Financial Mindfulness

76 Pages Posted: 2 Oct 2023

See all articles by Emily Garbinsky

Emily Garbinsky

Cornell University - SC Johnson Graduate School of Business

Simon J. Blanchard

Georgetown University - McDonough School of Business

Lena Kim

Cornell University - SC Johnson Graduate School of Business

Date Written: September 6, 2023

Abstract

Financial mindfulness has become a popular term used by practitioners to promote various financial products and services. Despite its industry-wide prevalence, there is still limited conceptual clarity of what financial mindfulness is and how to measure it effectively. In this article, we define financial mindfulness (FM) as “the tendency to be highly aware of one’s objective financial state while possessing a non-judgmental acceptance of that state,” and we develop and validate an 8-item scale to measure individual differences in financial mindfulness. Through 10 studies, we demonstrate that the FM-Scale has strong psychometric properties, is distinct from conceptually related scales, and predicts actual investment preferences and credit scores. Importantly, the FM-Scale is associated with a broad range of known financially detrimental behaviors (i.e., financial withdrawal, impulse buying, and sunk cost bias) above and beyond related scales (i.e., current money management stress and self-control). Our work is the first to introduce and define mindfulness in the context of consumer finance, and to provide a reliable and succinct way to measure it.

Keywords: consumer finance, credit scores, investment preferences, mindfulness, scale development

JEL Classification: G5, G53, D14

Suggested Citation

Garbinsky, Emily and Blanchard, Simon J. and Kim, Lena, Financial Mindfulness (September 6, 2023). Georgetown McDonough School of Business Research Paper No. 4564115, Available at SSRN: https://ssrn.com/abstract=4564115 or http://dx.doi.org/10.2139/ssrn.4564115

Emily Garbinsky

Cornell University - SC Johnson Graduate School of Business

Simon J. Blanchard (Contact Author)

Georgetown University - McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

Lena Kim

Cornell University - SC Johnson Graduate School of Business

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