Exploring financial well-being of working professionals in the Indian context

Abstract

Attainment of financial well-being is vital for individuals. Financial well-being further leads to satisfaction and happiness, which results in the overall well-being of an individual. Financial behavior and well-being assume greater importance in crises such as the COVID-19 pandemic. This study tests how working professionals’ financial knowledge and attitude in a developing country relate to their financial well-being. The emphasis of the study is on determining the mediating effects of financial behavior. The study finds that financial knowledge alone may not result in an individual’s financial well-being, and the relationship is mediated by financial behavior. This implies that acquiring knowledge and a positive financial attitude are important in the quest to attain financial well-being, but adopting healthy financial behavior is most important.

Introduction

During the crisis of COVID-19 pandemic, many working professionals lost their jobs and several others experienced pay cuts. Many organizations laid off employees due to loss of business and shutting down operations. When they resumed operations, they managed with a smaller workforce. Such detrimental impacts of the pandemic caused financial stress to working professionals and their families. The negative effect of job loss or pay cuts may have been lesser to some extent for persons who practiced responsible financial behavior and planned for financial well-being at an early stage of life. Responsible financial behavior comes with sound financial knowledge and a positive attitude. Thus, studying the relationship between these variables becomes essential, especially in challenging times, such as the pandemic.

The issue becomes precarious in a developing country like India, which does not have any formal government-supported social security, unemployment, and post-retirement benefits for its citizens. Even during the pandemic, despite widespread job losses, there was limited government aid to individuals. So, the onus of financial planning, saving for emergencies and planning for pandemic-like events falls on the individuals. Additionally, improved life expectancy and increased dependents necessitate a more significant retirement corpus. So, individuals need to invest adequate money and plan cautiously before retirement to not outlive their savings. Further aggravating the problem, financial products have become extraordinarily complex, requiring a better understanding of technical details. This calls for individuals to possess financial knowledge and be financially literate. It also highlights the need for policy interventions for enhancing awareness about the need for financial planning and increasing access to financial knowledge and retirement planning tools.

Literature on this subject is relatively young, and the studies mainly analyzed financial behavior of individuals as a critical factor for financial well-being. By doing this, most of the references in the field empirically examined financial attitude as a precursor to personal financial behavior. Specifically, even though financial attitudes are multifaceted, in this paper, this variable primarily refers to the person's attitude toward the cautious handling of money (Keller and Siegrist 2006). To the best of our knowledge, no study has examined how a person's financial attitude and knowledge shape his/her financial behavior, which, in turn, influences financial well-being.

Thus, this work makes a significant contribution to the related literature. First, while earlier research has examined direct links between specific model variables, it neglected to consider the mediating process determining how individuals achieve financial well-being. This paper intends to analyze the fundamental mechanisms through which a person's financial well-being is influenced by financial attitude. It does so through the proposal of a causal model. This study improves the understanding of how financial attitudes might affect people's financial behavior through purposeful components and how this might affect their financial well-being in an emerging country like India during the pandemic.

Past studies have examined the financial knowledge of an individual and have demonstrated its effects on the individual's level of wealth accumulation (Van Rooij et al. 2012), investment in stock and derivatives market (Van Rooij et al. 2011a; Hsiao and Tsai 2018), financial planning for retirement (Lusardi and Mitchell 2007; Van Rooij et al. 2011b) and credit card and debt-related behavior (Limbu and Sato 2019; Norvilitis et al. 2003, 2006). Financial well-being (FWB) represents an important goal of an individual's lifespan, and its attainment causes happiness and satisfaction (Porter and Garman 1993). With the changing social landscape and availability of complex financial products, the task of financial planning has become increasingly difficult. Governments across most countries in the world are curtailing post-retirement benefits. In many developing countries, including India, social benefit schemes are almost absent, requiring individuals to plan and invest for retirement. So, acquiring financial knowledge becomes imperative for individuals.

The financial management framework (Parrotta and Johnson 1998) resulting from the family resource management model insists that financial behavior is the consequence of financial knowledge and attitude. They further insist that financial behavior leads to financial contentment. A person with positive financial behavior would be financially satisfied and content. Not many researchers in the past have used this theory to study the financial well-being of working professionals. It has been found that financially knowledgeable individuals can better plan their finances (Lusardi and Mitchell 2007). In addition to financial planning, better financial knowledge has been found to facilitate good financial behavior like tracking expenses and budgeting, paying bills on time, paying full amounts due on credit cards, engaging in regular savings, and investing, among other positive financial behaviors (Xiao et al. 2009; Shim et al. 2009; Van Rooij et al. 2012; Limbu and Sato 2019). Xiao et al. (2009) posit that financial attitude is more important in explaining financial well-being than financial behavior.

The findings of the study indicate that (a) financial knowledge enables a person to make better financial decisions and is hence found to be positively related to financial well-being (b) a positive financial attitude which is demonstrated by judicious money management in addition to the financial knowledge promotes financial well-being (c) also, financial well-being can be influenced by financial behavior both directly and indirectly. Financial well-being is directly influenced by financial knowledge and attitude, but these associations can be changed by an individual's actions as demonstrated by their financial behavior.

The paper is divided into five segments. The first segment introduces the subject matter. The second section of the study presents a review of past literature to form the basis for theoretical framework and hypothesis development. The third section outlines the research methodology employed. The fourth next section presents the results obtained and the discussion. The concluding section outlines practical implications, limitations, and scope for future research.

Review of literature and hypotheses development

The current study is based on an extensive literature review which posits that financial attitude and financial knowledge impact the financial behavior (Kadoya and Khan 2017) of an individual and the financial well-being of an individual is greatly influenced by financial attitude and financial knowledge (Shim et al. 2009). Conceptual model of the present research is guided by financial management framework.

Parrotta and Johnson (1998) financial management framework, derived from Deacon and Firebaugh (1988) family resource management model, is used to support the conceptual model. Financial management behavior results from a person's financial attitude and knowledge. This model further proposes that financial contentment is influenced by financial management behavior. A recent study has used this framework to understand the causal relationships between financial knowledge, financial stress, financial behavior and financial well-being (Lee and Dustin 2021). Yap et al. (2018) employed the financial management framework to study a conceptual model where they attempted to find the indirect effect of financial knowledge and attitude on financial satisfaction through financial behavior. Similarly, Talwar et al. (2021) used this framework to study the financial behavior of retail investors as a consequence of their financial attitude.

Financial well-being

Previous research described financial well-being in numerous ways. Porter and Garman (1993) described financial well-being as complete happiness. Kempson et al. (2017a, b) analyzed a study conducted by the World Bank and found that individuals consider financial well-being to be very objective. They further revealed that financial well-being is the degree to which one can fulfil all needs quickly and contentedly and possesses financial flexibility to continue this in upcoming times. Many researchers suggested income, expenditure, belongings, and financial prestige as some objective measures of happiness (Fergusson et al. 1981; Sabri and Falahati 2012).

Meanwhile, a few researchers have defined financial well-being as a subjective measure (Strömbäck et al. 2017; Taft et al. 2013). Prawitz et al. (2006) argued that an individual's feeling about his/her financial situation at a given time could be referred to as financial well-being. Sabri et al. (2012) found that financial well-being relies on parents' background, financial literacy, academic ability, and financial socialization. In a similar study conducted by Falahati and Paim (2011), financial socialization, financial knowledge and financial difficulties were crucial determinants of financial well-being.

Financial knowledge

Mien and Thao (2015) defined financial knowledge as an adequate understanding of one's financial conditions. In other words, the better the understanding of an individual about own finances, the more responsible s/he would be in managing finances. One of the key factors in determining the degree of financial well-being is financial knowledge (Purniawati and Lutfi 2017). People who are knowledgeable about finance are more likely to save and invest money for the future (Henager and Mauldin 2015); they also tend to avoid getting into excessive debt that puts them in financial trouble (French and McKillop 2016). Financial well-being is greatly influenced by financial knowledge and demographic factors (Mokhtar et al. 2020). Knowledgeable people typically accumulate wealth and perceive their financial well-being better (Behrman et al. 2012). Serido et al. (2013) extended it to suggest that thorough financial knowledge enables acceptable financial behavior, which allows for the attainment of financial well-being.

An Individual's financial knowledge may positively or negatively impact financial behavior. For instance, Borden et al. (2008) revealed that financial knowledge might not immediately impact financial behavior. In contrast, Hancock et al. (2013), suggested that higher levels of financial literacy are associated with more responsible credit card behaviors. This gives credence to the adage that better financial management behavior correlates with greater financial knowledge. Evidence suggests that higher levels of financial knowledge cause better and positive financial behavior (Loke et al. 2015; Potrich, et al. 2016; Servon and Kaestner 2008). However, this relationship may not necessarily be causal (Hastings et al. 2013; Robb 2011). Literature leads to the formation of the following hypotheses:

H1

Financial knowledge (FK) has positive impact on financial well-being (FWB).

H2

Financial knowledge (FK) has positive impact on financial behavior (FB).

Financial attitude

Amagir et al. (2020) defined financial attitude as an individual's attitude toward money, including long-term financial planning, emergency savings and saving for the future. According to this study, indicators used to gauge a person's financial attitude are power prestige, financial planning, thinking before acting, and money quality. A person's attitude toward managing cash inflows and outflows, making long-term investments, and managing funds according to needs can be used to determine whether s/he has a decent and responsible financial attitude (Al Kholilah and Iramani 2013).

According to Shim et al. (2009), financial attitudes play a significant role in all domains of financial well-being. The choice of financial attitude as a factor was made because the development of a tracking and saving attitude can affect a person's ability to manage his/her finances. The present framework, therefore, asserts that the behavior of saving and control on overspending, with a favorable financial attitude, results in greater financial well-being. Prior research discovered that financial well-being was directly impacted by financial attitudes regarding money (Abdullah et al. 2019). Further, numerous studies like Amanah et al. (2016), Besri (2018), Budiono (2020), Firli and Hidayati (2021), found that financial attitude has a substantial impact on financial behavior. Literature leads to the following hypotheses:

H3

Financial attitude (FA) has positive impact on financial well-being (FWB).

H4

Financial attitude (FA) has positive impact on financial behavior (FB).

Financial behavior

Mien and Thao (2015) described financial behavior as how an individual is responsible for controlling and paying attention to the use of financial resources. Further, they suggested four important financial behavior indicators: consumption, cash flow management, credit management and saving. According to myriad studies (Brüggen et al. 2017; Shim et al. 2009; Xiao and Porto 2017), financial behavior is directly or indirectly related to financial well-being. People who practice good financial behavior particularly financial planning and regular savings, have higher levels of financial well-being (Chu et al. 2017; Veludo-de-Oliveira et al. 2014; Xiao and Porto 2017). When elements like knowledge and attitude are considered, financial behavior has been proven to be a mediator in explaining an individual's financial well-being (Çera et al. 2021).

Further, positive financial attitudes increase the likelihood of responsible financial behavior, promoting greater financial well-being (Rutherford and Fox 2010). Financial well-being is also linked to financial attitudes, especially regarding credit card use and lower debt loads (Norvilitis and Mao 2013; Kuknor and Sharma 2017). The findings of a recent study also supported the idea that financial behavior plays a mediation role in the relationship between financial attitude and financial well-being among Malaysian working adults (She et al. 2021). Further, the findings of Setiyani and Solichatun (2019) indicated that financial attitude indirectly impacted financial well-being via financial behavior.

Joo and Grable (2004) examined antecedents of financial satisfaction (instead of financial well-being) among white-collar professionals and revealed that financial knowledge had both direct and indirect effects on financial satisfaction and, in turn, on financial well-being. Shim et al. (2009) made a sole but unsuccessful attempt to connect financial well-being with financial knowledge. They measured financial well-being in terms of the financial satisfaction of an individual. Possession of financial knowledge diminishes anxiety, financial clashes, exploitation of children and conflict within families. Individuals with greater financial knowledge and a better sense of financial well-being are less miserable and more peaceful at their jobs (Kim et al. 2008). Narrow research on the outcome of financial knowledge on financial well-being, with mixed results, encourages the authors to investigate the direct as well as indirect effects of the financial knowledge level of an individual on financial well-being. Literature leads to the following hypotheses:

H5

Financial behavior (FB) has positive impact on financial well-being (FWB).

H6

Financial behavior (FB) mediates the relationship between financial knowledge (FK) and financial well-being (FWB).

H7

Financial behavior (FB) mediates the relationship between financial attitude (FA) and financial well-being (FWB).

Based on the hypotheses, a conceptual model, presented in Fig. 1, is proposed to be assessed to examine financial behavior's mediating effect. The model includes all three facets of financial literacy, namely financial knowledge, financial attitude, and financial behavior, which have been tested in isolation. This study examines the direct and indirect relationships of these tenets of financial literacy on the financial well-being of an individual.

Fig. 1.

Proposed model

Research methods

Sample of the study

For the current study, the authors developed a structured questionnaire for data collection. The questionnaire was administered personally and through the mail for four months (August–November 2020). The detailed statements used for measuring each construct are given in Annexure 1. Data for this study was obtained mainly from Delhi and the National Capital Region (NCR), using a combination of convenience and snowball sampling techniques which are non-probability sampling methods. We used personal and professional contacts to identify the respondents, and then they were requested to get the data from their acquaintances. The questionnaire was finalized in four different steps. The first draft of the survey questionnaire was prepared based on a literature review done on tangent studies on financial literacy and financial well-being. This draft was then presented to a team of five experts (two from academics and three from industry) who reviewed it to confirm the rightness of method, the scales used, and the correctness of the wordings used. This step helped further in ensuring content validity. In the third step, a pre-test was conducted to ensure the scales' reliability. Finally, after establishing reliability, the final draft of the questionnaire was circulated to approximately six hundred employed/ self-employed professionals. Respondents were educated about the study objective. To maintain the confidentiality of the data, they were asked not to reveal their names, addresses, phone numbers and email id. Each respondent took approx. 18–20 min to complete the survey. In total, 494 completed questionnaires were received back, of which 466 were found fit to be used for the analysis. The summarized demographic profile of the respondents of the study is presented in Table 1. As proposed by Bentler and Chou (1987), this study fulfils the minimum sample size criteria where the ratio of items in the questionnaire and sample size should be in proportion of 1:5. The finalized survey is composed of three sections. Questions to capture the respondents' demographic profiles were included in the first section. Statements on financial attitude, financial behavior and financial well-being were part of the second section. All the items were measured on a 5-point Likert scale, with "1 = strongly disagree" and "5 = strongly agree". The third section of the questionnaire included questions for measuring financial knowledge. These questions included options in the form of multiple-choice questions.

Table 1.

Sample profile

Variable	Items	Frequency	Percentage (%)
Age	19–30 years	170	36.48
	31–40 years	195	41.85
	40 years and above	101	21.67
Gender	Male	245	52.58
	Female	221	47.42
Education	Graduate	268	57.51
	Post-Graduation and Above	198	42.49
Occupation	Public/Private Sector Employee	393	84.33
	Business/Self-Employed	73	15.67
Income	Less than INR 1 million	160	34.33
	INR 1 million–INR 2 million	115	24.68
	INR 2 million–INR 3 million	85	18.24
	INR 3 million–INR 5 million	65	13.95
	More than INR 5 million	41	8.80
Marital status	Single	127	27.25
	Married	339	72.75
Number of dependents	None	106	22.75
	One	56	12.02
	Two	154	33.05
	Three	89	19.10
	Four or more	61	13.09

Measures

The scales included in the questionnaire were based on popular and extensively used scales, as seen in previous literature. Before finalizing the measurement scale for each construct, a chain of subsequent quantitative analyses was run to confirm using the most appropriate scales. This included a pre-test study on the data received from the first 25 respondents, which also helped ensure the proposed scales' validity. After obtaining the results of pre-test, we have rephrased the statement measuring financial attitude and another measuring financial well-being. Since a few respondents were uncomfortable with English (Hindi being the national language), scales were translated into Hindi for them and then translated back in English with the help of a linguistics expert. The financial knowledge construct was a single-order construct for which a score between 0 and 16 could be obtained, with a higher value representing higher financial knowledge. The scale of Van Rooij et al. (2011a) was used to measure the level of financial knowledge. There were 16 questions, of which 5 measured basic knowledge related to finance and 11 measured financial knowledge at an advanced level. The score was computed by adding one point for each correct answer.

The Potrich et al. (2016) scale was adapted for measuring the financial attitude and financial behavior constructs. These statements primarily measure a respondent's attitude and behavior regarding positive financial behavior. Positive financial behavior statements related to financial control, budgeting, timely credit card bill payment, regular savings and investment. The scale for measuring financial well-being was adapted from Prawitz et al. (2006). The statements measure an individual's perception of a financial situation, a subjective well-being measure with a higher value representing greater well-being.

Data analysis procedure

Smart PLS 3.0 (version 3.3.9) was employed for conducting the analysis (Hair et al. 2016). Consistency and regularity of estimations were tested using a bootstrapping process where 10,000 sub-samples were involved (Roldán and Sánchez-Franco 2012). While running the model on PLS, the model's reliability and validity were evaluated first. For measuring the reliability of the measurement model, the consistency of measurement items was checked using Cronbach's alpha. Both discriminant and convergent validity were assessed for measuring validity. The data were further evaluated for the presence of any common method bias (CMB). To test CMB, Harman single factor test was conducted using principal component analysis where the first factor accounted for 34.76 per cent of total variance, which was much below 50 per cent (permitted value). Kock (2015) suggested that inner VIF values greater than 3.3 signaled possible CMB. The inner VIF values were lower than 3.3, indicating CMB's absence. Hence, the problem of common method bias was ruled out from the study.

Results and discussion

Estimation of measurement model

All constructs of the hypothesized model were subjected to a measurement model using PLS-SEM. The outer loading of all items of various constructs and reliability and metrics for reliability and validity for constructs are presented in Table 2. For establishing indicator reliability, outer loadings are required to be at least 0.70, and all items of this study have outer loading greater than the threshold. Furthermore, Cronbach's alpha value of all the constructs exceeds the required value of 0.70 (Lin and Haung 2008). This establishes the internal consistency of all the constructs. To establish the convergent validity of the constructs under study, values of composite reliability (CR) and average variance extracted must be at least 0.7 and 0.5, respectively (Fornell and Larcker 1981). The conditions for establishing convergent validity are satisfied in this model. Descriptive statistics for the constructs are presented in Table 3.

Table 2.

Tests for reliability and validity

	Factor loading	Std deviation	t-statistic	Cronbach’s alpha		Composite Reliability	Average variance extracted
Financial attitude					0.945	0.958	0.820
FA1	0.931	0.009	107.097
FA2	0.891	0.014	64.280
FA3	0.907	0.013	72.076
FA4	0.903	0.015	59.715
FA5	0.895	0.013	67.696
Financial behavior				0.915		0.936	0.746
FB1	0.836	0.021	40.742
FB2	0.844	0.023	36.097
FB3	0.896	0.011	79.466
FB4	0.859	0.016	54.034
FB5	0.883	0.015	57.207
Financial well-being				0.883		0.914	0.680
FWB1	0.856	0.016	52.107
FWB2	0.863	0.014	60.425
FWB3	0.804	0.023	34.754
FWB4	0.800	0.014	55.453
FWB5	0.797	0.022	36.739

Table 3.

Descriptive statistics and HTMT

Constructs	Descriptive statistics				Heterotrait-Monotrait (HTMT) ratio
	Min	Max	Mean	SD	FA	FB	FK	FWB
FA	1	5	4.330	0.993
FB	1	5	4.153	1.030	0.830
FK	2	11	8.292	2.323	0.541	0.619
FWB	1	5	3.520	1.202	0.510	0.639	0.490

Discriminant validity was assessed using the HTMT ratio, which must be below 0.90 (Hair et al. 2020). A perusal of Table 3 establishes discriminant validity. Based on these observations, the measurement model is considered good and can be evaluated for estimating the structural equation model.

Structural model evaluation

Following the Confirmatory composite analysis (CCA) approach, we first evaluated collinearity in the model by examining the VIF statistic. The inner VIF values were found to be below 3.33, corresponding to each of the endogenous constructs, suggesting that multicollinearity is not present in the model (Diamantopoulos and Siguaw 2006). Thereafter, we evaluated the weights of path coefficients obtained from the nonparametric bootstrapping procedure by taking 10,000 samples. The standardized beta coefficients, standard error, t-values, and bias-corrected upper and lower confidence intervals are shown in Table 4. The path models are also presented in Fig. 2, wherein Model A presents the direct relationships without mediation, while Model B has FB included as a mediator. The total effect of FK on FWB (β = 0.277; t = 5.854; p < 0.001) and FA on FWB (β = 0.331; t = 6.564; p < 0.001) is positive and significant with R² value of 0.358 (p < 0.001) lending support to H1 and H3. In the mediation model, FK is positively and significantly related to FWB (β = 0.174; t = 3.574; p < 0.001) and FB (β = 0.256; t = 5.782; p < 0.001), supporting H1 and H2. FA is positively related to FWB (β = 0.052; t = 0.827; p = 0.408), while it is positively and significantly related to FB (β = 0.638; t = 14.201; p < 0.001), supporting H4. FB positively and significantly affects FWB (β = 0.428; t = 5.335; p < 0.001).

Table 4.

Structural relationships and hypotheses testing

Hypotheses	Desired relationship	Std Beta	Std error	t-value	5% CI LL	95% CI UL	Decision
H1	FK- > FWB Total Effect (Without Mediator) Direct Effect (With Mediator)	0.277 0.174	0.047 0.049	5.854 3.574	0.199 0.095	0.355 0.254	Fail to reject the null
H2	FK- > FB	0.256	0.044	5.782	0.185	0.331	Fail to reject the null
H3	FA- > FWB Total effect (Without Mediator) Direct effect (With Mediator)	0.331 0.052	0.050 0.063	6.564 0.827	0.245 − 0.053	0.412 0.155	Fail to reject the null
H4	FA- > FB	0.638	0.045	14.201	0.558	0.706	Fail to reject the null
H5	FB- > FWB	0.428	0.069	6.204	0.314	0.540	Fail to reject the null
H6	FK- > FB- > FWB	0.110	0.025	4.354	0.072	0.155	Fail to reject the null
H7	FA- > FB- > FWB	0.273	0.051	5.335	0.193	0.362	Fail to reject the null

*Significant at 0.001 level based on 10,000 bootstraps

Fig. 2.

Model A. Note For constructs the values represent the r-square and the path values represent path coefficients with associated p-values in parenthesis. Model B (With Mediation). Note For constructs the values represent the r-square and the path values represent path coefficients with associated p-values in parenthesis

We included age, gender, and income as control variables in the structural model to examine whether they affect the endogenous variable. Income was found to be significant, while the other two variables did not have a significant impact on FWB (age: (β = − 0.068; t = 1.673; p = 0.094; gender: (β = 0.021; t = 0.573; p = 0.567; experience: (β = 0.195; t = 5.397; p < 0.001).

Next, we evaluated the model's predictive ability through R², f², Q² and PLSpredict (Hair et al. 2020). The R² values of FB and FWB were 0.644 (p < 0.001) and 0.418 (p < 0.001), respectively, indicating the moderate predictive power of the model Hair et al. (2020). The value of f², or the effect size, explains the importance of various exogenous constructs on the endogenous construct. For the construct FB, the f² values of FK and FA are 0.134 and 0.827, indicating small and large effect sizes, respectively. For explaining FWB, the f² values of FK, FA and FB are 0.032, 0.002 and 0.110, indicating small effect sizes for all. Predictive relevance is indicated by Q² statistic, which measures cross-validated redundancy statistics (Geisser 1974; Stone 1974). The blindfolding technique with an omission distance set at seven was used to determine the Q² statistic. A higher value of Q² is representative of better predictive accuracy. Q² being higher than zero is considered satisfactory. In our model, the Q² values of FB and FWB are 0.475 and 0.263, respectively, showing that all the endogenous constructs have satisfactory predictive relevance. Finally, to assess the out-of-sample predictive power of the model for FWB, PLS predict procedure with ten folds and ten repetitions was applied. Most of the values for RMSE and MAE were found to be lower using PLS-SEM analysis compared to the linear model (LM), providing support to the model's predictive power (Shmueli et al. 2019).

Mediation analysis

We examined the mediation effects of FB on the relationship between FK and FWB, and FA and FWB. The direct effect of FK on FWB (β = 0.277; t = 5.854; p < 0.001) and FA on FWB (β = 0.331; t = 6.564; p < 0.001) are significant, as can be observed from Fig. 2 Model A. With the inclusion of FB as a mediator, the direct effect of FK on FWB (β = 0.174; t = 3.574; p < 0.001) gets reduced, pointing toward partial mediation. The direct effect of FA on FWB (β = 0.052; t = 0.827; p = 0.408) becomes insignificant, suggesting complete mediation. The specific indirect effect of FK on FWB (β = 0.110; t = 4.354; p < 0.001) and FA on FWB (β = 0.273; t = 0.335; p < 0.001) are also significant, and zero does not lie between the lower and upper confidence intervals. This indicates complementary mediation by FB in the relationship between FK to FWB and FA to FWB, lending support to H6 and H7.

Discussion of results

This study examined how financial knowledge and attitude influence a person's financial well-being. Furthermore, it examined if a person's financial behavior can mediate these relationships. A person is perceived to be financially literate if he/she possesses adequate financial knowledge, imbibes a positive financial attitude, and exhibits healthy and positive financial behavior (OECD 2013). Financial knowledge empowers an individual to take better financial decisions (Atkinson and Messy 2012). Possessing financial knowledge has been positively associated with financial well-being (Behrman et al. 2012; Sabri et al. 2012 Mokhtar et al. 2020; Purniawati and Lutfi 2017). Our study corroborates this evidence. In addition to financial knowledge, a positive financial attitude also influences financial well-being (Shim et al. 2009). Positive attitude toward financial planning, saving for the future and managing money judiciously has been found to influence financial well-being positively (Shim et al. 2009; Norvilitis and Mao 2013; Kuknor and Sharma 2017; Abdullah et al. 2019). The current study also finds a positive and significant impact of financial attitude on financial well-being, in line with previous evidence. So, knowledge of financial matters and a positive attitude toward money management can improve an individual's financial well-being (Shim et al. 2009). This is also explained by the financial management framework (Parrotta and Johnson 1998; Lee and Dustin 2021).

Financial knowledge and attitude are precursors to healthy financial behavior (OECD 2013). Financial knowledge empowers an individual with an understanding of important financial matters and increases the likelihood of better financial decisions, which may lead to positive financial behavior (Shim et al. 2009; Rutherford and Fox 2010). The study finds that financial knowledge positively influences an individual's financial behavior, implying that higher financial knowledge enhances the probability of a positive financial behavior which corroborates existing evidence (Servon and Kaestner 2008; Shim et al. 2009; Rutherford and Fox 2010; Loke et al. 2015; Potrich et al. 2016).

TPB posits that attitude leads to behavior (Ajzen 1991). Financial attitude represents the degree to which an individual derives positive or negative valuation from performing a specific behavior (Azjen 1991). Attitude can explain an individual's voluntary behavior, such as financial behavior involving financial planning, emergency savings and day-to-day money management (OECD 2013; Shim et al. 2009). Supporting TPB, the present study finds a positive and significant effect of financial attitude on financial behavior (Azjen 1991; OECD 2013; Shim et al. 2009).

It is pertinent to note how healthy and positive financial behavior influences the financial well-being of an individual. Literature posits that people engaging in positive behavior regarding financial matters are more content and experience greater financial well-being (Brüggen et al. 2017; Shim et al. 2009; Xiao and Porto 2017). In this context, the findings of this study collaborate with existing evidence. Financial behavior can have both a direct and mediating influence on financial well-being (Joo and Grable 2004; Setiyani and Solichatun 2019). Financial knowledge and financial attitude directly influence financial well-being, but these relationships may be modified by an individual’s actions modelled through financial behavior. Results of the present study prove that financial behavior fully mediates the relationship between financial attitude and well-being, which corroborates prior evidence (Çera et al. 2021; Setiyani and Solichatun 2019). Having financial knowledge alone cannot drive financial well-being, but bringing knowledge to action through decisions can improve well-being. This study finds that financial behavior positively mediates the relationship between financial knowledge and financial well-being (Joo and Grable 2004).

Implications and scope for future research

Theoretical implications

The study offers few theoretical implications. First, the findings present evidence of the financial management framework that explains the role of financial knowledge and attitude in forming an individual's behavior, which further influences financial contentment and well-being. Next, the study examined the mediating role of financial behavior in explaining financial well-being, which had not been extensively evaluated specifically for working adults. Finally, the study establishes a model for crises such as the pandemic, which severely impacted work requirements and working professionals' compensation; both directly impact overall well-being.

Practical and social implications

This study offers important practical and social implications and offers inferences for working adults, employers, policymakers and other stakeholders. Financial well-being is an important milestone in a working professional's life. Working professionals aspire to earn well and manage money prudently to get financial satisfaction and flexibility (Porter and Garman 1993; Kempson et al. 2017a, b). Realizing the need for financial well-being, working individuals must acquire adequate financial knowledge, develop a positive financial attitude, and exhibit positive financial behavior. The study offers a crucial understanding of Indian consumers in the growing industry for financial services for marketers. Having a better understanding of the needs of Indian consumers, marketing professionals could develop financial products and services accordingly and also arrange programs on financial literacy that are suitable for Indian consumers. The financial services would be more relevant, and training would be more successful if this were done. The study's contribution lies in advising marketers to relate their approaches to financial well-being. These findings open the door to the development of the notion of financial well-being and its precursors in many socioeconomic contexts.

Further, employers play a vital role in the financial wellness of working professionals. Employers provide financial benefits in the form of salary, allowances, and incentives but a more fulfilling reward will be to enable employees to be financially sound. Employers may engage a financial counsellor or plan workshops to help employees understand the need for good financial planning and comprehend complex financial products available in the market. If employer helps employees in financial planning and equips them to prepare for future financial requirements, then employees finances may not be severely impacted with short-term stress such as lesser incentives or temporary pay reduction due to pandemic-like events.

Policymakers must recognize that financial knowledge, attitude, and behavior improve citizens' financial well-being. Since the government does not guarantee social benefits to such working professionals post their retirement, it needs to plan interventions to equip working professionals better to achieve financial wellness on their own. Ingraining good financial behavior and achieving financial well-being is a prolonged process, but the seeds must be sown at an early age. Hence, policymakers must plan campaigns at various levels, starting from secondary schools, to help ingrain financial concepts and help students/youth understand how vital prudent financial attitude and behavior are to attain financial well-being in later phases of their lives. Ministry of Corporate Affairs, Government of India has set up an Investor Education and Protection Fund to disseminate the people's financial knowledge. The fund directly conducts financial knowledge drives and finance third party for conducting the same. Policymakers should extensively use this fund to enhance the financial knowledge of high school and college students. The policymakers may also introduce a requirement for compulsory financial knowledge training for new joiners. It also creates an opportunity for various stakeholders, such as financial institutions, financial planners, financial advisors, financial agencies, and educators, to contribute to this endeavor by educating people on financial issues so that their financial well-being may improve.

Limitations and scope for future research

This study focuses on an essential contemporary issue faced by the working population of an emerging country. However, there may be some limitations. First, the study uses cross-sectional data; an experimental study before and after an intervention on financial literacy could have helped to evaluate whether such interventions help improve a person's financial literacy and whether the change is reflected in financial well-being. Further, this study used a subjective measure of financial well-being, which is well documented. Future studies may include subjective measures along with objective measures of financial well-being. The target population of this study included working adults only; separate studies are needed for students, women, and retired persons. Furthermore, the future studies may also examine the risk management and insurance aspects.

Biographies

Dr. Shikha Bhatia

is Associate Professor (Finance and Accounting) at International Management Institute New Delhi, India. She has over 17 years of experience as an academician, researcher, and trainer. Her research papers and cases have been published in reputed national and international journals. She has taught courses and imparted training in Financial Accounting, Cost and Management Accounting, Financial Management, Corporate Valuation, Investment Banking and Financial Modelling. Her research interests include initial public offerings, ESG, corporate finance, and financial literacy.

Prof. Sonali Singh

is working as an Assistant Professor at Jaipuria Management Institute Noida. She has done her M.Phil in Operations Research from the University of Delhi and pursuing Ph.D in the area of Quality Management. She has more than nineteen years of teaching experience in the field of business statistics, operations research, research methodology, operations management and business analytics. She has keen interest in research and has published several papers in national and international journals of repute. She has imparted training in various organizations in the areas of quantitative techniques, data analysis, quantitative research methods, and related fields.

Appendix

Financial Attitude (FA)	FA1: It is important to control monthly expenses
	FA2: It is important to establish financial targets for the future
	FA3: It is important to save money on a monthly basis
	FA4: The way I manage my money today will affect my future
	FA5: It is important to invest regularly to achieve targets in the long-term
Financial Behavior (FB)	FB1: I have a plan for expenses/budget
	FB2: I have developed a plan for retirement saving
	FB3: I set goals to guide my financial decisions
	FB4: I save some of the money I get each month for a future need
	FB5: I save regularly to achieve financial targets in the long-term
Financial Well-being (FWB)	FWB1: I feel secure in my current financial situation
	FWB2: I am very satisfied with my present financial situation
	FWB3: I feel confident about having enough money to support myself in retirement, no matter how long I live
	FWB4: I am highly confident that I could find the money to pay for a financial emergency that costs about Rs.100,000
	FWB5: I don't feel stressed about my personal finances in general
Financial Literacy (FK)	If there were ₹100 in a savings account and the rate of interest was 5% per annum. After 5 years, how much do you think would have accumulated in the account if the money was not withdrawn? (a) More than ₹105 (b) Exactly ₹105 (c) Less than ₹105 (d) Do not know
	If there were ₹1000 in a savings account and the interest rate is 20% per annum and you never withdraw money or interest payments. After 5 years, how much would you have on this account in total? (a) More than ₹2000 (b) Exactly ₹2000 (c) Less than ₹2000 (d) Do not know
	Imagine that the interest rate on your savings account was 3% per year and inflation was 6% per year. After 1 year, how much would you be able to buy with the money in this account? (a) More than today (b) Exactly the same (c) Less than today (d) Do not know
	Assume a friend inherits ₹500,000 today and his sibling inherits ₹500,000 3 years from now. Who would be richer because of the inheritance? (a) My friend (b) His sibling (c) They are equally rich (d) Do not know
	Suppose that in the year 2025, your income doubled, and prices of all goods doubled too. In 2025, how much will you be able to buy with your income (a) More than today (b) The same (c) Less than today (d) Do not know
	Which statement according to you, describes the main function of the stock market? (a) Predicts stock earnings (b) Increase the price of stocks (c) Allow for the meeting of people who want to buy and sell stocks (d) Do not know
	What happens if somebody buys a stock of firm B in the stock market? (a) He owns a part of firm B; (b) He has lent money to firm B; (c) He is liable for firm B's debts; and (d) Do not know
	Which statement about mutual funds is correct? (a) Once one invests in a mutual fund, one cannot withdraw money in the first year; (b) Mutual funds can invest in several assets, for example can invest in both stocks and bonds; (c) Mutual funds pay a guaranteed rate of return which depends on their past performance; (d) Do not know
	What happens if somebody buys a bond of firm B? (a) He owns a part of firm B (b) He has lent his money to firm B (c) He is liable for firm B's debts (d) Do not know
	Considering a long period (for example 10 or 20 years), which asset normally gives the highest return? (a) Savings accounts (b) Bonds (c) Stocks (d) Do not know
	Normally, which asset displays the highest fluctuations over time? (a) Savings accounts (b) Bonds (c) Stocks (d) Do not know
	When an investor spreads his money among different assets, does the risk of losing money: (a) Increase (b) Decrease (c) Stay the same (d) Do not know
	If you buy a 10-year bond, it means you cannot sell it after five years without incurring a major penalty. True or false? (a) True (b) False (c) Do not know
	Stocks are normally riskier than bonds. True or false? (a) True (b) False (c) Do not know
	Buying a company stock usually provides a safer return than a stock mutual fund. True or false? (a) True (b) False (c) Do not know
	If the interest rates fall what should happen to bond prices? (a) Rise (b) Fall (c) Stay the same (d) Do not know

Author contributions

We declare that all added authors have contributed to the paper.

Funding

We declare that this study is not funded by any individual or organization.

Data availability

The dataset used for the analysis during the current study is available with the corresponding author and can be shared on reasonable request.

Declarations

Conflict of interest

We hereby declare that authors have no conflict of interest to disclose and we have complied with all ethical standards.