“Finance, money and debt” are the most common causes of anxiety affecting mental health and well-being (Swift et al., 2014). Previous research has sought to understand financial well-being and the important factors for promoting financial well-being (FWB) for both individuals and society. The research seeks to explain why financial behaviour change matters. Financial education is considered as an important intervention to improve FWB (Brüggen et al., 2017). Nevertheless, the level of impact of financial education on financial behaviour change, capability and well-being are disputed. Behaviour change is not only influenced by education; other factors play an important role. There are constraints preventing people from changing behaviour, such as socioeconomic status, personality, financial knowledge, literacy, psychological and demographic characteristics (Hensley, 2015; Collins and Holden, 2014; Lyons et al., 2006; Bird et al., 1997).
This paper investigates how behaviours influence individual FWB and how financial education can play a role in enhancing these elements. Saving and borrowing are key behaviours discussed in this paper. Some factors that might constrain people from making a change, such as financial attitudes and resources are also explored. Using data from my PhD, the efficacy of the online financial education intervention “Managing My Money” on Future Learn will be explored. The research uses a mix of quantitative and qualitative methods including surveys, financial literacy quizzes, interviews and content from online discussions.
Key findings show that there is no significant change in perceived FWB before and after the intervention. From the data, it is not clear why there were some changes in influential factors such as financial behaviour, attitudes, attitudes towards making a change, knowledge and capacity, but no significant change in FWB. It might be that the level of change of these influential factors was not large enough to trigger a change in FWB. It could also be that the changes in some indicators of these influential factors are not sufficient to create a significant change in FWB. For instance, there was a positive change in saving behaviour within the financial behaviour factor, however, a positive change simultaneously in other indicators (i.e. paying off debts, retirement funds) might be needed to generate a positive change in FWB. Low response rates in post-surveys make it difficult to justify the causes of this result.
The findings from the thematic analysis of the qualitative data revealed that saving and borrowing were the favourite topics in the online discussions. Learners were contemplating how their cognition, attitudes and behaviours in managing their finances had been changed over time. They asked for advice and stressed that they needed some help in managing their finances. Financial education was recognised by learners as key in achieving their financial needs and goals. The stories of their life-changing situations explained how these changes influenced their financial behaviours such as spending, saving and borrowing money. This research found that learners were at different stages of behaviour change for individual financial behaviours. Due to various circumstances, a few learners had relapsed in their saving behaviour, but over a twelve-month period were back on track. It was the limited financial resources in a specific period that prevented them from maintaining a desirable behaviour such as saving, rather than a lack of self-efficacy to maintain the change, awareness of the desirability of change or a lack of knowledge of saving for instance. These learners stressed they knew that they needed to save and to pay off debt. However, when the relapse was caused by limited financial resources, it might take longer than the one to six months cut-off periods, as suggested in five stages of behaviour change (Prochaska et al., 2002) to observe the change in behaviour after a relapse. Financial behaviour is constrained by an individual’s financial capacity, so the approach to dealing with behaviour change is distinguished from other types of behaviour change that involve purely physical and psychological factors (e.g. exercise, diet, smoking etc.). It requires a different approach and more thought to define the stages of financial behaviour change.
Learners also discussed how risk attitude influenced the way they spend, save, borrow and invest their money. Risk attitude is defined as “an individual’s orientation toward taking or avoiding risk when deciding how to proceed in situations with uncertain outcomes” (Glanz et al., 2016, p.1). Financial capacity constrained the levels of risk attitude of learners. The more risk-averse attitude the learners had the more resilience they developed to resist pressure to “keep up with the Joneses”.
There is not one answer that fits all, as it depends on an individual’s financial situation. Informed decision making is more important to help them make the right decision at the right time with reasonable costs or risks. This paper offers some preliminary findings on the above to inform the social marketers in designing financial education interventions that work for different segments
