Financial behavior and financial wellbeing

The purpose of this chapter is to summarize the main concepts in consumer financial wellbeing including financial education, literacy, capability, behavior and associations between financial wellbeing and behavior. First, brief descriptions of the history and evolution of consumer behavior and wellbeing are presented. This is followed by a discussion of consumer financial wellbeing and behaviors. Some specific findings are that financial literacy and capability have helped expand our paradigms past simple knowledge transfer; consumers constantly make tradeoffs between different dimensions of wellbeing, and current theoretical frameworks which explain financial behaviors are limited. Finally, the chapter proposes a conceptual model for financial wellbeing that looks at the intersection of psychology, sociology, and physical health. Examples of future research include investigating what heuristics high-net-worth households utilize and their resulting habits, and research on when and what nudges and choice architecture are needed for consumers to boost their financial wellbeing.