What factors impact financial behavior other than financial literacy?
Muma Business Review • Volume 4 • 2020 • pp. 193-200
In Huston’s (2010) framework regarding financial literacy, she provides the following conceptual model (Fig 1). This model, which is widely accepted within the research on financial literacy since 2010, reveals that while financial literacy is certainly part of the story influencing financial behavior, it is not the whole story. We see that Huston includes “other factors” as informing financial behavior as well. Additionally, there’s conflicting evidence within the literature reviewed that calls into question financial literacy as the strongest predictor of financial behavior. Given that pursuing an exhaustive list of “other factors” might prove indeterminable, financial advisors will be surveyed as a proxy for financial behavior subject matter experts to identify some of the more commonly accepted factors outside of financial literacy that have an evident correlation to financial behavior according to their perception based on client interactions. Having this short list of factors from experts could lead to follow-on research determining the strength of correlation among the identified factors, to include financial literacy. If future research were to identify a factor(s) that had a stronger correlation to financial behavior than financial literacy, it may impact the current push for policy to embolden financial education efforts to improve financial literacy alone as a means to improve financial behavior. Additionally, we may be able to remove the stigma that low financial literacy equates to an inability to win with personal finances.
Financial literacy, financial behavior, financial planners, self-efficacy, self-control
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