Financial decisions matter: promoting positive financial behaviour, financial satisfaction, and financial well-being

Abstract

This dissertation reveals that sound financial decisions are determined by multiple factors and are germane to both financial satisfaction and financial well-being. The most promising factors to increase financial satisfaction were financial confidence, future orientation, and perceived behavioural control, and the most promising factors to increase financial well-being were the combination of high objective and high subjective financial knowledge and financial self-efficacy. We also found two observations remarkable. First, not all financial behaviours that could be intuitively regarded as positive were immediately beneficial to financial satisfaction or financial well-being. For example, budgeting and making considered purchases could be unpleasant and, therefore, adversely affect financial well-being in the short term. Likewise, adjusting spending based on changing (financial) circumstances and keeping track of expenses could be painful and, hence, adversely impacted financial satisfaction in the short term. Second, not all control skills that could be expected to help people make sound financial decisions, actually do so. For instance, people with more spending self-control reported working less toward their financial goals. It is possible that these people are so focused on curbing purchase impulses, that they forget what they are doing it for, namely to create financial room to achieve their goals.