Impact of financial literacy on financial wellbeing: mediating role of financial self-efficacy

Abstract

This study investigates the link between financial well-being, financial self-efficacy, and financial literacy among Gwadar area public sector workers. Financial self-efficacy is the conviction that one can make prudent financial decisions and financial literacy, characterized as the capacity to manage funds effectively, is assessed simultaneously. The study looks into how these variables affect people's financial welfare, including their capacity to maintain their preferred living and financial independence. Each of the 100 employees was given a questionnaire to collect data, which was then examined using the partial least squares (PLS) method. The results show that being financially literate helps people feel more confident in their financial decisions, which is essential for their financial health. When people know more about managing money, they are more likely to feel capable of handling their finances well. The study also found that confidence in financial skills (financial self-efficacy) connects financial knowledge to better financial health. Teaching people about money and helping them build confidence in their financial decisions can improve their financial well-being. The recommendations include actions to boost confidence in financial decision-making, improve accessibility to financial education, integrate financial literacy into curricula in schools, offer chances for continuous learning, and tailor interventions for various demographic groups. Overall, the study provides realistic strategies to enhance employees' financial outcomes while highlighting the significance of financial literacy and self-efficacy in promoting financial health.