and its influence on financial wellbeing are stronger (Adam et al, 2017;Tahir et al, 2021;Thomas and Gupta, 2021;Munisamy et al, 2022;Prakash et al, 2022). In the Australian context, recent studies have reported that the financial literacy of individuals in small businesses has a positive relationship with enhanced business performance and cash flow (Belle Isle et al, 2023).…”