Action Filename Size Access Description License


The understanding of personal finance management becomes a pressing concern as individuals across most of the world live longer while simultaneously facing decreasing incomes and increasing income inequality. Study 1 examined time discounting as an individual differences predictor of income. The investigation of putative mechanisms revealed that the effect of time discounting on income is fully mediated by general education and financial literacy. Study 2 extended these findings by focusing on another metric of financial standing: creditworthiness as measured by FICO scores. Results indicated that education and financial literacy fully mediated the relationships between deliberative time discounting – thought to reflect controlled/reflective processing – and creditworthiness. In order to assess how individuals use assets, credits, loans, savings, and investments, we developed a measure of consumer banking competence (CBC) in which lower scores indicate undesirable banking practices and higher scores indicate desirable banking practices. Studies 3-5 demonstrate the newly-developed scale’s internal consistency, validity, and reliability. Greater scores on the CBC were associated with greater individual and household income, specifically, with greater income from investments and capital gains. The data indicated that financial literacy and consumer banking competence represent two distinct yet viable indices of financial expertise. Whereas financial literacy seems to assess knowledge of finance, the CBC scale appears to assess behavioral practices in regard to money management. Study 6 demonstrated that the CBC fully mediated the relationships between financial literacy with income and creditworthiness. These results suggest that among the two indices of financial expertise – financial literacy vs. consumer banking competence – consumer banking competence may play a more proximal role to individual financial outcomes. Study 7 showed that conscientiousness, extraversion, and emotional stability carry implications for personal finance management. Results from Study 8 show that consumer banking competence explained variability in physical health beyond known correlates. By contrast, variability in financial literacy accounted for unique variability in subjective well-being beyond that explained by known correlates of the construct. Taken together the current findings indicate that managing personal finance represents a broad-ranging set of skills with implications for not only financial outcomes but also physical health and psychological well-being.


Additional Details


Download Full History