Financial psychological characteristics and psychological well-being: The mediating role of financial well-being

Psychological well-being plays an important role in many aspects of life, but its relationship with financial factors remains insufficiently explored. This study aims to examine whether financial well-being can serve as a mediator between five financial psychological characteristics and psychological well-being. Drawing on the conservation of resources theory, this research focuses on materialism, financial self-efficacy, financial risk tolerance, external locus of control, and propensity to plan as financial psychological characteristics. Data were collected from 157 respondents aged 18 to 60 years old in Indonesia who actively managed their finances, and analyzed using PLS-SEM. The results show that materialism, financial self-efficacy, and propensity to plan positively affect financial well-being, while financial risk tolerance and external locus of control do not. Furthermore, financial well-being can enhance psychological well-being and act as a mediator of the relationships between materialism, financial self-efficacy, and the propensity to plan on psychological well-being.