Financial capability and wellbeing of vulnerable consumers

• Published date: 01 June 2022
• Author: Jing Jian Xiao,Nilton Porto
• Date: 01 June 2022
• DOI: http://doi.org/10.1111/joca.12418

PRACTICAL APPLICATION

Financial capability and wellbeing of

vulnerable consumers

Jing Jian Xiao | Nilton Porto

Department of Human Development and

Family Science, University of Rhode

Island, Kingston, Rhode Island, USA

Correspondence

Jing Jian Xiao, Department of Human

Development and Family Science,

University of Rhode Island, 2 Lower

College Road, Kingston, RI 02881, USA.

Email: jjxiao@uri.edu

Abstract

Consumer financial capability can be defined variously

by different researchers. In this study, financial capabil-

ity is assumed to have three components, financial

knowledge, financial behavior, and financial skills.

This study examines relative contributions of financial

capability components to financial wellbeing among

vulnerable consumers. With data from the National

Financial Wellbeing Survey commissioned by the Con-

sumer Financial Protection Bureau (CFPB), results

show that among financial capability components,

financial behavior contributes the most to financial

wellbeing of the whole sample, followed by financial

skill and financial knowledge. In addition, group differ-

ences surface when subsamples in terms of age, poverty

status, confidence, and fraud victim status are exam-

ined. Results suggest that for low-income consumers,

encouraging them to engage in desirable financial

behaviors is more important than teaching them finan-

cial knowledge and skills. Findings have implications

for financial educators, practitioners, and policymakers

to help them recognize the proper financial education

or program to be delivered based on consumer vulnera-

bility and components of financial capability.

KEYWORDS

financial capability, financial wellbeing, vulnerable consumers

Received: 13 January 2021 Revised: 21 August 2021 Accepted: 25 September 2021

DOI: 10.1111/joca.12418

© 2021 American Council on Consumer Interests.

1004 J Consum Aff. 2022;56:1004–1018.

wileyonlinelibrary.com/journal/joca