Financial Satisfaction and the Influence of Financial Literacy in Malaysia

Achieving a state of being financially satisfied is a more feasible aim than becoming debt-free, which requires well strategized economic behaviors over one's life cycle. Furthermore, financial satisfaction can describe an individual's perception concerning his/her current financial situation. In this study, we developed and tested a conceptual model to predict the level of financial satisfaction among Malaysian working individuals. Specifically, the model explains how financial planning (FP) directly affects financial satisfaction and mediates the effects of financial literacy (FL) and basic money management (BMM). The hypotheses were tested using survey data from 1,957 respondents who attended investment seminars across Malaysia. The results from partial least squares analyses suggest that FP is an important determinant of financial satisfaction, whereas BMM does not affect satisfaction directly. In addition, FL and attitude towards money were found to be significant antecedent variables of FP. The study also found that the current FL level in Malaysia is moderately high at 66.7 % based on tier one financial quiz questions. From the findings, with the increasingly complex financial systems, we conclude that everyone should manage and plan their financial activities well ahead because people will face many differing financial commitments at certain points in their lives.