Financial Well‐Being Research and Structural Equation Modeling: A Systematic Review and Guidelines for Improved Practice

Financial well‐being (FWB) has become an important outcome for individuals, organizations, and policymakers because of its implications for consumer behavior, financial resilience, and quality of life. Research in this field has increasingly relied on structural equation modeling (SEM) to examine complex relationships, yet methodological practices remain inconsistent. This study critically evaluates SEM use in FWB research and develops field‐specific recommendations for its application. Following systematic‐review reporting principles, we searched Scopus for English‐language, peer‐reviewed articles published between 2009 and 2025 that measured FWB and applied SEM, yielding 165 eligible studies. The review identified recurring limitations in data‐quality assessment, measurement specification, construct reliability and validity, estimator selection, model evaluation, reporting of explanatory and predictive measures, and causal interpretation. A broader pattern of misalignment emerged among construct conceptualization, measurement, analytical method, model assessment, and inferential claims. These limitations can reduce the validity, comparability, and cumulative value of empirical findings. The review translates these recurring problems into field‐specific methodological priorities intended to improve transparency, consistency, and interpretability in future FWB research and to support more reliable evidence for financial planning, financial education, and policy.