Advertisement

The Moderating Effect of Generalized Anxiety and Financial Knowledge on Financial Management Behavior

  • John E. Grable
  • Kristy L. ArchuletaEmail author
  • Megan R. Ford
  • Michelle Kruger
  • Jerry Gale
  • Joseph Goetz
Original Paper

Abstract

When financial and mental health issues intersect, the study and practice of financial therapy is warranted. The purpose of this study was to determine the extent to which the following two psychosocial constructs—financial knowledge and generalized anxiety—are associated with and related to risky financial management behavior. Research findings from a sample of 110 clients who sought services at an integrated service clinic suggest that anxiety and financial knowledge individually are significantly associated with financial behaviors. In addition, evidence suggests a moderating effect between anxiety and financial knowledge exists. The outcomes associated with this study can be used by not only financial therapists, but also mental health clinicians and financial professionals when developing, presenting, and implementing behaviorally focused treatments, interventions, and counseling recommendations within the professional’s scope of practice.

Keywords

Anxiety Financial knowledge Financial behavior Financial therapy 

Notes

Acknowledgements

The authors would like to acknowledge and thank the ASPIRE Clinic, its faculty, and its students for data collection and management to make this study possible.

References

  1. Ailawadi, K. L., Dant, R. P., & Grewal, D. (2004). The difference between perceptual and objective performance measures: An empirical analysis. MSI Report No. 04-103. Cambridge, MA: Marketing Science InstituteGoogle Scholar
  2. Aldana, S. G., & Liljenquist, W. (1998). Validity and reliability of a financial strain survey. Journal of Financial Counseling and Planning,9(2), 11–19.Google Scholar
  3. Archuleta, K. L., Dale, A., & Spann, S. M. (2013). College students and financial distress: Exploring debt, financial satisfaction, and financial anxiety. Journal of Financial Counseling and Planning,24(2), 50–62.Google Scholar
  4. Archuleta, K. L., & Grable, J. E. (2011). The future of financial planning and counseling: An introduction to financial therapy. In J. E. Grable, K. L. Archuleta, & R. R. Nazarinia (Eds.), Financial counseling and planning scales (pp. 33–59). New York: Springer.CrossRefGoogle Scholar
  5. Archuleta, K. L., Mielitz, K. S., Jayne, D., & Le, V. (2019). Financial goal setting, financial anxiety, and solution-focused financial therapy (SFFT): A quasi-experimental outcome study. Contemporary Family Therapy.  https://doi.org/10.1007/s10591-019-09501-0.CrossRefGoogle Scholar
  6. Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology,51, 1173–1182.  https://doi.org/10.1037/0022-3514.51.6.1173.CrossRefPubMedGoogle Scholar
  7. Borden, L. M., Lee, S. A., Serido, J., & Collins, D. (2008). Changing college students’ financial knowledge, attitudes, and behavior through seminar participation. Journal of Family and Economic Issues,29(1), 23–40.  https://doi.org/10.1007/s10834-007-9087-2.CrossRefGoogle Scholar
  8. Britt, S. L. (2016). The intergenerational transference of money attitudes and behaviors. The Journal of Consumer Affairs,50, 539–556.  https://doi.org/10.1111/joca.12113.CrossRefGoogle Scholar
  9. Burchell, B. J. (2003). Identifying, describing and understanding financial aversion: Financial phobes. Report for EGG. Retrieved March 1, 2019 from http://people.ds.cam.ac.uk/bb101/financialaversionreportburchell.pdf.
  10. Carlson, J. P., Vincent, L. H., Hardesty, D. M., & Bearden, W. O. (2009). Objective and subjective knowledge relationships: A quantitative analysis of consumer research findings. Journal of Consumer Research,35, 864–876.  https://doi.org/10.1086/593688.CrossRefGoogle Scholar
  11. Dew, J., & Xiao, J. J. (2011). The financial management behavior scale: Development and validation. Journal of Financial Counseling and Planning,22(1), 43–59.Google Scholar
  12. Financial Therapy Association. (2019). Financial therapy. Retrieved March 1, 2019 from https://www.financialtherapyassociation.org/.
  13. Gale, J., Goetz, J., & Bermudez, M. (2009). Relational financial therapy. Family Therapy Magazine,8(5), 25–30.Google Scholar
  14. Gale, J., Goetz, J., & Britt, S. (2012). Ten considerations in the development of the financial therapy association. Journal of Financial Therapy,3(2), 1–13.  https://doi.org/10.4148/jft.v3i2.1651.CrossRefGoogle Scholar
  15. Gambetti, E., & Giusberti, F. (2012). The effect of anger and anxiety traits on investment decisions. Journal of Economic Psychology,33(6), 1059–1069.CrossRefGoogle Scholar
  16. Goetz, J., & Gale, J. (2014). Financial therapy: De-biasing and client behaviors. In H. K. Baker & V. Ricciardi (Eds.), Investment behavior: The psychology of financial planning and investing (pp. 227–244). Hoboken: Wiley.CrossRefGoogle Scholar
  17. Grable, J., Heo, W., & Rabbani, A. (2015). Financial anxiety, physiological arousal, and planning intention. Journal of Financial Therapy,5(2), 2.  https://doi.org/10.4148/1944-9771.1083.CrossRefGoogle Scholar
  18. Grable, J. E., & Joo, S. H. (2006). Student racial differences in credit card debt and financial behaviors and stress. College Student Journal,40(2), 400–409.Google Scholar
  19. Hayhoe, C. R., Cho, S. H., DeVaney, S. A., Worthy, S. L., Kim, J., & Gorham, E. (2012). How do distrust and anxiety affect saving behavior? Family and Consumer Sciences Research Journal,41(1), 69–85.  https://doi.org/10.1111/j.1552-3934.2012.02129.x.CrossRefGoogle Scholar
  20. Hayhoe, C. R., Leach, L. J., Turner, P. R., Bruin, M. J., & Lawrence, F. C. (2000). Differences in spending habits and credit use of college students. Journal of Consumer Affairs,34(1), 113–133.  https://doi.org/10.1111/j.1745-6606.2000.tb00087.x.CrossRefGoogle Scholar
  21. Hilgert, M. A., Hogarth, J. M., & Beverly, S. G. (2003). Household financial management: The connection between knowledge and behavior. Federal Reserve Bulletin,89(7), 309–322.Google Scholar
  22. Hira, T. K., & Mugenda, O. (2000). Gender differences in financial perceptions, behaviors and satisfaction. Journal of Financial Planning,13(2), 86–92.Google Scholar
  23. Huston, S. J. (2010). Measuring financial literacy. The Journal of Consumer Affairs,44, 296–316.  https://doi.org/10.1111/j.1745-6606.2010.01170.x.CrossRefGoogle Scholar
  24. Jones, J. E. (2005). College students’ knowledge and use of credit. Financial Counseling and Planning,16(2), 9–16.Google Scholar
  25. Joo, S. H., & Grable, J. E. (2001). Factors associated with seeking and using professional retirement-planning help. Family and Consumer Sciences Research Journal,30(1), 37–63.  https://doi.org/10.1177/1077727X01301002.CrossRefGoogle Scholar
  26. Kim, J. H., Gale, J., Goetz, J., & Bermudez, M. (2011). Relational financial therapy: An innovative and collaborative treatment approach. Journal of Contemporary Family Therapy,33, 229–241.  https://doi.org/10.1007/s10591-011-9145-7.CrossRefGoogle Scholar
  27. Klontz, B. T., Britt, S. L., & Archuleta, K. L. (Eds.). (2015). Financial therapy: Theory, research, and practice. New York: Springer.Google Scholar
  28. Lusardi, A., & Mitchell, O. S. (2008). Planning and financial literacy: How do women fare? American Economic Review,98(2), 413–417.CrossRefGoogle Scholar
  29. Lyons, A. C. (2004). A profile of financially at-risk college students. Journal of Consumer Affairs,38(1), 56–80.  https://doi.org/10.1111/j.1745-6606.2004.tb00465.x.CrossRefGoogle Scholar
  30. Mandell, L., & Klein, L. S. (2009). The impact of financial literacy education on subsequent financial behavior. Journal of Financial Counseling and Planning,20(1), 15–24.Google Scholar
  31. National Institute of Mental Health. (2019). Anxiety disorders. Retrieved March 1, 2019 from https://www.nimh.nih.gov/health/topics/anxiety-disorders/index.shtml.
  32. O’Neill, B., & Xiao, J. J. (2003). Financial fitness assessment: Differences by age, gender, and state of residence. Journal of Consumer Education,21, 38–49.Google Scholar
  33. O’Neill, B., & Xiao, J. J. (2012). Financial behaviors before and after the financial crisis: Evidence from an online survey. Financial Counseling and Planning,23(1), 33–46.Google Scholar
  34. Perry, V. G., & Morris, M. D. (2005). Who is in control? The role of self-perception, knowledge, and income in explaining consumer financial behavior. Journal of Consumer Affairs,39(2), 299–313.  https://doi.org/10.1111/j.1745-6606.2005.00016.x.CrossRefGoogle Scholar
  35. Pitman, C. M., & Karle, E. M. (2015). Rewire your anxious brain: how to use the neuroscience of fear to end anxiety, panic & worry. Oakland: New Harbinger Publications.Google Scholar
  36. Robb, C. A., & Sharpe, D. L. (2009). Effect of personal financial knowledge on college students’ credit card behavior. Journal of Financial Counseling and Planning,20(1), 25–43.Google Scholar
  37. Robb, C. A., & Woodyard, A. (2011). Financial knowledge and best practice behavior. Financial Counseling and Planning,22(1), 60–70.Google Scholar
  38. Ross, D. B., Gale, J., & Goetz, J. (2016). Ethical issues and decision making in collaborative financial therapy. Journal of Financial Therapy,7(1), 3.  https://doi.org/10.4148/1944-9771.1087.CrossRefGoogle Scholar
  39. Sages, R., Britt, S., & Cumbie, J. (2013). The correlation between anxiety and money management. College Student Journal,47(1), 1–11.Google Scholar
  40. Serido, J., & Deenanath, V. (2016). Financial parenting: Promoting financial self-reliance of young consumers. In J. J. Xiao (Ed.), Handbook of Consumer Finance Research (pp. 291–300). New York: Springer.Google Scholar
  41. Shapiro, G. K., & Burchell, B. J. (2012). Measuring financial anxiety. Journal of Neuroscience, Psychology, and Economics,5(2), 92–103.  https://doi.org/10.1037/a0027647.CrossRefGoogle Scholar
  42. Spitzer, R. L., Kroenke, K., Williams, J. B., & Löwe, B. (2006). A brief measure for assessing generalized anxiety disorder: The GAD-7. Archives of Internal Medicine,166(10), 1092–1097.CrossRefGoogle Scholar
  43. Tang, N., & Baker, A. (2016). Self-esteem, financial knowledge and financial behavior. Journal of Economic Psychology,54, 164–176.  https://doi.org/10.1016/j.joep.2016.04.005.CrossRefGoogle Scholar
  44. Xiao, J. J., Serido, J., & Shim, S. (2011). Financial education, financial knowledge, and risky credit behavior of college students. In D. Lamdin (Ed.), Consumer knowledge and financial decisions (pp. 113–128). New York: Springer.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.University of GeorgiaAthensUSA
  2. 2.Loras CollegeDubuqueUSA

Personalised recommendations