Explaining Financial Well-being Through Dual Pathways: Analyzing the Mediating Role of Financial Hardship and Financial Satisfaction in the Relationship Between Financial Literacy and Financial Stress

Document Type : Original Article

Authors
sura Rafiq Abdulrazzaq Al-Darouq 1
mahdi madanchi zaj 2
fateme samadi 3
1 Department of Financial Management, Science and Research Branch, Islamic Azad University, Tehran, Iran
2 Department of Financial Management, Central Tehran Branch, Islamic Azad University, Tehran, Iran
3 Department of Financial Management, East Tehran Branch, Islamic Azad University, Tehran, Iran
10.22034/jik.2025.24243
Abstract
Objective:
This study aims to explain the psychological-behavioral mechanisms that influence financial well-being. It proposes and tests a dual conceptual model that examines the sequential mediating roles of financial hardship and financial satisfaction in the relationship between financial literacy (an empowering factor) and financial stress (a hindering factor) with financial well-being.

Methodology:
This applied and descriptive-correlational study is based on Structural Equation Modeling (PLS-SEM). The research population consists of students and faculty members from public and private universities in Najaf City, Iraq. A stratified random sample of 366 participants was collected. Valid international scales were used to measure constructs, and data analysis was conducted using SPSS and SmartPLS software. The significance of the results was tested using bootstrapping with 5,000 resamples.

Findings:
The results showed that financial literacy has a significant negative effect on financial hardship (β = −0.351, p < 0.001), while financial stress has a significant positive effect on financial hardship (β = 0.483, p < 0.001). Financial hardship negatively impacts financial satisfaction, and financial satisfaction positively impacts financial well-being. Financial literacy indirectly affects financial well-being positively through the pathway of financial hardship → financial satisfaction, while financial stress indirectly impacts financial well-being negatively through the same pathway.

Conclusion:
Financial well-being is influenced by cognitive factors (financial literacy) and emotional factors (financial stress), which are transmitted through the mediating pathway of “reduction/increase in financial hardship → changes in financial satisfaction.” Policymakers and educational and financial institutions are recommended to design integrated programs that enhance financial literacy and reduce financial stress.
1.       فولادلو، ک.، نیسار، ت.، و سید، ج. (1402). نقش میانجی‌گری رضایت مالی در رابطه بین وضعیت مالی عینی و رفاه ذهنی: مرور نظام‌مند مطالعات پیشین. فصلنامه امور مصرف‌کنندگان، 57(2)، 345–364.
 
2.       حسینی، م.، احمدی، س.، و کریمی، ع. (1401). بررسی تأثیر استرس مالی بر کیفیت زندگی و رفتارهای مالی. فصلنامه پژوهش‌های اجتماعی و اقتصادی، 12(4)، 101–120.
 
3.       محقق‌زاده، ف.، صفری، م.، و یوسفی، ب. (1400). رابطه سختی مالی و رضایت مالی: تأثیر میانجی‌گری بر رفاه مالی افراد. فصلنامه اقتصاد و مدیریت، 11(3)، 55–72.
 
4.       رضایی، م.، فلاحی، س.، و ترابی، ر. (1402). نقش رضایت مالی در ارتقای رفاه مالی: یک مطالعه تجربی در جامعه ایران. فصلنامه رفاه اجتماعی، 19(1)، 25–40.
 
5.      Angel, S., James, A., & Williams, D. (2021). Financial hardship and its impact on well-being: A systematic review. Journal of Economic Behavior & Organization, 185, 24–35. https://doi.org/10.1016/j.jebo.2021.03.002
6.      Ates, M., Kılıç, R., & Yılmaz, F. (2021). Financial literacy and its impact on financial behavior: Evidence from emerging markets. International Journal of Financial Studies, 9(3), 45–60. https://doi.org/10.3390/ijfs9030045
7.      Brüggen, E. C., Hogreve, J., Holmlund, M., Kabadayi, S., & Löfgren, M. (2017). Financial well-being: A conceptualization and research agenda. Journal of Business Research, 79, 228–237. https://doi.org/10.1016/j.jbusres.2017.03.013
8.      Chen, H., & Volpe, R. P. (2022). An analysis of personal financial literacy among college students. Financial Services Review, 7(2), 107–128.
9.      Danziger, S., & Ratner, R. K. (2022). Financial hardship and consumer decision-making: The role of emotions. Journal of Consumer Research, 48(1), 21–37. https://doi.org/10.1093/jcr/ucab040
10. Edin, K., & Shaefer, H. L. (2022). Extreme poverty in the United States: Understanding the new reality. Brookings Institution Press.
11. Fuladlu, K., Nisar, T., & Syed, J. (2023). Financial satisfaction as a mediator in financial well-being: A systematic review of literature. Journal of Consumer Affairs, 57(2), 345–364. https://doi.org/10.1111/joca.12345
12. Guan, J., Wang, H., & Zhang, Y. (2022). Financial stress and its consequences: A review of literature. Journal of Economic Psychology, 89, 102473. https://doi.org/10.1016/j.joep.2022.102473
13. Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5–44. https://doi.org/10.1257/jel.52.1.5
14. Ng, W., & Diener, E. (2019). What matters for financial satisfaction: The role of income, spending, and expectations. Journal of Happiness Studies, 20(6), 1821–1838. https://doi.org/10.1007/s10902-018-0024-1
15. OECD. (2020). OECD/INFE 2020 international survey of adult financial literacy. OECD Publishing. https://doi.org/10.1787/3c8d2af3-en