Effects of financial empowerment and self-confidence in financial empowerment on financial well-being

Consumers need sufficient financial empowerment and the ability to accurately evaluate their level of empowerment to make desirable financial decisions and improve their financial well-being. Hence, the current study examined both the main and the interaction effects of financial empowerment and self-confidence in financial empowerment on financial well-being for 2,000 consumers aged 20 years old and older. Consumers were classified based on financial empowerment and self-confidence in financial empowerment using the 2018 Korean Consumer Empowerment Index. Multinomial regression analysis and a general linear model were performed to investigate the variables related to belonging to consumer groups and how financial empowerment, self-confidence in financial empowerment, and the discrepancy between them relate to a consumer’s financial well-being, respectively. We found higher financial well-being for the groups with higher education or income. Furthermore, the group with high financial well-being was also characterized by high financial empowerment and self-confidence in financial empowerment. However, the interaction effect of financial empowerment and self-confidence in financial empowerment on financial well-being was not statistically significant. Previous research measured self-confidence using only knowledge. However, this study measured consumer empowerment, which encompasses financial knowledge, attitude, and behavior.