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Introduction
Over half of Americans are very worried about financial issues, including not having enough for retirement, to pay normal monthly bills, to make minimum credit card payments or pay medical costs for normal healthcare (Saad, 2015). Additionally, two-thirds of working millennials in the USA have not saved anything for retirement, and only 5 percent are saving enough (Brown, 2018). These worries and concerns are global. According to a Barclay’s survey including 100 employers and 2,000 employees in the UK, almost half worry about their finances, and 20 percent choose not to think about their finances because they find it too upsetting (Barclays, 2018). Whereas some are optimistic, and expect to be better off financially in the future (Berman et al., 2016), for many it is just overconfidence.
Financial well-being has been studied using both subjective and objective measures, where objective well-being relates to income- and wealth-related factors and subjective well-being is measured by perceptions of ones’ financial status (Xiao and Porto, 2017), as people in the same financial predicament can view their financial well-being quite differently (Garman et al., 2004). There are numerous definitions of financial well-being and several approaches to studying this construct. Some view financial well-being as subjective (e.g. “perception of being able to sustain current and anticipated desired living standards and financial freedom,” Brüggen et al., 2017), whereas others focus on the construct’s objective components (e.g. “state of being wherein you have control over day-to-day, month-to-month finances, have the capacity to absorb a financial shock, are on track to meet your financial goals, and have the financial freedom to make the choices that allow you to enjoy life,” CFPB, 2015). Ultimately, both subjective and objective financial well-being are important, as people may have subjectively positive financial well-being yet not acknowledge their minimal savings. These hopeful individuals may also not realize their financial vulnerability, as an unexpected emergency could threaten their financial security (O’Connor et al., 2018).
Poor subjective and objective financial well-being have numerous consequences. Both low incomes and financial problems are associated with poor health in mid-life (Arber et al., 2014). In the workplace, employees with financial worries say their work is impacted as they are too distracted and less productive (Barclays, 2014). A PwC...