Factors Associated With Financial Stressors, Financial Stress, and Financial Behaviors
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Connects with: @archuleta2013 @drentea2015 @grable2015 @heckman2014
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lopezalvarado2021 - p. 12
Financial stress is the emotional reaction to present financial circumstances that may not be solved only by financial counseling or financial coaching.
lopezalvarado2021 - p. 17
The purpose of this study was to examine the relationships among financial stressors, financial stress, and financial behaviors in the U.S. To fulfill the objectives of the present study, data from the 2018 National Financial Capability Study (NFCS) was used. The main objectives of the present study included the following: 1) to explore factors associated with financial stressors and financial stress; 2) to examine the effects of financial stressors and financial stress on financial behaviors; and 3) to investigate race/ethnicity and sociodemographic characteristics associated with financial behaviors.
lopezalvarado2021 - p. 21
There are economic impacts that create yet another financial stressor: that is, calls from debt collectors. As individuals fail to meet their financial responsibility to a creditor or lender, their debts are sent to collection agencies or debt collection agencies
lopezalvarado2021 - p. 24
Financial stress is the emotional reaction that comes from individuals who experience financial stressors (Falconier & Epstein, 2011).
lopezalvarado2021 - p. 26
Like financial stress, financial anxiety is described as a subjective reaction to financial stressors. However, these concepts are different in how individuals and families feel about stressors. While financial stress is the immediate reaction to financial stressors, financial anxiety is defined as the feeling of anxiousness or worry about one’s current and future financial situation
lopezalvarado2021 - p. 27
Financial stressors can lead to financial conflict and financial distress (financial stress) which can be alleviated by seeking financial advising and financial education program
lopezalvarado2021 - p. 37
There are two forms of financial knowledge that have been used across the literature: subjective financial knowledge and objective financial knowledge. Subjective financial knowledge is commonly defined as confidence (Atlas et al., 2019). Though subjective financial knowledge can lead to positive financial behaviors, research suggest that overconfidence can have the opposite effect—negative financial behaviors (Atlas et al., 2019). Objective financial knowledge is defined as the combination of financial competence, mathematical ability, and understanding of financial matters (Lind et al., 2020).
lopezalvarado2021 - p. 38
Financial behaviors can also be viewed as long-term financial behaviors and short-term financial behaviors. Short-term financial behaviors include emergency saving and budgeting, whereas long-term financial behaviors include retirement planning and investment practices (Henager & Cude, 2016)
lopezalvarado2021 - p. 49
This study used data from the 2018 National Financial Capability Study (NFCS), which is funded by the Financial Industry Regulatory Authority (FINRA). FINRA is a “government-authorized not-for-profit organization that oversees U.S. broker-dealer” dedicated to protecting investors’ rights, ensuring market integrity, and educating investors and consumers (FINRA.org, 2021)
lopezalvarado2021 - p. 51
Table 1 presents the measurements of the key independent variables analyzed in this study: 1) financial stress; 2) financial stressors, and 3) race/ethnicity, financial knowledge, and socio-demographic characteristics Race/ethnicity was included in the empirical model as In addition to race/ethnicity, financial knowledge and socio-demographic characteristics were also considered as resource variables in this study. The socio-demographic characteristics included age, gender, education, marital status, employment status, and income.
lopezalvarado2021 - p. 54
financial stress was measured by three survey questions: 1) financial stress—“how strongly do you agree or disagree with the following statements –discussing my finances can make my heart race or make me feel stressed”(J33_41); financial anxiety—“how strongly do you agree or disagree with the following statements —thinking about my personal finances can make me feel anxious” (J33_40); and financial worry—“how strongly do you agree or disagree with the following statements —I worry about running out of money in retirement” (J33_1) . These three questions were measured on a 7 point-Likert scale where 1 = Strongly disagree, 4= Neither agree nor disagree, and 7= Strongly agree.
lopezalvarado2021 - p. 55
To measure the “too much debt” variable, a question in the NFCS survey was used: “How strongly do you agree or disagree with the following statement? – I have too much debt right now “(G23).
lopezalvarado2021 - p. 55
Collector calls, unpaid medical bills, and income drop are asked in a yes and no question format in the original survey. The variables were coded as: collector calls [1 if R had no calls, 0 if otherwise; 1 if R had calls, 0 if otherwise], unpaid medical bills [1 if R no medical debt, 0 if otherwise; 1 if R medical debt, 0 if otherwise], income drop [1 if R no income drop, 0 if otherwise; 1 if R income drop, 0 if otherwise]. Inability to pay bills is asked in the data set: “in a typical month, how difficult is it for you to cover your expenses and pay all your bills?” (J4)
lopezalvarado2021 - p. 56
In this study, there are four major dependent variables: 1) financial stressors, 2) financial stress, 3) positive financial behaviors (bonadaptation), and 4) negative financial behaviors (maladaptation)
lopezalvarado2021 - p. 56
In this study, negative financial behavior was a continuous variable. This index variable was created by summing seven behaviors: mortgage delinquency (0-1), credit card delinquency (0-1), credit limit overdraw (0-1), checking account overdraw (0-1), retirement withdrawal (01), hardship withdrawal (0-1), payday lender use (0-1). The variables where recoded where 0=1 and 7=8, for a rage of 1-8.
lopezalvarado2021 - p. 56
An index variable for positive financial behaviors was also created by summing seven behaviors: spend within budget (0-1), pay credit card bill on time (0-1), have emergency fund (1-0), own stocks (0-1), have IRAs (0-1), have 401(K) (1-0), have will (0-1).
lopezalvarado2021 - p. 78
High 0.831 0.046 <.0001 0.247
lopezalvarado2021 - p. 78
igh 0.622 0.048 <.0001 0.189
lopezalvarado2021 - p. 78
High 0.141 0.039 <.0001 0.125
lopezalvarado2021 - p. 82
High debt 2.502 0.141 <.0001 0.223
lopezalvarado2021 - p. 82
Yes calls 1.170 0.230 <.0001 0.079
lopezalvarado2021 - p. 82
Yes bills 1.047 0.210 <.0001 0.077
lopezalvarado2021 - p. 82
Yes drop 2.016 0.182 <.0001 0.148
lopezalvarado2021 - p. 82
Yes difficulty 2.859 0.150 <.0001 0.248
lopezalvarado2021 - p. 82
Hispanic 0.386 0.187 0.0389 0.022
lopezalvarado2021 - p. 82
Subjective financial knowledge -0.560 0.056 <.0001 -0.109
lopezalvarado2021 - p. 82
Objective financial knowledge -0.246 0.045 <.0001 -0.065
lopezalvarado2021 - p. 82
Age 30-37 0.960 0.222 <.0001 0.071
lopezalvarado2021 - p. 82
Age 38-45 1.140 0.215 <.0001 0.077
lopezalvarado2021 - p. 82
Age 46-53 0.816 0.209 <.0001 0.055
lopezalvarado2021 - p. 82
Age 54-62 0.736 0.193 0.0001 0.053
lopezalvarado2021 - p. 82
Female 0.364 0.123 0.0030 0.032
lopezalvarado2021 - p. 83
Working 0.777 0.144 <.0001 0.066
lopezalvarado2021 - p. 83
Less than $25,000 0.909 0.382 0.0175 0.026
lopezalvarado2021 - p. 83
49,999 0.704 0.207 0.0007 0.041
lopezalvarado2021 - p. 83
74,999 0.359 0.167 0.0319 0.026
lopezalvarado2021 - p. 83
99,999 0.390 0.152 0.0108 0.030
lopezalvarado2021 - p. 84
0.189 0.044 <.0001 0.044
lopezalvarado2021 - p. 84
0.110 0.035 0.0019 0.026
lopezalvarado2021 - p. 88
High -0.196 0.060 0.0010 -0.056
lopezalvarado2021 - p. 89
High 0.212 0.049 <.0001 0.061
lopezalvarado2021 - p. 89
High debt -1.062 0.051 <.0001 -0.302 Collector calls: (No calls) Yes calls 0.428 0.078 <.0001 0.092 Unpaid medical bills: (No bills) Yes bills 0.170 0.073 0.020 0.040 Income drop: (No drop) Yes drop 0.750 0.063 <.0001 0.175 Inability to pay bills: (No difficulty) Yes difficulty -0.678 0.054 <.0001 -0.188
lopezalvarado2021 - p. 89
Black 0.212 0.074 0.0041 0.037 Hispanic -0.314 0.065 <.0001 -0.057 Asian/Other 0.172 0.070 0.0142 0.028 Subjective financial knowledge 0.394 0.020 <.0001 0.243
lopezalvarado2021 - p. 89
Age 30-37 -0.227 0.077 0.0032 -0.053
lopezalvarado2021 - p. 89
Age 38-45 -0.570 0.075 <.0001 -0.122 Age 46-53 -0.693 0.073 <.0001 -0.145 Age 54-62 -0.268 0.067 <.0001 -0.061
lopezalvarado2021 - p. 89
Female -0.206 0.042 <.0001 -0.059
lopezalvarado2021 - p. 89
High school drop/grad -0.471 0.070 <.0001 -0.102 Some college -0.337 0.057 <.0001 -0.094 College graduate -0.135 0.058 0.0209 -0.034
lopezalvarado2021 - p. 89
Never-married 0.360 0.084 <.0001 0.077
lopezalvarado2021 - p. 89
Working -0.253 0.050 <.0001 -0.068
lopezalvarado2021 - p. 89
Less than 25,000 - 50,000 - $74,999 -0.453 0.058 <.0001 -0.103