The parallel mediation effects of financial confidence and financial behavior on the relationship between financial literacy and financial well-being: evidence from young professionals

Abstract

This study analyzes the intervening influence of financial confidence and behavior on how financial literacy affects financial well-being as viewed by young professionals in Makati City. Earlier research has repeatedly established the positive efficacies of financial literacy regarding economic outcome variables; however, it barely mentioned the critical situation of young professionals who are unfortunate enough to live in the fast-paced cities. The study takes a quantitative cross-sectional design founded on Social Cognitive Theory. Structured, self-administered questionnaires were distributed among purposively sampled 377 young professionals. The data were analyzed with PROCESS Macro (Model 4) in testing the parallel mediation effects of financial confidence and financial behavior. It shows that financial literacy significantly predicts both direct and indirect financial well-being, and financial confidence is a stronger mediator than financial behavior. The findings speak to the fact that knowledge, standing alone, is insufficient; instead, financial well-being is situated best when literacy is wed to confidence and disciplined behavior; this triangulation reflects the cognitive and personal factors along with behavior originally envisaged in Social Cognitive Theory. This research sheds light on young urban professionals, a category of people often overlooked in research on financial well-being and the much-needed attention it has received. Essentials have shown that both financial confidence and financial behavior have a dual mediating effect, hence providing evidence on the psychological and behavioral mechanisms through which financial literacy is transformed into improvement in well-being. The findings actually advocate on the establishment of holistic financial education programs which would enhance not only one's technical skills but would also develop the psychological preparedness to confront financial problems imposed generally by the competitive set-up of an urban environment.