The impact of financial literacy on financial well-being: a systematic literature review

Abstract Background: The harsh reality of financial difficulty can be concerning, requiring that an opportunity to break free from these limitations be seized at the earliest opportunity. This systematic literature review was therefore necessary to enhance understanding of financial literacy as a means of achieving financial well-being, and to carefully examine the extant literature in order to unravel the key themes and future research agenda of the impact of financial literacy on financial well-being. Methods: Following the PRISMA guidelines, we searched the Scopus database from inception to August 16, 2024 and included articles that had the key words: financial literacy, financial education, financial outcome, financial well-being, economic outcome, economic well-being in their titles, abstracts, or keywords. After applying various inclusion and exclusion criteria, 35 articles were included in the final review. The synthesis was performed in a narrative way. Descriptive and thematic analysis were conducted to answer the research questions. Findings: The study showed that numerous studies have consistently found financial literacy to significantly influence financial well-being. Other variables such as financial behavior, pronounced behavioral elements such as non-impulsive future-oriented behavior and impulsiveness, and financial socialization were discovered as having significant influence on financial well-being. The following themes were developed in answer to the research questions: financial literacy and its determinants; the influence of financial literacy on financial well-being; the impact of financial socialization on financial well-being; the interplay of financial literacy, psychology, and behavioral economics; digital financial literacy in contemporary contexts, and emerging trends. The study made some future research recommendations. Implications: Future research can build on this work to improve our understanding of financial literacy’s impact on financial well-being and help create effective strategies to support individuals and families.