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Subjective Financial Well-Being and Its Influence on Life Quality


Financial well-being has always been a significant phenomenon because available economic resources can influence an individual’s life quality. However, Brüggen, Hogreve, Holmlund, Kabadayi, and Löfgren (2017) admit that research on the topic remains insufficient, meaning that any scientific attempt to study the issue is considered an essential contribution. It is worth mentioning that financial well-being can be objective and subjective. Sorgente and Lanz (2017) explain that “the objective side is the total of the subject’s material resources, while the subjective side is a self-report evaluation of one’s financial condition” (p. 256).

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The present research will only focus on subjective well-being, denoting that the attention will be drawn to how respondents assess their own economic condition. This phenomenon is analyzed through the lens of how and whether it affects an individual’s happiness. Ross, Cloutier, and Searle (2019) clarify that this term refers to a positive emotional state that determines a person’s life satisfaction. Thus, it is reasonable to find whether there is a correlation between economic well-being and happiness.

Some scholarly articles try to address the issue above from a scientific perspective. On the one hand, Netemeyer, Warmath, Fernandes, and Lynch Jr. (2017) demonstrate that financial well-being contributes to overall well-being that relies on numerous concepts, including physical health assessment, job satisfaction, and others. These scholars indicate that there is a direct connection between the two variables under review.

On the other hand, Sorgente and Lanz (2017) admit that it is not always that happiness increases when economic conditions improve. Even though the two studies offer conflicting results, Sorgente and Lanz (2017) explain that their findings are present because some mediators can influence the relationship between subjective financial well-being and happiness. The given research work supposes that they include uncertainty tolerance, self-confidence, optimism, and gender differences.

Thus, the information above allows developing a problem statement and embedding it in research tradition and state-of-the-art research. Since the literature on financial well-being is scarce, it is reasonable to identify whether there is a connection between this phenomenon and an individual’s happiness. Many scholarly articles offer conflicting conclusions regarding the issue under consideration. That is why the given research is going to address this problem by focusing on whether personal characteristics, including uncertainty tolerance, self-confidence, optimism, and gender differences, have a moderating effect.

Reviewing and Synthesizing Findings

Reviewing credible and timely sources is useful for identifying whether there is significant reasoning behind considering uncertainty tolerance, self-confidence, optimism, and gender differences moderating factors. There should be a sufficient number of scholarly and peer-reviewed articles that focus on how these issues affect the relationship between subjective financial well-being and happiness. That is why the given section will consist of four subsections, and each of them will comment on a single characteristic.

Uncertainty Tolerance Effect

When it comes to financial affairs, uncertainty, risk, and ambiguity are unavoidable phenomena. That is why it is reasonable to consider subjective economic well-being through this lens. Iannello, Sorgente, Lanz, and Antonietti (2020) admit that there are four ways to address uncertainty, including anxiety, comfort, black-and-white thinking, and flexible thinking. It means that an individual’s subjective well-being significantly depends upon which strategy they follow.

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For example, flexible and black-and-white thinkers have different approaches to managing ambiguity (Iannello et al., 2020). It means that uncertainty tolerance has a moderating effect because it leads to the fact that people can have different attitudes to the same condition. Simultaneously, Castro-González, Fernáddez-López, Rey-Ares, and Rodeiro-Pazos (2020) also stipulate that a person’s financial well-being depends on how they approach money. In particular, the scientists claim that risk tolerance is an essential factor that determines how people assess their financial condition (Castro-González et al., 2020). This fact denotes that economic well-being is in connection with uncertainty tolerance.

Furthermore, sufficient scientific evidence demonstrates that uncertainty tolerance mediates the feeling of happiness. Firstly, Garrison, Lee, and Ali (2017) admit that the phenomenon under consideration impacts career identity and life satisfaction. It means that people who are afraid of any ambiguity tend to be dissatisfied if they face challenges, and this fact inevitably leads to decreased happiness. Secondly, Balaz and Valus (2020) state that higher life satisfaction is found among those individuals who have “the ability to tolerate higher risks” (p. 1). It means that such people can feel happy even if they are currently experiencing financial struggles.

Thirdly, the study by Li, Xia, Cheng, and Li (2020) supports this claim by explaining that intolerance of uncertainty is in connection with social anxiety and a pessimistic explanatory style. As a result, a person with this characteristic is likely to feel less happy even if their financial state is promising. The scientific evidence above has justified why it is reasonable to consider uncertainty tolerance a moderator.

Self-Confidence Effect

Self-confidence is of significance when it comes to considering subjective phenomena, including financial well-being. It is so because this assurance in personal thoughts and beliefs can affect the way how a person assesses their state. For example, Santos, Mendes-Da-Silva, Norvilitis, and Flores (2019) and Limbu and Sato (2019) focus on credit card users to demonstrate that self-confidence leads to increased financial well-being.

The rationale behind this claim is that using such cards allows people to improve their financial literacy (Limbu & Sato, 2019). Britt-Lutter, Moore, Gallardo, and Scott (2018) also argue that self-confidence determines how individuals process information and make decisions, directly affecting their financial well-being. It means that higher self-confidence leads to increased economic well-being. Simultaneously, evidence regarding this phenomenon’s impact on how people assess their financial position can be found in many other studies (Sabri, Wijekoon, & Rahim, 2020; Setiyani & Solichatun, 2019). This information denotes that it is not reasonable to focus on subjective well-being and ignore the role of self-confidence.

The connection between self-confidence and happiness is another point to consider, and credible scientific sources offer the required information. On the one hand, Akdoğan and Çimşir (2019) explicitly mention that happiness is correlated “with a number of variables that are subjective in nature, such as self-esteem, self-efficacy, and self-confidence” (p. 14). It denotes that self-confidence can be considered a moderator in the relationship between happiness and financial well-being. On the other hand, Satuf et al. (2018) comment on the indirect connection between the phenomena under analysis.

Thus, the scholars stipulate that self-esteem leads to improved self-confidence and higher job satisfaction (Satuf et al., 2018). Since there is a connection between the two phenomena above, one can suppose that happiness is also involved in this correlation. It is so because job satisfaction means that people are happy with their working conditions, and it can happen that representatives of low-paid positions report satisfaction.

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Optimism Effect

Optimism also deserves attention in the research field when it comes to financial well-being because numerous scholarly articles focus on this aspect. For example, Strömbäck, Lind, Skagerlund, Västfäll, and Tinghög (2017) stipulate that the phenomenon under investigation is “an important aspect of financial well-being” (p. 31). The authors explain this claim by mentioning that optimistic individuals are more likely to work harder and save more money (Strömbäck et al., 2017).

It implies that optimism levels can determine whether a person has economic well-being. Thus, Segerstrom, Carver, and Scheier (2017) argue that a higher level of optimism helps people address the emerging adversaries and achieve goals successfully. The data from these two articles are sufficient to state that optimism can positively influence financial well-being through numerous aspects. That is why it is reasonable to admit the moderating effect of this phenomenon.

However, one should also admit that optimism can lead to mediocre well-being and happiness. Firstly, it is so because overoptimistic individuals follow destructive financial behaviors (Strömbäck et al., 2017). Such people cannot adequately assess the situation and their state in it. Secondly, Dawson’s (2017) study demonstrates that optimism can reduce employee pay satisfaction because of higher expectations. It refers to the fact that people may not feel happy with their financial state even if their salary is high because they have initially anticipated earning more. Thirdly, Joshanloo, Park, and Park (2017) mention that low levels of optimism result in fragile happiness.

This term denotes that any issue has an opportunity to hurt a person significantly to make them lose this feeling. Thus, the information above clarifies that an optimism level is of significance to consider when it comes to the relationship between happiness and emotional well-being because it can affect this correlation.

Gender Differences Effect

Taking into consideration financial well-being and happiness, one should also draw attention to gender differences. It is so because men and women can have various attitudes toward the issues under review. Thus, Lind et al. (2020) investigated more than 2,000 participants and claimed that “women reported a lower level of subjective financial well-being even though they reported a more prudent financial behavior than men” (p. 626). It means that if a man and a woman are in the same financial conditions, a female respondent is more likely to assess her position more adversely. The reasoning behind this factor is in numerous social issues, including discrimination. Batz and Tay (2018) mention that gender differences affect access to education, resource distribution, political life participation, and others. That is why it is evident that men and women have various backgrounds and positions in society, which makes them assess their economic conditions through different lenses, producing unequal conclusions.

Simultaneously, it is worth emphasizing that gender differences also affect how individuals assess their happiness. Hori and Kamo (2018) focus on this issue and conclude that such a correlation exists. In particular, they state that when people are in identical conditions, their actual level of happiness depends on their gender. It refers to the fact that full-time employment is associated with higher satisfaction among Chinese men, while the same factor leads to a decreased level of happiness among Japanese women (Hori & Kamo, 2018).

Even though the different results can be explained by various nations, Zuckerman, Li, and Diener (2017) focus on a homogenous group and prove the claim under analysis. The scholars have identified that “women report more negative emotions than men when societal conditions are better” (Zuckerman et al., 2017, p. 329). This information demonstrates that it is reasonable to consider gender differences when analyzing financial well-being and happiness because they moderate the relationship between the variables.


The information above has presented sufficient evidence to state that it is reasonable to consider the four personal characteristics having a moderating effect. It is so because scholarly and peer-reviewed articles demonstrate that uncertainty tolerance, self-confidence, optimism, and gender differences can impact individuals’ subjective financial well-being and happiness levels. It means that people who are in the same conditions can differently assess their economic well-being and happiness level because of these moderating effects, and the literature findings have offered evident examples of such cases. That is why it is rational to draw attention to these personal characteristics when it comes to evaluating the relationship between the two variables under review.

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Formulating Hypotheses

Based on the identified data, one can formulate specific hypotheses. A quantitative methodology will then be applied to test them and determine whether these preliminary suppositions are valid. Thus, the hypotheses are as follows:

  1. Lower levels of uncertainty tolerance make individuals undervalue their subjective financial well-being, leading to feeling less happy.
  2. Higher self-confidence levels allow people to feel happier compared to less confident individuals when they are in identical economic conditions.
  3. The presence of optimistic beliefs makes people overstate their subjective financial well-being, which allows them experiencing more happiness.
  4. When reporting equal subjective financial well-being, men consider themselves happier than women.


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