Financial literacy and its impact on life satisfaction in rural households: a mediated approach via financial self-efficacy

PurposeThe study aims to explore the relationship between financial literacy and general life satisfaction. The study further investigates the mediating role of financial self-efficacy in this relationship in the context of Indian rural households.Design/methodology/approachHouseholds belonging to the rural area of the Koraput district of Odisha were taken as the sample unit of this study. A structured questionnaire was framed to collect primary data using multi-stage and convenience sampling; 299 responses were received. Data analyses were performed using partial least square-structure equation modelling through SmartPLS 4.0.FindingsThe results of the study connoted that financial literacy has a noteworthy impact on the overall life satisfaction of households with lower incomes, both directly and indirectly. Moreover, the study identified financial self-efficacy as a significant complementary partial mediator in the relationship between financial literacy and overall satisfaction with life.Practical implicationsThe findings of the study can be used by financial regulatory authorities and policymakers to seed the financial concepts' understanding among the rural community to enhance their financial status and thereby overall satisfaction with life.Originality/valueTo the best of the authors' knowledge, the exploration study of life satisfaction of rural households is yet to be discovered in the context of previous research frameworks despite rural households being an intricate part of the Indian economy. The study adds to the existing literature on life satisfaction, necessitating financial literacy expertise in rural households for achieving financial self-efficacy.