Know Thyself Financially: How Financial Self-awareness Can Benefit Consumers and Financial Advisors

37 Pages Posted: 2 Nov 2019

See all articles by Nivriti Chowdhry

Nivriti Chowdhry

Rice University - Jesse H. Jones Graduate School of Business

Utpal M. Dholakia

Rice University - Jesse H. Jones Graduate School of Business

Date Written: October 23, 2019

Abstract

We consider the relationship between an individual’s financial self-awareness (FSA), defined as detailed knowledge about one’s current financial assets, liabilities, and spending patterns, and financial outcomes. The results of three studies show that a higher level of FSA is associated with positive financial decisions and satisfaction among individuals. This effect is mediated by perceived efficacy about handling personal finances. We also find that financial literacy strengthens the association between FSA and investing and saving, but does not affect the association between FSA and either financial satisfaction or spending decisions. Increasing the FSA of clients offers a useful method for financial advisors and policymakers to encourage prudent financial decisions.

Keywords: Financial self-awareness, financial knowledge, financial literacy, financial decision making, savings, consumer debt

Suggested Citation

Chowdhry, Nivriti and Dholakia, Utpal M., Know Thyself Financially: How Financial Self-awareness Can Benefit Consumers and Financial Advisors (October 23, 2019). Available at SSRN: https://ssrn.com/abstract=3474625 or http://dx.doi.org/10.2139/ssrn.3474625

Nivriti Chowdhry

Rice University - Jesse H. Jones Graduate School of Business ( email )

Houston, TX
United States
7133481790 (Phone)

Utpal M. Dholakia (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

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